Success of German Hydrogen Strategy Depends on Production Capacities in Partner Countries

“Germany must import green hydrogen due its low levels of renewable energy potential. Following the launch of the National Hydrogen Strategy in 2020, hydrogen has been integrated into many existing partnerships and new partnerships have been formed with a strong focus on hydrogen cooperation. The international reach of the German strategy, which engages with more than fifty non-EU countries, is quite unique," says lead author Rainer Quitzow (RIFS). Rather than merely seeking to build a domestic hydrogen economy with regional supply relationships, Germany’s strategy aims to create a global hydrogen market.
 
Other countries with low potential for renewable energies have taken a different tack: Japan and South Korea, for example, have devised strategies that are more regional in their outlook, focusing on bilateral relationships in the Asia-Pacific and the Middle East, and which embrace all types of hydrogen production. According to the researchers, this may enable these countries to get a head start in the application of hydrogen technologies and achieve their domestic climate targets sooner. However, rather than reducing emissions, this approach will merely shift GHG emissions to regions where hydrogen is produced from natural gas or even coal. Depending on the specific end-use, this could even translate into a net increase in emissions. 

Now is the time to establish viable hydrogen supply chains

The researchers emphasize that Germany's international ambitions extend far beyond the establishment of bilateral supply relationships. Indeed, Germany is playing an important role in the development of international hydrogen supply chains. “Policy plays a central role during the early stages of development of new green industries. The German government's H2 Global instrument aims to foster the development of international hydrogen supply chains – from production through to delivery to a northern European port, such as Rotterdam or Hamburg. The scheme uses an innovative double auction mechanism in which both producers and buyers participate as bidders," explains co-author Adela Marian. Unlike Japan, for example, the German government is clearly committed to a competitive approach.

Germany also plays a leading role in capacity- and competence-building in developing and emerging countries. This includes activities in the field of energy-related development cooperation, for example in Namibia, India, Morocco, Brazil and South Africa. In West Africa, the German government is supporting capacity and skill development by funding a Master's Graduate Programme on green hydrogen technologies at several universities. 

More ambition needed in cooperation with other hydrogen frontrunners 

One shortfall in the German hydrogen strategy identified by the authors is that far less weight is attached to sustainability-related issues in dialogues with other hydrogen frontrunner countries and multilateral bodies than is the case in cooperation with developing and emerging nations. “Cooperation with other frontrunner countries in developing sustainability standards would provide an entry-point for promoting Germany's priorities in international markets”, explains co-author Almudena Nunez. However, the revised strategy seems to indicate that the government has recognized this deficit and may increase its efforts to promote international standards.

This is particularly important in the area of so-called “blue hydrogen”, which is produced using fossil fuels in combination with CCS (the capture and storage of CO2 emissions). Germany is cooperating closely with Norway in this area. According to the researchers, blue hydrogen could be utilized during a transitional phase - but only if methane emissions during natural gas extraction and transportation and later CO2 emissions during storage can be strictly managed. Ambitious international standards and a high degree of transparency will be necessary to achieve this. A question mark also hangs over the issue of whether blue hydrogen will actually be available soon enough to play a meaningful role in the relatively short transition phase.  

Rainer Quitzow, Almudena Nunez, Adela Marian, Positioning Germany in an international hydrogen economy: A policy review, Energy Strategy Reviews, Volume 53, 2024, 101361, ISSN 2211-467X, https://doi.org/10.1016/j.esr.2024.101361