Germany boosts its hydrogen ambitions with more money

In order to speed up the global market ramp-up, German Chancellor Olaf Scholz announced more money for the government’s global hydrogen finance instrument, H2Global.

During a roundtable at COP27 Scholz said, “Green hydrogen is the way to decarbonizing our economies, especially for hard-to-electrify industries such as steel production, the chemical industry, heavy shipping, and aviation.”

“We agreed on a hydrogen action plan to speed the market ramp-up of low carbon and renewable hydrogen and derivatives during our current [German] G7 leadership,” said Scholz.

Due to its acknowledgment of low-carbon hydrogen, another name for “blue” hydrogen where the rising CO2 emissions are absorbed and stored, the G7 hydrogen action plan is viewed as contentious. “Blue” hydrogen is dependent on high CO2-capture rates and has the potential to be more climate-unfriendly than burning the gas used to produce it.

By 2030, Scholz said, “We are modifying our ambitions for domestic production of green hydrogen from five gigawatts to 10 gigawatts of electrolyzer capacity.

“Only one-third of the anticipated demand will be satisfied. The vast majority must travel from abroad.

Steel mills or chemical plants, as potential consumers, must be certain they will obtain adequate and competitive supplies before they invest, he said, adding that green hydrogen producers are prepared to make significant investments. However, they need long-term off-take agreements.

The government-funded foundation H2Global, run by Kirsten Westphal, is the tool of choice in Berlin. It was established in May 2021 and was funded by government funds totaling €900 million.

Government funding fills the gap between expensive production and the reduced price that customers are ready to pay. Scholz wants to give them even more of a boost.

“We intend to invest [into H2Global] more than €4 billion.” Soon, the first tenders will be released, he said. The non-EU nations are specifically mentioned in H2Global.

The EU’s domestic instrument pales in comparison to the unilateral global hydrogen market established by Germany.

Ursula von der Leyen, president of the European Commission, declared her intention to establish a new “European Hydrogen Bank.” According to Jonas Helseth, hydrogen is an energy sink rather than a source of energy and must be created using a significant amount of electricity.

The EU has thus far committed to new actions at COP27. A memorandum of understanding (MoU) establishing a strategic relationship between the EU and Namibia that mainly involves hydrogen was signed by Commission President Ursula von der Leyen.

To “develop local capacities” around the green hydrogen value chain, Germany is collaborating with Brazil, Morocco, South Africa, and Tunisia, according to Scholz.