Germany

Country: Germany

Document type: National Strategy

Title: The National Hydrogen Strategy
Released: June 2020

Update to the National Hydrogen Strategy – German Language
Official Joint Press Release: Update to the National Hydrogen Strategy – English Language
Released: July 2023

National Hydrogen Strategy – 2020

  • The 2020 national hydrogen strategy included the following goals or ambitions:
    • Improving the price competitiveness of hydrogen technologies
    • Developing a domestic market for hydrogen technologies and facilitating imported hydrogen
    • Establishing hydrogen as an alternative energy source
    • Establishing hydrogen as a sustainable base material for industrial processes
    • Enhancing the infrastructure for the transport and distribution of hydrogen
    • Improving the policy/regulatory environment, fostering research and skills development
    • Strengthening international relationships and cooperation mechanisms
  • Around 5 GW of hydrogen-generation capacity was planned to be established domestically by 2030. An additional 5 GW of capacity would be added, if possible, by 2035 and no later than 2040. (Note: the Coalition Agreement executed in December 2021 targeted increasing electrolyser capacity from 5 to 10 GW by 2030.)
  • Domestic hydrogen generation would need to be supplemented by imports, requiring establishment of (non-domestic) production capacity and new supply chains.
  • An Action Plan included a first ramp-up phase to 2023 (start market ramp-up, harness opportunities) and a second phase to begin in 2024 (strengthen market ramp-up nationally and internationally).
  • Financial (funding) support measures available for hydrogen applications noted in the strategy included:
    • Access to around €8 billion across various programs supporting the transport application, including €3.4 billion to support construction of charging and refuelling infrastructure (importantly, this latter amount, and also for other transportation-related programs noted, is for all alternative technologies).
    • Up to €0.7 billion to facilitate the use of highly efficient fuel cell heating systems in buildings.
    • Utilisation of up to €2 billion arising from the coalition committee’s ‘package for the future’ of 3 June 2020 to intensify international cooperation on hydrogen.

Update to the National Hydrogen Strategy – 2023

The 2020 strategy remains in place in principle but is further developed to reflect an increased level of climate protection ambition. The update in many cases reflects measures that had already been started in parallel with the development of the update of the strategy or are planned in the period to 2030. Key objectives in the strategy update include:

  • Accelerated market ramp-up of hydrogen: the market ramp-up of hydrogen, its derivatives and hydrogen application technologies will be significantly accelerated.
  • Ensuring sufficient availability of hydrogen and its derivatives: the target for domestic electrolysis capacity in 2030 is increased from 5 GW to at least 10 GW, with residual demand covered by imports. A separate import strategy is being developed.
  • Building a high-performance hydrogen infrastructure: of particular importance is the creation of the necessary hydrogen infrastructure. By 2027/2028, a hydrogen launch network with more than 1,800 kilometres of converted and newly built hydrogen pipelines is to be established in Germany via IPCEI funding. Approximately 4,500 kilometres is to be added throughout Europe (European Hydrogen Backbone). By 2030, all major generation, import and storage centres would be connected to relevant customers by means of expansion.
  • Establishment of hydrogen applications in the following sectors: by 2030, hydrogen and its derivatives are to be used especially in industrial applications, in heavy commercial vehicles as well as increasingly used in air and sea transport. In the electricity sector, hydrogen contributes to energy security; gas-fired power plants that can be converted to climate-neutral gases (hydrogen-ready) and electrolysers that serve the system, in particular as variable and system-serving stabilisers, or flexible loads. For the prospective use of hydrogen in heat supply, the framework conditions are (as of July 2023) being further developed in various forums.
  • Import strategy: English language media reports on the strategy update note that the strategy foresees hydrogen demand to reach 95-130 Terawatt-hours (TWh) by 2030, of which around 50-70% is expected to be covered by imports. The update to the national strategy highlights that an import strategy for hydrogen and its derivatives was in preparation, with the Federal Cabinet adopting the import strategy for hydrogen and hydrogen derivatives in July 2024.
  • The strategy also highlights key objectives around Germany being a leading provider of hydrogen technologies by 2030 and the creation of supporting framework conditions (e.g., legal and regulatory, standards, certification, coordinated administration).

English language reporting notes matters in the strategy update that deal with public funding support for industry development. While direct financial support for hydrogen production is limited to the production of green hydrogen, it is reported that on the application side, other sources of hydrogen could also be supported taking into account greenhouse gas limits and meeting the legal target of climate neutrality.

