German federal elections crucial for hydrogen strategy

Author: Jake Stones Arlind Neziri

2021/09/24

LONDON (ICIS)--On 26 September Germany will go to the polling stations and select its next government, determining the future of Europe’s largest hydrogen demand centre.

As of 21 September three parties lead the polls: the Social Democrats (SPD), the Christian Democrats (CDU) and the Greens, with a split of 25%, 22% and 16% of voter support.

The parties all mention hydrogen within manifestos, although the strongest policy points were made by the Greens and CDU, with divergence on technology streams and import policy.

WHAT COLOUR?

“The colour of hydrogen is probably the main difference between the different parties,” according to Dr Thomas Hillig, founder of Thomas Hillig Energy Consulting (THEnergy), which specialises in off-grid renewable energy, microgrids and hydrogen.

The German hydrogen strategy, released in 2020, focused heavily on the development of domestic green production, but suggested low-carbon hydrogen could be imported.

The CDU has now said that it will support blue hydrogen in the near term to achieve decarbonisation, a slight turn from the strategy the party released.

Hillig said that despite CDU acceptance of blue hydrogen, subsidies may show a lean towards green projects.

He said: “I think politically it’s very difficult to set up support programmes for blue hydrogen.”

Germany’s hydrogen demand is expected to reach 110TWh/year by 2030, yet domestic production will amount to just 19TWh.

This room for imports that could come from central eastern Europe or Russia via Nord Stream 2, which could consist of blue hydrogen.

At the other end of the scale was the Green party’s pledge to focus solely on green hydrogen.

The party also stated that green hydrogen would be the commodity of choice for import.

This would position countries such as Spain or Portugal, which have high renewable capacity and potential for green hydrogen, as possible primary suppliers to Germany.

Hillig said: “The Green party I would say clearly support green hydrogen, but I would say there are some question marks and strong voices within the party that are not fully supportive of the hydrogen cause. They say efficiency is too low, the impact on the environment is too big.

“They would probably opt for the importing option. But, definitely with the Green party: if hydrogen, green, but equally there is a question of ‘if hydrogen at all?’”

With regard to the SPD, the party’s programme for government is focused on green hydrogen.

Hillig said this was likely due to the difficulty in providing support schemes for blue, but noted there could be changes as blue production would support employment.

In addition, when taking into account carbon pricing, blue hydrogen slowly becomes less appealing

RENEWABLE CAPACITY

Hillig said that there could be a strong policy push from the Greens to ensure that new electrolysis capacity would need to support the development of additional renewable assets.

Such policy decisions are made with the intention of accelerating renewable deployment and avoiding green hydrogen producers pulling output from other areas of demand.

“If they became the leading party after the election then they would likely push a faster route to renewable expansion.

“But it’s always about negotiation, and the additionality factor could need to be dropped if in discussion with another party,” Hillig said.

USE CASES

The parties all showed agreement that hydrogen should be used in areas where electrification is not possible.

Industry was a primary focus of all three, but some modes of transportation were also included, for example, heavy goods vehicles, maritime and air traffic.

INFRASTRUCTURE

Both the SPD and the Greens outlined a need for new hydrogen infrastructure, with the SPD focusing on the build out of a hydrogen grid.

Taking a slightly firmer approach, the Greens noted they would not support new natural gas infrastructure unless it was geared towards hydrogen.