Germany will allocate €8 billion for the implementation of 62 hydrogen projects

    07 Jun 2021

    The German government has identified 62 large-scale hydrogen projects that will receive government funding in the amount of €8 billion under the European Union’s IPCEI program (important projects of European interest), Euraktiv reports.

    Germany’s Federal Ministry of Economics (BMWi) and the Federal Ministry of Transport (BMVI) selected 62 large-scale hydrogen projects this week, which are to be state-funded as part of a joint European hydrogen project (Important Project of Common European Interest, IPCEI), BMVI states.

    “We want to become the world leader in hydrogen technology. To this end, we are combining our efforts in Europe and initiating huge investments in the hydrogen technologies of the future in the framework of the first joint European hydrogen project. We provide more than €8 billion from federal and regional funds to 62 German hydrogen projects covering the entire production chain – from the production and transportation of hydrogen before its industrial application,” – said on June, 4, the Minister of Economy and Energy of Germany Peter Altmeier, the words of which are quoted in the release of the ministry.

    50 projects will be financed by the Ministry of Economy and Energy (€4.4 billion), 12 – by the Ministry of Transport (€1.4 billion), the rest of the funds will be provided by the federal lands.

    It is noted that within the framework of the implementation of projects, priority is given to the construction of electrolyzers for the production of “green” hydrogen and the necessary infrastructure for its transportation.

    In addition, the government has identified the steel and chemical industries as key sectors where the use of hydrogen could significantly reduce CO2 emissions.

    At the same time, the government intends to invest in projects for the production of hydrogen fuel cells, as well as trucks and cars running on hydrogen, and in the development of a nationwide and cross-border network of hydrogen refueling stations.

    As reported, in June 2020, Germany adopted the National Hydrogen Strategy, which is based on the production of “green” hydrogen from renewable energy sources. To partially supply Germany with “green” hydrogen, it is planned to put into operation electrolysers and renewable energy plants for its production by 2030 with a total capacity of up to 5 GW.

    Until 2024, the EU envisages the installation of at least 6 GW hydrogen electrolyzers and the production of up to 1 million tons of renewable hydrogen. At the stage from 2025 to 2030, hydrogen should become an integral part of an integrated energy system, in which the capacity for electrolysis of renewable hydrogen will be at least 40 GW.

    Germany said on Friday (28 May) it would invest €8 billion in 62 large-scale hydrogen projects, including electrolysers and pipeline infrastructure, as part of the country’s bid to decarbonise its industry and become a world leader in pioneering fuel technology.

    The economy and transport ministries selected 62 of 230 large-scale projects to receive state funding, which is expected to be matched with €33 billion of additional private investments.

    The infrastructure are classified as Important Projects of Common European Interest (IPCEI), meaning they will be able to receive government funding without having to observe the EU’s usually strict state aid rules.

    “We want to become the world’s number one in hydrogen technologies,” said Economy Minister Peter Altmaier, pointing to the steel and chemical industries as key sectors where the use of hydrogen fuel could result in a significant reduction in carbon emissions.

    The lion’s share of the funding will be directed towards building electrolysers and hydrogen pipelines. Germany’s major steel manufacturers will receive €2 billion between them in funding for hydrogen related decarbonisation projects.

    “Companies competing internationally depend on political support for climate protection investments in order to make a decisive contribution to achieving climate targets,” said Hans Jürgen Kerkhoff, president of the German Steel Federation (WV Stahl).

    Steel production has attractive prospects for cutting emissions, Kerkhoff added, given that a tonne of carbon neutral hydrogen could prevent 26 tonnes of carbon emissions in steel-making.

    “This is an important milestone on the road to climate-neutral steel production and a strong signal from the German government,” said Nils Pfennig of steelmakers ThyssenKrupp, which is to receive funding for a hydrogen project in Duisburg.

    Steel decarbonisation projects near the French border have alarmed German environmental NGO Friends of the Earth Germany (BUND) that cross-border hydrogen networks risk subsidising hydrogen produced with nuclear power, which Germany itself is phasing out.