Policy Developments

  • In May 2021, the Federal Ministry for Economic Affairs and the Federal Ministry of Transport announced the selection of 62 large-scale hydrogen projects to be provided with more than €8 billion in federal and state funds as part of a joint European hydrogen initiative (the Important Projects of Common European Interest – IPCEI). Around €4.4 billion is to be provided by the Federal Ministry for Economic Affairs and up to €1.4 billion from the Federal Ministry of Transport, with the remaining funds to be provided by the federal states. The target is for the projects to be approved by the EC under state aid law before the end of 2021. The selected 62 projects can be found here.
  • In June 2021, the Federal Ministry of Economic Affairs and Energy announced the operational launch of the H2Global Foundation. Through H2Global, renewables-based hydrogen or its derivatives would be purchased abroad with long-term contracts and resold in Germany via annual auctions. The Ministry would be providing €900 million to bridge the gap between the purchase price and the domestic sales prices.   In December 2021, the European Commission approved, under EU State Aid rules, the H2Global scheme. As part of the 2023 federal budget, the German Government plans to make a further Euros 3.5 billion available through the Federal Ministry of Economic Affairs and Energy for new bidding rounds with terms until 2036 (such increase being subject to EC approval under EU State Aid rules). Official releases indicate a further amount of €1.4 billion is available under H2Global for a call for proposals through the Federal Ministry for Digital and Transport. In December 2022, it was announced that the procurement process for the first import of green hydrogen as part of the H2Global programme had begun (for a value of €900 million) for renewable ammonia (Lot 1), methanol (Lot 2), and sustainable aviation fuels (eSAF, Lot 3). At the end of May 2023, the EC Energy Commissioner and the German Federal Minister for Economic Affairs and Climate Action agreed to enhancing the global hydrogen ramp-up by linking the (EC) European Hydrogen Bank initiative with the German H2Global initiative. The joint media releases noted that H2Global would be open to all EU Governments interested in conducting hydrogen tenders; in addition, H2Global would also work together with the European Hydrogen Bank on joint European auctions open to all EU countries (to make a visible contribution to international hydrogen imports). In Jul 2024, H2Global announced the successful bidder of the first H2Global pilot auction for renewable ammonia (Lot 1); no contract was awarded for eSAF (Lot 3).
  • In October 2021, the Federal Ministry of Economics and the Federal Ministry of Education and Research presented a funding guideline for the financial support of international hydrogen projects (PDF, 151 KB). The funding directive specifically supports projects for the production and further processing of green hydrogen as well as for the storage, transport and use of hydrogen in countries outside the EU through an investment grant for the plants. A total of €350 million in funding volume is available for the period up to the end of 2024. For companies in the commercial sector, funding in the form of a non-repayable grant can amount to up to €15 million per project and applicant. Projects of research and scientific institutions can each be funded with up to €5 million euros. Joint projects between companies in the commercial sector and research institutions are also eligible.
  • In November 2021, reports indicated that Germany’s newly formed coalition government announced a series of reforms to accelerate climate policies; among a range of measure, the agreement of the incoming coalition government includes an aim to reach 10 GW of hydrogen electrolyser capacity by 2030 (compared with the 5 GW of capacity included in the National Hydrogen Strategy).  It is reported that the Federal Minister for Economic Affairs and Climate Action is seeking to quickly initiate measures for the development of a green hydrogen economy, based on the opening balance sheet on climate protection, presented by the Minister in January 2022.
  • In January 2022, the Federal Network Agency confirmed the scenario framework for the Gas Network Development Plan 2022-2032 with amendments, including that transmission system operators identify those natural gas pipelines that can be converted from natural gas to hydrogen (with the intention of enabling the rapid development of a hydrogen network).
  • In May 2022, the Federal Ministry of Digital Affairs and Transport announced plans to progress establishment of the Innovation and Technology Centre for Hydrogen (ITZ) which is intended to support companies in their development activities in the transport sector (especially in the highly specialised field of testing and certification). The Centre is also intended to support international cooperation to set standards, amongst other things. The ITZ is to be built at four locations – Chemnitz, Duisburg, Pfeffenhausen, and at a North German cluster for ship and aviation applications (Bremen/Bremerhaven, Hamburg and Stade). The Ministry is providing start-up financing of up to €290 million.
