In depth

Need for hydrogen import

As mentioned, in the medium and long term, the German economy will be dependent on imports of green hydrogen from abroad, as the enormous demand for this energy carrier can hardly be met with only the German production capacities from renewable energies. According to the German federal government, hydrogen consumption as of June 2020 was approximately 55 terawatt-hours. By 2030, the German government expects hydrogen demand to increase to around 90 to 110 terawatt-hours. By 2030, German green hydrogen production capacity is expected to increase to 14 terawatt-hours. Despite the planned comprehensive expansion of renewable energy sources in Germany (especially wind and solar energy), it is assumed that these energy sources do not offer enough expansion potential in Germany to satisfy the economy's demand for green hydrogen.

The form in which green hydrogen is to arrive in Germany is still under discussion and strongly depends on the further expansion of the respective hydrogen infrastructure. In principle, hydrogen can be transported in a gaseous form via the existing pipeline infrastructure or in a liquefied form using tank ships. However, transport with tank ships is only cost-effective for long-distance transports.

For this purpose, the German federal government is pursuing establishing hydrogen partnerships with several countries that show great potential for cost-effective green hydrogen production and, thus, can contribute to the long-term security of the supply of green hydrogen for Germany. For selecting the partners, industrial, energy policy and geopolitical aspects play a significant role.

H2Global foundation as a funding instrument

As a key building block of this collaboration strategy, the foundation H2Global was established in June 2021 with headquarters in Hamburg. So far, 16 companies have participated, while up to 70 companies are expected to join in the future. The founding members are, among others, Siemens Energy, ThyssenKrupp, Deutsche Bank, Linde and Uniper. Through this foundation, green hydrogen and other green power-to-X (PtX) products will be purchased abroad under long-term contracts and resold to the industry in Germany via annual auctions. The long-term purchase contracts are intended to create planning and investment security for the industry. The German Federal Ministry of Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie (BMWi)) will support this instrument with EUR 900 million, and will compensate for the difference between supply and demand to enable a rapid and sustainable market ramp-up of the hydrogen products. The delivery of the hydrogen products is expected to start in 2024. Experts assume that primarily green ammonia, green kerosene and green methanol will be supplied via the H2Global foundation.

Status quo of hydrogen partnerships

At the European level, on 2 June 2021, the European Commission jointly agreed with Australia, Austria, Canada, Chile, Germany, India, Italy, Morocco, Norway, Saudi Arabia, South Korea, the United Kingdom and the United States on the "Clear Hydrogen Mission" to advance the development of clean hydrogen worldwide. The goal of this agreement is to reduce the total cost of clean hydrogen to USD 2 per kilogram.

At the German level, several partnerships have been initiated so far and further partnerships are currently being evaluated.

Australia: On 10 June 2021, the "Germany Australia Hydrogen Accord"¹ between Germany and Australia was signed and it provides for three different initiatives, as follows:

• HyGate: This concerns establishing a German-Australian H2 incubator for applied research and pilot projects along the entire hydrogen supply chain.
• Demonstration projects: This concerns support for and the promotion of industrial cooperation in German-Australian demonstration projects in Australian hydrogen hubs.
• Hydrogen trade cooperation: This concerns developing measures to support the import of hydrogen and its derivatives from renewable energy sources from Australia to Germany (H2Global).

Canada: The German federal government signed a memorandum of understanding² with Canada in March 2021. The declared energy partnership with Canada is of a general nature; specific projects have not yet been envisaged, but cooperation is planned in the field of green hydrogen production.

Chile: On 29 June 2021, German Federal Minister of Economic Affairs and Energy Peter Altmaier and Chilean Energy Minister Juan Carlos Jobet signed a memorandum of understanding³ on cooperation in the field of hydrogen. The establishment of a Hydrogen Task Force takes place within the framework of the German-Chilean Energy Partnership, which has been in place since April 2019. The aim is to further intensify cooperation between the two countries, to identify opportunities for the creation of consortiums and for investments, to create suitable framework conditions for the development of a hydrogen economy and to identify concrete joint pilot and demonstration projects.

Japan: In June 2021, the German Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung (BMBF)) published a framework announcement⁴ on the topic of green hydrogen cooperation with Japan. The aim is to promote research cooperation, which generates added value for the participating research and cooperation partners. Through the exchange of knowledge and joint developments, sustainable international knowledge and innovation networks are to be established and a lasting research, development and innovation partnership created. Grants are awarded by way of a nonrepayable grant within the framework of project funding and, as a rule, with a maximum of EUR 600,000 per collaborative project for the German side and for a term of up to 36 months. Project applications have to be submitted by 10 September 2021.

