“The goal of the federal government is to use green hydrogen, [produced from renewable electricity through water electrolysis] to support a rapid market ramp-up for it and to establish corresponding value chains”, the draft law reads.
The Social Democrats (SPD), in coalition with Chancellor Angela Merkel’s conservative CDU party, have set out plans for for Germany to increase green hydrogen production capacity to at least 10,000 MW by 2030. Added to this are hydrogen imports sourced on designated European market, where the SPD supports incentives for large-scale projects of more than 100 MW.
Promising technology, job machine
Green hydrogen is increasingly seen as silver bullet to decarbonize Europe’s heavy industry and aviation. The Germany government is also seeing hydrogen as a promising growth market for much of the country’s engineering-focused industry.
Merkel has voiced the hope that Germany could create hundreds of thousands of jobs by the middle of the century if it can hold onto its current share of the global market for electrolysers that produce hydrogen, which stands at around 20%. The National Hydrogen Strategy is expected to become part of a "green stimulus" programme to restart the economy after the coronavirus crisis.
Germany has pledged to become carbon-neutral by 2050 and to reach this goal hydrogen could gradually replace natural gas in the power sector. However, to produce the necessary volumes of green hydrogen, technology costs for both renewables and electrolyzes would have to fall substantially.
The German industry said to become carbon-neutral it would need to invest of around 45 billion Euros in new infrastructure and processes. In addition, it would need more than 600 TWh of electricity per year from the mid-2030s – more than Germany's entire current power production – mainly to produce hydrogen and other renewable fuels.
Aiming for 80 GW hydrogen capacity
A hydrogen road map by the research institute Fraunhofer ISE expects a production capacity of 50 to 80 GW in Germany alone by 2050. To reach these volumes, annual growth rates in the double-digit megawatt range must be achieved immediately, and in the 1 GW range by the end of the 2020s, researchers pointed out.
Manufacturers of electrolysis and fuel cells could earn an estimated additional 32 billion Euros, researcher suggest, provided the global installed electrolysis capacity will reach 3,000 GW or more by 2050.