  • In September 2022, the Federal Transport Minister announced the funding decision for around €80 million for “H2GO – National Action Plan for Fuel Cell Production”: H2GO bundles the activities of 19 Fraunhofer Institutes across nine federal states with the aim of significantly reducing CO2 emissions in load mobility. The focus is on the development and rollout of industrial technologies for the economic production of fuel cells, primarily for road-based heavy goods traffic. The overall coordination of the research network with a total of five sub-networks lies with the Fraunhofer Institute for Machine Tools and Forming Technology IWU. The funding period runs until the end of 2025.
  • In October 2022, the EC approved under the Guidelines on State Aid for Climate, Environmental Protection and Energy 2022, €134 million grant funding to support the construction and installation of a large-scale electrolyser at BASF’s Ludwigshafen site, with an annual production capacity of 54 MW.
  • In November 2022, press reports noted that the German government announced plans to provide €550 million for two new green hydrogen funds to help grow the hydrogen industry. According to reports, the Ptx Development Fund (€250 million) would promote investments in hydrogen in emerging nations, while the PtX Growth fund (€300 million) would support German (or European companies with permanent German operations) by subsidising cyclical investments that could contribute to the global market ramp-up of green hydrogen.
  • In December 2022, the German Government launched the procurement procedure for the import of green hydrogen worth €900 million under the H2Global programme. The first deliveries of these sustainable hydrogen derivatives to Germany and Europe are scheduled for the end of 2024.
  • In January 2023, Germany and Norway issued a Joint Statement on Hydrogen Cooperation (part of a wider Joint Declaration on German-Norwegian Partnership on Climate, Renewable Energy and Green Industry) confirming a common intent to ensure a large-scale supply of hydrogen with the necessary infrastructure from Norway to Germany by 2030. The two countries commissioned a joint feasibility study to assess large-scale transport of hydrogen from Norway to Germany, and CO2-transport from Germany to Norway. The results of the study are to be presented in the (northern) spring of 2023.
  • Coincident to this bilateral strategic partnership initiative, RWE AG and Equinor AS announced a strategic energy partnership, including plans to jointly invest in flexible hydrogen-ready gas-fired power plants in Germany with a total capacity of 3 gigawatts by 2030 (the investments being contingent on the construction of a hydrogen pipeline between Norway and Germany and a German hydrogen downstream infrastructure).
  • In January 2023, it was announced in a French-German declaration that the two countries would form a joint working group on hydrogen tasked to prepare conclusions and recommendations on strategic choices regarding hydrogen development (aiming for such by the end of April 2023). Also noted in the declaration was that the two countries would take the necessary steps on a European backbone for hydrogen transport across Europe, including the necessary national and transnational hydrogen infrastructures and, in particular, the extension and connection of existing and planned infrastructures, including extension of the H2Med pipeline to Germany in close cooperation with involved partners.
  • In January 2023, the Federal Maritime and Hydrographic Agency released the Area Development Plan 2023 for the German North Sea and Baltic Sea. Media reports of the Plan note, amongst other things, that the transportation of power from the offshore zone to onshore electrolysers is excluded from the Plan as it is considered an ‘inefficient connection option’. In order to test the viability of offshore wind-based hydrogen production at scale, the Plan defines an area in the North Sea (the SEN-1 Zone) capable of an electrolysis capacity of up to 1GW and which can be connected to shore by pipeline.
  • In February 2023, the Federal Ministry for Digital Affairs and Transport announced a call for funding in support of the construction of electrolysis plants for the production of green hydrogen for the transport sector, with up to €80 million being made available for this purpose (through the National Innovation Programme Hydrogen and Fuel Cell Technology Phase II).
  • In February 2023, the EC approved, under State Aid rules, a direct grant of €55 million by the German Government to support ArcelorMittal in the construction and installation of a green steel demonstration production facility using 100% renewable hydrogen. The plant would have an annual capacity of 100,000 tonnes of direct reduced iron and is envisioned to start operating in 2026 (and is expected to result in the avoidance of over 700,000 tonnes of CO2 in total).
