German federal government adopts national hydrogen strategy

Out-Law News | 22 Jun 2020 | 1:13 pm | 2 min. read

The German federal government has published plans to boost the production and use of hydrogen for energy.

The national hydrogen strategy is designed to strengthen the market for hydrogen technology to achieve greenhouse gas neutrality by 2050.

Germany wants to take the lead in the development and use of hydrogen technology and after months of debate has adopted a national hydrogen strategy for the use of hydrogen for energy storage and as an energy carrier.

"The national hydrogen strategy is a big step in the right direction", said Sönke Gödeke, expert for power economy at Pinsent Masons, the law firm behind Out-Law. "With this strategy, the federal government adjusts its course to quickly changing market conditions and economic expectations in the wake of the German energy transition."

According to the federal government, the use of hydrogen will help to boost the German energy transition and achieve greenhouse-gas neutrality in Germany by 2050.

When combusted, hydrogen causes almost no emission. For this reason, some experts believe hydrogen technology will pave the way for a climate-friendly future. On the other hand, a lot of electricity is required to produce hydrogen and use it as an energy carrier.

The hydrogen strategy says that hydrogen can be used in many ways for the storage and carrying of energy. It is also an important raw element for many chemical and industrial processes. Additionally, hydrogen could make it possible to decarbonise industrial and chemical production, especially in the steel and chemicals industry, and in the transport sector.

The national hydrogen strategy comprises 38 measures, some of them are described in detail, others are only briefly summarised. There are generally two phases: measures taken to establish a market until 2023 and measures taken to strengthen the market until 2030.

"However, with regard to the high economic burdens imposed by the development of new technology, further details would have been desirable to provide planning security", said Gödeke.

To make hydrogen technology competitive, the federal government announced that it will improve the legal framework. The infrastructure for transport and distribution of hydrogen shall also be improved, including the ramp-up of hydrogen grid. The German government declared that it would check and optimise the regulatory and technological framework. It is also planning various support programs, such as for hydrogen vehicles and scientific research.

On account of the federal government, only green hydrogen is sustainable because it is produced with renewable energy. However, the paper mentions the possibility to purchase so-called blue hydrogen from other countries, if necessary, which is not produced with electricity from renewable energies, but is CO2-neutral.

The strategy aims to improve the conditions for the efficient use of electricity from renewable energies in order to make hydrogen production economically more attractive.

Also, the German government wants to make the production of green hydrogen less costly by reducing taxes, charges and levies on electricity. For producers of green hydrogen the EEG levy is to be abolished.

Experts said that a relief only for producers of green hydrogen will not suffice to make hydrogen technology competitive in Germany. "A lower price for electricity in general, or at least for electricity used to produce hydrogen, would make electricity as a raw material for the production of hydrogen much more attractive", Gödeke said.