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The strongest aspects of Germany’s updated National Hydrogen Strategy: what CEE countries can learn

At the end of July, Germany updated its National Hydrogen Strategy, following a political agreement reached by all Federal ministries and in line with the country’s goal to achieve greenhouse gas neutrality by 2045.

In principle, the National Hydrogen Strategy from 2020 “remains in place”, read the document, but it now takes into account the major developments that have affected the energy industry since then, including the COVID-19 pandemic, the Russian invasion of Ukraine and the new goals and objectives set by the European Union.

Indeed, the landscape is completely different than it was three years ago and the production of hydrogen is becoming more and more urgent to ease dependencies on fossil fuels and on energy imports. However, in this regard, the updated Strategy is clear: due to the foreseen huge demand for hydrogen in the German market, domestic production won’t be enough to cover all the needs and imports from neighbouring countries will still make for a huge percentage of hydrogen usage.

Nonetheless, it has been regarded as a great milestone for the government in office, something that Bettina Stark-Watzinger, Federal Minister of Education and Research defined as the missing piece of the puzzle for the energy transition.

“It is a great opportunity to combine energy security, climate neutrality and competitiveness,” she said.

“By updating the National Hydrogen Strategy, we are setting the framework for the new phase in the hydrogen market ramp-up, which we have consistently initiated since taking office: from research and demonstration to large-scale production,” stated Robert Habeck, Federal Minister for Economic Affairs and Climate Action. “Investing in hydrogen is an investment in our future, in climate protection, in skilled jobs and the security of energy supply.”

What exactly is included in the updated Hydrogen Strategy?

In other words, Germany aims to take the lead in the field of hydrogen with massive and ambitious goals. First of all, the target for domestic electrolysis capacity in 2030 has been increased from 5 gigawatts (GW) to at least 10 GW. At the same time, an efficient hydrogen infrastructure will be developed: by 2027-2028, a hydrogen start-up network with more than 1,800 kilometres of converted and newly built hydrogen lines will be set up in Germany via the IPCEI funding (to be added to the 4,500 kilometres of the European Hydrogen Backbone).

The Strategy also includes hydrogen derivatives that will be used in particular for applications in industry, heavy commercial vehicles and increasingly in aviation and shipping.

And to allow all of this, coherent legal requirements will be developed, for example, efficient planning and approval procedures, uniform standards and certification systems and coordinated administration.

As Jorgo Chatzimarkakis, CEO of Hydrogen Europe said, there is a lot to like in the new strategy, especially the fact that more colours of hydrogen have been included (green, blue, turquoise and orange are all promoted, despite the fact that pink hydrogen, otherwise known as hydrogen produced by nuclear power, is still left out). However, even if this aspect was praised by industry associations, environmental NGOs have criticised the possible State support for blue hydrogen which, according to them, will only delay the energy transition and keep us on one foot into fossil fuels.

“With the update of the National Hydrogen Strategy at the end of July 2023, the chances that a leading hydrogen industry can be built from scratch in Germany have increased massively,” Jorgo Chatzimarkakis tells CEENERGYNEWS. “Besides China, Germany will become the most important buyer of green hydrogen on the global market. This future will also be shaped with the help of German technologies, which are world leaders, particularly in the field of electrolysers.”

He also recalls that the Federal Minister of Economics wants to generate 30 GW of electricity with CO2-free hydrogen power plants – 15 GW of hybrid plants, which will initially be operated with natural gas and then with hydrogen from 2035.

“Almost 9 GW are to supply pure hydrogen power plants, biomethane and biomass power plants and storage facilities are to supply the rest,” Mr Chatzimarkakis continues.

A lesson for the CEE region to learn

And Central and Eastern European countries can learn a lot from the new German Strategy.

“The strongest aspect is the ambition and the inclusion of many types of hydrogen, plus the concrete plans to build up capacity including doubling the country’s domestic electrolysis capacity target for 2030 to at least 10 GW and foreseeing the need to import substantially,” the CEO of Hydrogen Europe points out.

Indeed, the greater level of cooperation was also noted by Ákos Hegedüs, Managing Director of Linde Gas Hungary, one of the leading providers of industrial gases in Hungary.

“What is visible regarding the first pilot projects in Germany is that a full cooperation and integrated approach has been established between all value chain members (private and State companies) with heavy support from the government,” he tells CEENERGYNEWS. “The other important aspect of the German projects is that while mobility is usually mentioned as one of the main target groups, all main projects are focusing on the current grey hydrogen users, for example, the chemical industry; also not talking about green hydrogen as a stand-alone solution, the projects are focusing on – mid-term – on blue hydrogen and carbon capture storage solutions together.”

What is still needed for the CEE region to unlock its hydrogen potential?

Indeed, the CEE region is increasing its importance on the European hydrogen map. After one-year research, four leading Central European gas infrastructure companies (Slovakia’s EUSTREAM, the Gas TSO of Ukraine; Czechia’s NET4GAS, and Germany’s OGE) finalised a pre-feasibility study to develop a hydrogen “highway” through Central Europe, clearly indicating that it is technically feasible to transport 120 gigawatt-hours (GWh) of hydrogen per day through Central Europe by 2030. Most of the regional transmission system operators (like Greece’s DESFA or Latvia’s Conexus Baltic Grid and Romania’s Transgaz) are preparing new hydrogen-ready pipelines, conducting market studies and launching non-binding market demand assessment processes for blue hydrogen to play a role in the near future.

However, despite being geographically close to Germany and other Western European countries that are also betting on hydrogen technologies, CEE is not yet not successful in this field and most of the ideas remain what they simply are: ideas. No large-scale projects, only pilot ones; not a real infrastructure, nor a defined regulatory framework.

“The CEE region should implement the EU legislation without delay, ensuring certainty in their domestic market for producers and off-takers,” Jorgo Chatzimarkakis highlights. “They should also build up manufacturing capability and incentivise industrials to switch to hydrogen.”

“Regarding the CEE region from my point of view there are three pillars needed to successfully step into the hydrogen value chain: an integrated approach and business model; cheap electricity with stable prices for a long period; and governmental support (not only CAPEX, but OPEX as well),” adds Mr Ákos Hegedüs.

Something actually the US is doing with the Inflation Reduction Act (IRA) which is supporting also the OPEX part of hydrogen production, something that the EU Net-Zero Industrial Plan has been accused of falling short of.

In fact, the main aspect underlined once more by Mr Chatzimarkakis is the huge possibility of the hydrogen economy creating skilled jobs, all made in Europe. In a moment like today, in which most of the solar panels are built in China and most of the batteries are produced in Asia (with subsidiaries and factories in Europe and especially in CEE), it is important for our continent to retain some skilled workers and because it wants to become the first climate-neutral continent by 2050 and because of all the strategies, legislations, technologies and finance mechanisms devoted to hydrogen, it should be the natural leading field for Europe to excel in a field of the energy transition.

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