Morocco: The German federal government signed a memorandum of understanding⁵ with Morocco in June 2020 on a partnership in the field of renewable energies. On this basis, Germany and Morocco plan a cooperation, which includes the joint development of green hydrogen production technologies and the construction of a hydrogen production plant with a capacity of 100 megawatts, which will supply Germany in the future.⁶ The infrastructure needed to export the hydrogen by tank ships is also being expanded, with Hamburg and Tangier agreeing in October 2020 to expand their respective port infrastructures.⁷

Saudi Arabia: The German federal government signed a memorandum of understanding⁸ to establish a hydrogen cooperation with Saudi Arabia on 11 March 2021. In this context, a bilateral innovation fund will be established to promote clean hydrogen. Furthermore, the use of German technologies and the involvement of German companies in the implementation of clean hydrogen projects in Saudi Arabia are planned. In perspective, the import of clean hydrogen and its downstream products, such as electricity-based kerosene, from Saudi Arabia to Germany is intended.

South Africa: The German Development Bank (Kreditanstalt für Wiederaufbau) has initiated a program of up to EUR 200 million on behalf of the German government to support the development of green hydrogen projects in South Africa, and has issued a formal request for information⁹ to identify project opportunities for the production, consumption, transportation or storage of green hydrogen and its derivatives in South Africa. These projects could involve the production, transportation, export and/or storage of green hydrogen and green hydrogen products, as well as projects in existing materials and chemical value chains that support a transition from fossil-based processes to those based on green hydrogen. The German Federal Ministry of Environment, Nature Conservation and Nuclear Safety (Bundesministerium für Umwelt, Naturschutz und nukleare Sicherheit (BMU)) also launched the "PtX Pathway Project."¹⁰ This supports the development of sustainable hydrogen/PtX markets as a building block for the energy transition in South Africa, among other countries.

West and Southern Africa: Beyond the above-mentioned partnerships, the BMBF aims to focus in the future on strategic partnerships with various states in West and Southern Africa, as these states have a high potential for the production of green hydrogen. To this end, the BMBF is funding a "Hydrogen Potential Atlas"¹¹ for the region, as part of which 31 countries have already been analyzed, e.g., Nigeria, Niger, Mali and Senegal. The analysis of these states is intended to serve as a basis for future hydrogen partnerships.

International organizations

Germany is committed to developing hydrogen projects through contributions to international organizations such as the International Energy Agency and the International Renewable Energy Agency. In these bodies, cooperation is sought with countries that show enormous potential for green hydrogen production, such as Brazil, India and Indonesia.

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1 BMWi, link: https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2021/06/20210613-unterzeichnung-einer-absichtserklaerung-zur-gruendung-einer-deutsch-australischen-wasserstoffallianz.html.

2 BMWi, link: https://www.bmwi.de/Redaktion/DE/Downloads/G/gemeinsame-erklaerung-deutschland-kanada-energiepartnerschaft-deutsch.pdf?__blob=publicationFile&v=4; https://www.energypartnership.cl/newsroom/chile-and-germany-sign-green-hydrogen-agreement/#c9197.

3 BMWi, link: https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2021/06/20210629-absichtserklaerung-gruendung-deutsch-chilenische-taskforce-wasserstoff.html.

4 BMBF, link: https://www.bmbf.de/bmbf/shareddocs/bekanntmachungen/de/2021/06/3672_rahmenbekanntmachung.

5 BMWi, link: https://www.bmwi.de/Redaktion/DE/Downloads/G/gemeinsame-erklaerung-deutschland-marokko-energiepartnerschaft.pdf?__blob=publicationFile&v=3.

6 BMZ, link: https://www.bmz.de/de/entwicklungspolitik/wasserstoff.

7 AHK, link: https://marokko.ahk.de/infos/news/news-details/kooperationsvertrag-zwischen-dem-hamburger-hafen-und-tangermed.

8 BMWi, link: https://www.bmwi.de/Redaktion/DE/Downloads/M-O/memorandum-of-understanding-wasserstoff-saudi-arabien-und-deutschland.pdf?__blob=publicationFile&v=4.

9 Link: https://www.csir.co.za/sites/default/files/Documents/Green-hydrogen-RFI-2021.pdf.

10 BMU, link: https://www.international-climate-initiative.com/de/details/project/langfristige-dekarbonisierungspfade-basierend-auf-powertox-20_I_389-3167.

11 Link: https://www.h2atlas.de/de/hydrogen-tool.