Germany Turns to Hydrogen in Quest for Clean Energy Economy

(Bloomberg) -- Hydrogen, overlooked for decades by Germany’s energy planners, is gaining ground as alternative to fossil fuels as the nation scrambles to recover lost ground on its climate promises.

From government officials to utilities and power grid operators, hydrogen is being touted as a cleaner way to break Germany’s dependence on coal. In the past three weeks, the Economy Ministry unveiled 20 labs to research the fuel, and natural gas pipeline owners asked for rules that would allow them to carry more of the lightest element.

Hydrogen releases only water when burned and therefore is considered cleaner than coal, oil or gas, which emit greenhouse gases. That’s already prompted policymakers in Japan, the China and Britain to encourage using hydrogen.

“Hydrogen is one of the hottest topics in the energy transition in the country at the moment,” said Inga Posch, managing director at FNB Gas e.V., the federation of Germany’s gas network operators. “The interest from the private sector is really huge. Germans have been too focused on the electrification of the economy, so we are starting on the process with a delay.”

Germany Turns to Hydrogen in Quest for Clean Energy Economy

Germany is already home to the first hydrogen-powered train, but it was only in July that Economy Ministry Peter Altmaier declared his goal for the nation to become “the number one in the world” for the technology.

Japan’s automakers have put hydrogen fuel cells in their cars, while consumers there are buying home energy units using the fuel. China and Britain also are investigating the technology, with Royal Dutch Shell Plc seeing it as reliable and easy to transport.

What’s held back hydrogen for decades is the cost and complexity of the technology. Current production methods are expensive, and the fuel is volatile and highly flammable. For many, it conjures up the image of the Hindenburg disaster, when a giant hydrogen-filled airship burned in half a minute when it caught fire in 1937.

In Germany, hydrogen is now seen as an important option to fill the energy gap left from the impending closure of nuclear stations and the phaseout of coal-fired power. Chancellor Angela Merkel pledged to cut in half carbon dioxide emissions by 2030 compared with 1990 levels. That ambition was endorsed in the Paris Agreement on climate change in 2015, though progress toward that goal has slipped since then.

To get emission cuts back on track, the government announced in July that 20 new research laboratories will receive a total 100 million euros ($110 million) a year to test new hydrogen technologies for industrial-scale applications. Even more money is earmarked for labs in “structural change” regions, or those most affected by the nations’ shift.

Germany’s biggest companies are already investing in hydrogen
  • Siemens AG announced in July it’s building a hydrogen laboratory in eastern Germany. Merkel hailed the move as a “milestone” in turning an area still dependent on lignite mining into a pool of innovation.
  • EON SE, a major utility, is working on a project to blend hydrogen into natural gas grids at much higher rates than today.
  • RWE AG and Innogy SE are jointly evaluating a large-scale facility to produce green hydrogen close to Innogy’s Westereems wind farm in the Netherlands.
  • Uniper SE has a pioneering power-to-gas plant, the world’s first facility to turn wind energy into a stored asset in the gas grid. Finnish utility Fortum Oyj has cited the business as one of its reasons for taking a stake in Uniper.

Hydrogen may be a good fit for Germany as its gas infrastructure can transport and store large quantities of the fuel, according to FNB’s Posch. Her group is calling for the natural gas system to carry a mandated share of renewable and decarbonated gases, including biomethane, synthetic methane and hydrogen, starting at 1% in 2021 and rising to 10% by 2030.

Germany Turns to Hydrogen in Quest for Clean Energy Economy

Germany’s overall consumption of natural and so-called green gases is expected to grow 7% from 2017 to 2030, according to FNB. But hydrogen demand in the transport and industry sectors is set to surge 37% by 2030.

“Green gas must be part of the solution, because it can use existing infrastructures and applications and thus significantly reduce the costs and risks of the energy system’s transformation,” says Timm Kehler, chairman at the gas industry lobby group Zukunft Erdgas.

German Grid Cos Call for Green Gas Quota to Meet Climate Goals

So-called blue hydrogen is produced by breaking down the natural gas molecule, a relatively cheap option but still not a carbon-free one. Green hydrogen is made by converting wind or solar electricity into hydrogen through electrolysis -- a zero-emission but expensive process that consumes a lot of energy.

“For hydrogen, business cases are still slow at the moment,” said Thomas Brehler, global head of power, renewables and water at KfW IPEX-bank, one of Europe’s largest energy financiers. “We are far away from large hydrogen projects.”

Installing policies and incentives now could help cut costs in the long run, according to the International Energy Agency, in the same way that decades of subsidies and grants for photovoltaic cells and wind turbines helped make many renewable technologies cost-competitive with fossil fuels across the world.

If the technology advances and gets to an industrial scale, it might solve one of Germany’s toughest challenges: keeping energy supply constant even when the sun doesn’t shine and the wind doesn’t blow.

“The application of hydrogen for energy is new and there is a belief that it has a great future,” said Ulrich Schmidtchen, spokesmen at the German Hydrogen and Fuel Cell Association. “Industry is investing and politics usually follows suit.”

©2019 Bloomberg L.P.

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