    “The German government must now immediately clarify from which energy sources the steel industry in Saarland is to be supplied. Should this also involve the use of nuclear hydrogen produced with French nuclear power, funding for the Saarland projects must be stopped,” said Olaf Bandt of BUND.

    Hydrogen production is another key focus of the investment, with selected projects set to add 2 gigawatts (GW) of electrolyser capacity. Germany’s hydrogen strategy foresees the country presiding over 5 GW of electrolyser capacity by 2030.

    Infrastructure to transport hydrogen is another priority, with funding allocated for 1,700 kilometres of new pipeline along the German-Dutch border and running west to east across Germany.

    Meanwhile BASF, the world’s largest chemical manufacturer, will receive funding for carbon-free hydrogen manufacturing projects and hydrogen use projects such as ammonia production and sustainable aviation fuels.

    Transportation related projects such as fuel cell systems and vehicles are also slated to receive funding, albeit a smaller share than industry.

    “Transport is still more than 95% dependent on the use of fossil fuels,” said Transport Minister Andreas Scheuer. “Green hydrogen and fuel cells – across all modes of transport – are a super complement to battery-only vehicles,” he added.

    The European Commission will seek to position Europe as a global leader on hydrogen with a new industry-led alliance set to be unveiled on Wednesday (8 July).

    The projects, which all fall under the remit of the IPCEI scheme, benefit from not having to abide by the EU’s strict state aid rules. The move had been criticised by some EU states and NGOs as it could be misused as a way to provide state aid to gas-based infrastructure and hydrogen production.

    The 62 projects selected must now pass state aid muster at the European Commission to progress further.

    Germany has shortlisted 62 hydrogen production and infrastructure projects as Important Projects of Common European Interest (IPCEI), the energy ministry said May 28. IPCEI status would remove potential conflicts with EU state-aid rules, clearing the way for Eur8 billion ($9.6 billion) of national subsidies with the ministry hoping to clear projects before the end of this year.

    The projects were selected from 230 proposals, covering the whole value chain from electrolyzers to pipelines.

    “We have taken a big step on the way to climate neutrality for our economy with several million tons of CO2 to be saved by these projects especially in the steel and chemical industry,” Energy Minister Peter Altmaier said.

    The energy ministry has selected 50 projects including electrolyzer projects with a combined capacity of over 2 GW, and hydrogen pipelines with a length of 1,700 km.

    The transport ministry selected a further 12 projects in the mobility sector for development and production of fuel cell systems and vehicles as well as refueling infrastructure.

    RWE said three projects it is involved in were shortlisted with over 400 MW electrolyzer capacity proposed at Lingen (300 MW), Rostock (100 MW) and offshore Heligoland (28 MW).

    It expected funding decisions to be released in spring 2022 with matchmaking across Europe to start June 8.

    “Together with partners, RWE is currently forging ahead on 30 hydrogen projects [across Europe],” according to RWE’s head of hydrogen, Sopna Sury.

    Meanwhile, Vattenfall said its proposal for a 100 MW electrolyzer at the former coal plant Hamburg-Moorburg was shortlisted.

    All steel companies active in Germany (ArcelorMittal, Stahl Holding Saar, Salzgitter Stahl and ThyssenKrupp Steel) presented proposals.

    These, such as BASF’s proposal for the Ludwigshafen chemical site, showed some of the biggest potential to reduce emissions, the statement said.

    The government aimed to achieve formal EU state aid clearance for selected projects before the end of this year.

    In addition to the state aid consisting of Eur4.4 billion from the energy and economy ministry, Eur1.4 billion from the transport ministry and Eur2.2 billion from states, the projects would trigger some Eur33 billion in private investment, the ministry said.

    S&P Global Platts assessed the cost of renewable hydrogen (PEM electrolysis with capex) at Eur5.25/kg on May 27, more than double the cost of natural gas-derived hydrogen with CCS (Netherlands TTF MA gas, SMR with CCS, capex) at Eur2.16/kg.

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