  • In March 2023, media reports indicated that Germany and Denmark had signed a joint declaration of intent that the countries would cooperate on advancing the roll-out of transmission infrastructure for green hydrogen between western Denmark and northern Germany from 2028, enabling a large-scale transmission interconnector for green hydrogen. In October 2024, media reports citing the Danish Energy Ministry indicate that the roll-out has been delayed from 2028 to 2031.
  • In April 2023, the German Government released a Draft Law Amending the Building Energy Act and Amending the Heating Cost Ordnance. English language reporting indicates that, amongst other things, the draft law allows hydrogen-ready gas boilers to be installed until 2035, on the provision that gas networks are switched to run on hydrogen by 1 January 2035. It is reported that from 2045, all heating systems must be operated entirely with renewable energies.
  • In April 2023, the Federal Minister for Economic Affairs and Climate Action together with the Lower Saxony Minister-President handed over a funding notice worth nearly €1billion to Salzgitter AG for its SALCOS project. The Federal Ministry is providing funding as part of the first Important Project of Common European Interest (IPCEI) for hydrogen. Thirty per cent (30%) of the funding will be contributed by Lower Saxony. Under the SALCOS project, a hydrogen-ready direct reduction plant, an electric arc furnace for the production of 1.9 billion tonnes of crude steel, and a 100 MW electrolyser, will be built in the town of Salzgitter (as the basis for later transitioning to the hydrogen-based direct reduction method, which will allow part of the conventional furnace route to be replaced).
  • In May 2023, the German Cabinet endorsed an amendment to the Energy Industry Act (EnWG) that provides, amongst other things, the legal basis for the establishment of a hydrogen core network at the level of transmission pipelines. Media reports indicate that a comprehensive hydrogen network development plan would be ready by the end of 2023.
  • In June 2023, media reports indicated that the German Government plans to introduce a Carbon Contracts for Difference (CCfDs) scheme to help meet its climate ambitions and develop low-carbon technologies. It was reported that the Government has reserved a mid-double digit billion euro amount to finance the measure (though implementation requires approval by the EU Commission).
  • In July 2023, the EC approved, under State Aid rules, German federal and state government funding in support of the ThyssenKrupp Steel Europe decarbonisation project “tkH2Steel” at its Duisburg facility for a total amount of around €2 billion, via an initial grant (of €550 million) and a conditional payment mechanism (of €1.45 billion) to support the first ten years of operations.
  • In July 2023, the transmission system operators published the planning status for a supraregional hydrogen core network by 2032. The design is not finalised; in its pre-optimisation stage, the pipelines presented have a length of around 11,200 kilometres. (See October 2024 entry and link below for the approved network based on a July 2024 submitted application by the transmission system operators.)
  • In August 2023, media reports indicated that the German Cabinet had agreed to a €212 billion allocation to the Climate and Transformation Fund (KTF) for the period 2024-2027, of which €18.6 billion is allocated to hydrogen industry development with €3.8 billion included in the draft federal budget for 2024.
  • In December 2023, the EC approved, under EU State aid rules, a €2.6 billion German measure to support SHS Stahl-Holding-Saar GmbH & Co KGaA (‘SHS’) in partly decarbonising its steel production processes in Saarland, through hydrogen use.  The aid, which will take the form of a direct grant, will support, among other things, the construction of a direct reduction plant and two new electric arc furnaces which will replace the existing blast furnaces and oxygen converters. Natural gas, initially used in the new direct reduction plant, will gradually be phased out of the steel production processes. Ultimately, the new installation will operate using mainly low-carbon and renewable hydrogen.
  • In December 2023, Germany announced its participation in the European Hydrogen Bank’s EU “Auctions as a Service” mechanism, providing an additional €350 million for electrolyser projects in Germany (this being in addition to the €800 million earmarked by the EU Innovation Fund for projects across the EU). The “Tenders as a Service” mechanism under the Hydrogen Bank allows EU Member States to finance additional projects that participate in the call but can no longer be funded from the [EC] Innovation Fund budget. This tool allows Member States to identify and support competitive projects on their territory without the need for a separate national tender. Member States’ participation is voluntary. In April 2024, the EC approved, under EU State aid rules, this €350 million German scheme to support the production of renewable hydrogen.  The approved scheme would support the construction of up to 90 MW of electrolysis capacity and is expected to incentivise the production of up to 75,000 tonnes of renewable hydrogen.
