The German government sees hydrogen as a key element in the successful transformation of energy systems. In order to meet the various demands for hydrogen and hydrogen-based energy sources in the industrial, transport, electricity and heating sectors, the government is planning not only to increase domestic hydrogen production but also to open up import channels with European and non-European partner countries. This should ensure that sufficient hydrogen is available in the future and that decarbonisation in Germany can be driven forward.
How much hydrogen will Germany need?
Germany's hydrogen demand currently stands at 55 TWh per year and has so far been met mainly with hydrogen produced from natural gas. In its updated National Hydrogen Strategy (NWS), the German government assumes that this demand will increase significantly in the coming years. For the year 2030, a total hydrogen demand of about 95 to 130 terawatt hours (TWh) is expected. This corresponds to more than a tenth of the energy demand currently covered by natural gas in Germany. The scenarios of the Federal Ministry of Economics and Technology (BMWK) also assume that the demand for hydrogen in Germany will continue to grow until 2045. For example, the BMWK estimates that the electricity sector alone will require 80 to 100 TWh of hydrogen, while industry is expected to require 290 to 440 TWh by 2045.
The hydrogen spectrum
There are different ways of producing hydrogen. However, in the context of decarbonisation as part of the energy transition, the carbon footprint of the different processes and the origin of the feedstocks are in the spotlight. Although hydrogen itself is a colourless gas, different hydrogen colours are distinguished depending on the production process. The main colours are green, turquoise, blue and grey.
Green hydrogen is produced by electrolysis of water using only electricity from renewable energy sources. Regardless of the electrolysis technology used, the production of hydrogen is CO2-free as 100% of the electricity used comes from renewable sources.
Turquoise hydrogen is hydrogen produced by the thermal decomposition of methane (methane pyrolysis). Instead of CO2, solid carbon is produced, which can no longer escape into the atmosphere. For the process to be carbon neutral, the high-temperature reactor must be powered by renewable energy sources and the carbon must be permanently sequestered.
Grey hydrogen is produced from fossil fuels. During production, natural gas is usually converted into hydrogen and CO2 with steam under heat (steam reforming). The CO2 is released into the atmosphere, so the process has a significant carbon footprint: producing one tonne of hydrogen generates about 10 tonnes of CO2.
Blue hydrogen, on the other hand, is grey hydrogen whose CO2 is captured and stored during production (carbon capture and storage, CCS). The CO2 generated during hydrogen production is therefore not released into the atmosphere and hydrogen production can be considered carbon neutral.
To ensure the rapid development and expansion of the hydrogen market and to meet the expected demand, especially in the transition phase, the government plans to use other types of hydrogen in addition to green hydrogen. Although climate-neutral green hydrogen is the first (but currently the most expensive) choice, turquoise and blue hydrogen will also be used, subject to ambitious greenhouse gas emission limits.
Expanding domestic hydrogen production
In the coming years, hydrogen, which is currently produced mainly from natural gas, is to be increasingly supplemented or replaced by the production of green hydrogen. In its hydrogen strategy, the German government states that domestic electrolysis capacity should be increased to at least 10 gigawatts (GW) by 2030. These 10 GW can produce around 28 to 35 TWh of hydrogen per year. In this way, Germany wants to ensure that demand is met with short transport routes and create the basis for a domestic market that covers all stages of the value chain, from production to distribution and marketing.
In general, German energy suppliers and experts agree that the enormously energy-intensive production of green hydrogen will only be economically viable if the costs of using renewable energies such as wind and solar continue to fall. In addition, the 'greening' of power generation in Germany is far from complete, while the demand for electricity is growing in all sectors. Hydrogen production will then also have to compete with renewable energies.
However, a study commissioned by the NRW Renewable Energy Association in July 2023 also suggests that domestic green hydrogen is more competitive today than it was a few years ago. Domestic production could be a much more economical alternative, especially compared to shipping from distant regions of the world. The main reason for this is the lower investment cost of electrolysers.
Importing hydrogen by pipeline and ship
As domestic electrolysis can only supply part of the hydrogen needed in Germany in the coming years, hydrogen imports will play a crucial role. Around 50 to 70 per cent of the projected demand up to 2030 – equivalent to up to 90 TWh – will be met by imports from abroad. In general, large quantities of hydrogen can be imported in two ways: by pipeline or by ship. Pipeline transport is comparatively cheap, especially if it uses the existing gas network. However, as pipeline import is not feasible everywhere, some of the required hydrogen will have to be imported by ship. However, the transport of liquefied hydrogen by ship is very time-consuming and expensive, so the transport of hydrogen in bonded form as so-called vectors represents a further and possibly better option. In addition to ammonia, liquid organic hydrogen carriers (LOHC) can also be considered.
For the future landing of hydrogen, the construction of import terminals and the development of hydrogen transport infrastructure in ports should be accelerated. The terminals currently being built for LNG (liquefied natural gas) have an important role to play in this context. They should be built in such a way that they are "H2-ready", i.e. they can be converted to ammonia with little economic effort. A start has already been made with the LNG terminal built in Wilhelmshaven last December, and a second LNG terminal is due to be built there this year.
Partner countries Norway and Denmark
From the perspective of the NWS, the import of hydrogen and especially its derivatives until 2030 should be largely ship-based, despite the high costs of building a shipping infrastructure with possibly rather short utilisation times. After 2030, pipeline-based imports of green hydrogen from Europe and neighbouring regions will be increasingly developed. According to the NWS, the transport of ammonia in particular will play a role in the short term, while imports of green methane, synthetic methanol, LOHC (Liquid Organic Hydrogen Carrier) and liquid hydrogen will become more important in the medium to long term.
Within the EU exchanges via pipeline projects with Norway and Denmark, are already more advanced. Blue hydrogen imports from Norway are likely to play a particularly important role in the market ramp-up phase. Last year, the German Minister of economics Robert Habeck signed a German-Norwegian declaration of intent to build a pipeline through the North Sea with the participation of the Norwegian energy companies RWE and Equinor. The pipeline will initially transport blue hydrogen, followed by green hydrogen.
SEFE has also recently entered into a similar cooperation with the Norwegian company Gen2 Energy, which specialises in the development, construction, maintenance and operation of a green hydrogen value chain. The company aims to develop several large green hydrogen production plants in Norway and Northern Europe. The aim of the German-Norwegian cooperation is for Gen2 Energy to supply green hydrogen from its production plant in Mosjøen, Norway, and for SEFE to supply the green energy carrier to customers in the German and North-West European markets.
