Today, Germany's long-awaited hydrogen strategy has been presented. It signals a turn away from fossil gas, a significant move for Europe's largest gas consumer, and is based on the right premises. Does it also come to the right conclusions? Read on:
Let's kick off with a simple question: why has it taken so long? Originally, the strategy was due by the end of 2019. In addition to the COVID crisis, the delay is mostly due to political disagreements over how much hydrogen to produce & where to use it.
in.reuters.com/article/us-ger…
in.reuters.com/article/us-ger…
The strategy now says that only green hydrogen (made from renewables) is sustainable & should be supported. That's the right premise for planning security & clearly shows that other hydrogen forms, made from fossil gas, will not play a role in Germany's long-term energy future. 
At the same time, there's a backdoor: the government expects "CO2-free" hydrogen from fossil gas to play a role in global & European hydrogen markets and therefore also in Germany. Hydrogen from fossil gas always has significant residual emissions and thus isn't CO2-free...
...so it now must be ensured that hydrogen demand and green hydrogen supply are balanced. As last week's recovery package has mobilized an additional €9bn for green hydrogen, expectations are high! Let's look at the plans for green hydrogen production in more detail.
A number of policies are being considered to boost green hydrogen production: reducing electricity prices for electrolysers, enabling the cooperation of grid operators & hydrogen producers, and tendering models for green hydrogen as well as direct financial support.
In total, the government is planning to have 5 GW of production capacity by 2030 and another 5 GW by 2040. However, that only translates into a domestic production of 14 TWh by 2030, with a projected demand of up to 110 TWh - so there's a big gap. What's the takeaway here?
Most importantly, this shows that getting enough sustainable hydrogen is very difficult and that therefore every policy option to reduce the need for synthetic gases including hydrogen should be used, for example through investments into energy efficiency and electrification.
Also, Germany will face a heavy lift in filling that gap with green hydrogen. For that, it's looking to imports from EU states around the North Sea & in Southern Europe and is launching a new initiative with Morocco, but it's an open question mark of whether there's ...
...enough import potential to fill that gap. The strategy includes plans for global mappings of hydrogen potential which will be a very interesting resource for this debate. On the positive side, it's worth noting that the strategy clearly states that imports of green hydrogen...
...especially from developing countries should not jeopardize the domestic energy transition in potential hydrogen exporting countries. So much for the supply side, let's look at the demand side, where some interesting measures are being introduced.
The premise is right: hydrogen should only be used where other technologies do not offer solutions. Unfortunately, the strategy is inconsistent as it later also mentions the possibility of hydrogen use for private cars & heating, where electrification would be the better option.
But the more interesting action is elsewhere. For hydrogen use in industry, Germany will establish a contracts for difference (CfD) scheme for steel & chemicals, consider a quota for green raw materials, and will set up sectoral dialogues for long-term decarbonization strategies.
These measures, on top of existing funding, reflect demands for industry decarbonisation made by @WWF_Deutschland, @AgoraEW and @DIW_Berlin. I personally am intrigued by the prospect of the sectoral dialogues - let's hope that they're organized in a transparent and inclusive way.
The same need for transparency & inclusiveness applies to another very interesting initiative: the government wants to analyse the long-term infrastructure needs of the transition to climate neutrality by 2050 with "stakeholders". That's great and a very important step...
...but to ensure the most efficient outcome, it must be ensured that this is a discussion bringing together experts from across the energy system rather than just representatives of particular industries. That wasn't always the case in the past. @ThorstenHerdan
This thread is long enough already, but one final question worth asking is: where did all the stimulus funding go? The €9bn in additional funding announced last week are only mentioned twice in the entire document and it is unclear what additional ambition they are delivering.