  • In February 2024, media reports indicated that the German Government had agreed to the construction of 10 GW of ‘hydrogen-ready’ gas-fired power plants, including the (reported) provision of construction subsidies of €16 billion (with the subsidies to be sourced from the Climate Transformation Fund). It is reported that the transition from natural gas to 100% hydrogen for these plants is expected to occur between 2035 and 2040.
  • In February 2024, the EC approved, under State aid rules, a €1.3 billion German measure made available in part through the Recovery and Resilience Facility (‘RRF’) to support ArcelorMittal Bremen and ArcelorMittal Eisenhüttenstadt (‘ArcelorMittal’) in decarbonising part of their steel production processes.
  • In March 2024, the German Government launched the first bidding process for the Climate Protection Contracts funding programme. Companies in energy-intensive industries that successfully participated in the preparatory process in the summer of 2023 can apply for 15-year funding for major transformation projects. The funding volume amounts to a total of €4 billion. In October 2024, the German Government handed over the first signed climate protection contracts to 15 German industrial companies with a total value of around €2.8 billion. Of the 15 awarded contracts, five were to companies that plan to decarbonise their production processes with the help of hydrogen. After a preparatory process that began in July 2024, the second-round bidding process is scheduled to begin before the end of 2024.
  • In April 2024, the EC approved, under the State aid Temporary Crisis and Transition Framework, a €2.2 billion German scheme to support investments in the decarbonisation of industrial production processes through (i) investments in the electrification of industrial processes, as well as (ii) investments enabling the substitution of fossil fuels with renewable hydrogen or renewable hydrogen-derived fuels. Under this measure, the aid will take the form of direct grants.
  • In April 2024, media reports indicated that Germany’s coalition government had agreed a financing mechanism for the country’s future hydrogen pipeline network, reporting a 2037 timeline for it to be built.
  • In May 2024, Germany, Italy and Austria signed a Declaration of Intent for the development of the SoutH2 Corridor. The SoutH2 Corridor is to facilitate hydrogen imports from North Africa through southern Italy and is then to be connected to hydrogen demand clusters in Italy, Austria and Germany. The Declaration announcement notes that the SoutH2 Corridor is one of the five large-scale pipelines for hydrogen imports that will facilitate the European import of renewable hydrogen by 2030. (Note: The SoutH2 Corridor has been chosen as a Project of Common Interest.)
  • in May 2024, media reports indicated the German Cabinet approved a draft law to accelerate the availability of hydrogen and to amend further legal framework conditions for the hydrogen ramp-up (as well as to amend other energy law regulations).
  • In June 2024, the EC approved, under State aid rules, an estimated €3 billion German scheme to support the construction of the Hydrogen Core Network (‘HCN’). The HCN is to be the backbone of long-distance transport pipelines for hydrogen in Germany and part of the European hydrogen backbone connecting several Member States.
  • In July 2024, the German Government announced a power plant strategy to be implemented within the framework of a Power Plant Safety Act, implementing the agreement reached with the coalition leaders in February 2024 (see above) and agreed with the services of the European Commission. A total of 12.5 GW of power plant capacity and 500 MW of long-term storage is to be tendered via two pillars (with the first tender call expected by end 2024 or early 2025):
    • Pillar I – 5 GW of new hydrogen-ready gas-fired power plants and 2 GW of hydrogen-ready modernisations would be put out to tender (and which must switch to operation on green or blue hydrogen from the 8th year of their commissioning / modernisation). In addition, there are 500 MW of pure hydrogen power plants that are to run immediately on hydrogen and 500 MW of long-term storage.
    • Pillar II – another 5 GW of new gas-fired power plants would be tendered. These are aimed at contributing to security of supply and represent a “bridge” to a comprehensive, technology-open capacity mechanism, which is expected to be operational from 2028.
  • In July 2024, the German Government announced the official start of implementation of 23 hydrogen projects (including up to 1.4 GW of hydrogen electrolysis production capacity) approved by the EC under state aid law in February 2024 under the Important Projects of Common European Interest scheme Hy2Infra.
  • In October 2024, the Bundesnetzagentur (the Federal Network Agency) approved the hydrogen core network proposed by the gas transmission system operators (as submitted in July 2024). The network is made up of a total of 9,040 kilometres of pipelines that is due to go into operation step by step up to 2032. About 60% of these pipelines are natural gas pipelines that will be converted to hydrogen, while 40% will be newly built. The total investment costs are expected to be €18.9bn.

 

Updated: October 2024