1. Hydrogen production
One of the key bases for a hydrogen economy is for there to be reliable and sustainable production of hydrogen which can be provided at competitive costs compared to conventional energy sources. In order to significantly reduce production costs, generation plants (i.e. electrolysers) must first be built on an industrial scale to produce “green” hydrogen. Parallel to this, renewable energy needs to be expanded at a greater rate in order to provide the green electricity needed to produce this green hydrogen. For investments in hydrogen production to pay off, there must also be appropriate demand for hydrogen on the application side. The measures to promote hydrogen applications are first of all targeted at sectors in which the use of hydrogen is close to being economically viable, as well as at industries in which no alternative decarbonisation technologies are available (e.g. the steel and chemical industries).
Hydrogen is an important building block for sustainable and climate-friendly mobility and complements other alternative forms of propulsion across all modes of transport. The use of hydrogen offers a particularly high level of potential for large and heavy vehicles (e.g. in road haulage, air traffic, and maritime transport), either in fuel cells or as a feedstock for renewable electricity-based fuels, as battery-electric drives are not suitable for application throughout. Specific measures in the transport sector include promoting green hydrogen in fuel production and as an alternative to conventional fuels, e.g. in aviation. Other funding measures are targeted towards research and development as well as investments in hydrogen vehicles, especially in road haulage, air traffic, and maritime transport.
3. Industrial sector
The Federal Government is promoting the switchover from the use of fossil technologies towards processes that are low-greenhouse gas (GHG) or GHG-neutral. The aim is to reduce the amount of process-related emissions from industry. This shift plays a key role in the steel and chemical industries in particular. One example of this is the Carbon2Chem project, which is about converting blast-furnace gases from steel production into input products for fuel, plastic or fertilisers. This is to be achieved by cross-sector cooperation between the steel, chemical, and energy industries. In addition to providing investment grants, the Federal Government also plans to introduce a number of funding instruments to help electrolysis plants achieve economic viability. ‘Carbon contracts for difference’ between the state and companies in energy-intensive industry are designed to compensate for the higher cost of climate-friendly production processes compared with conventional processes. The aim is for them to provide incentives for the early implementation of climate projects.
Since 2016, the Federal Government has been promoting the purchase of highly efficient fuel cell heating appliances in the buildings sector. This grant scheme will run until the end of 2022, and may continue depending on the outcome of an evaluation planned during the course of the year. The question here is in what ways fuel cell technology can continue to be supported within the framework of technology funding. If the grant scheme continues, clear reductions in costs will have to be laid down in the provisions underlying it.
Another key basis for a hydrogen economy is having a secure, demand-driven and efficient supply of hydrogen. The potential for repurposing existing infrastructure, such as natural gas pipelines, is currently being explored and the government is providing support for this. Funding is being channelled into establishing supply structures, where necessary. Special attention is being given to expanding the network of hydrogen refuelling stations for road transport, rail networks and waterways.
6. Research, education and innovation
Technological innovation is massively driven by new scientific findings. This is why the Federal Government has set up research funding initiatives, which will lay the foundation for future market success along the entire hydrogen value chain and accelerate the transfer of innovations into industrial practice. The three Hydrogen Flagship Projects H2Giga, H2Mare and TransHyDE, and the four Kopernikus projects deserve special recognition in this context. The interministerial research campaign entitled ‘Hydrogen Technologies 2030’ strategically bundles research measures on key hydrogen technologies. These include the relatively small but numerous applied energy research projects, the ‘Regulatory Sandboxes of the Energy Transition’, which demonstrate new technologies on an industrial scale (five launched since 2020), and the technology-neutral, interdisciplinary forum called the ‘Hydrogen Research Network’.
7. Need for action at European level
Germany also wants to drive the ramp-up of hydrogen technologies at EU level. Against the background of the European Green Deal, the Federal Government is still working towards an accelerated implementation of the EU hydrogen initiatives. An important step here was the creation of a new Important Project of Common European Interest (IPCEI) on hydrogen as a joint project with other Member States, which was launched at the end of 2020. Under this European funding instrument, flagship projects that address the entire hydrogen value chain are to receive support.
To create a common internal market, it is also important to develop reliable sustainability and certification standards that are uniform throughout Europe. Looking ahead, the global trade in hydrogen will require compatibility with international standards, and this needs to be taken into account today. These include, for example, proof of origin for electricity from renewable energy and for green hydrogen.
8. International hydrogen market and external economic partnerships
The market ramp-up of hydrogen technologies cannot function as a stand-alone, German solution, but will ultimately only work within the framework of a global market. This is because the planned domestic hydrogen market will be far from sufficient to provide the quantities of hydrogen needed to decarbonise at the level desired. Germany will have to cover a large proportion of its hydrogen demand via imports. This necessitates stepping up efforts to build and intensify international cooperation on hydrogen at all levels, particularly within the framework of our existing energy partnerships. In addition to securing Germany's import requirements and exploiting export opportunities for German hydrogen technology, German Development Cooperation also helps to sustainably develop the energy supply in the partner countries.