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23 March 2022

Germany ramps up search for hydrogen to replace Russian gas

By Harry Morgan

In its scramble to wean itself of Russian energy imports, Germany has accelerated its ambitions to become the hub of Europe’s future hydrogen economy. This week, new import agreements with the UAE, as well as talks of a hydrogen pipeline with Norway, are starting to redraw the lines that have defined the global energy system for decades.

The latter of these deals came about last Thursday, with Germany climate minister Robert Habeck signing a joint statement with Norway’s Prime Minister Jonas Gahr Store to initiate plans for large-scale hydrogen exports. They cited the need to reduce Europe’s dependance on Russian energy imports as quickly as possible, while pairing the shift with the transition from natural gas to clean technologies. Germany is currently dependent on Russia for up to two-thirds of its natural gas demand and faces tight supply issues now that it has halted the development of the Nord Stream 2 pipeline.

With a focus on green hydrogen and derivatives such as ammonia, the pair will begin by carrying out a feasibility study on the development of a pipeline to transport green hydrogen produced by renewables in Norway into Europe’s largest economy.

Spearheaded by Germany’s new green-inclusive coalition, it is encouraging that the focus of the venture has been placed on ‘green’ hydrogen, rather than ‘blue hydrogen’ produced using natural gas with carbon capture. However, the two countries have not ruled out the use of blue hydrogen to make the pipeline economically viable in its infancy, before green hydrogen production can be scaled up.

It may be worth keeping an eye on Norway’s intentions here. The country’s state-controlled fossil fuel major Equinor has been a key proponent of blue hydrogen as it tries to find long-term prospects for its doomed natural gas business. Norway currently supplies 20% to 25% of gas used in the EU and UK – mostly through subsea pipelines – and has recently approved plans to extend the production at three key offshore gas fields in the country.

With blue hydrogen offering neither an economic nor decarbonizing alternative to natural gas, it is vital that Germany keeps its hydrogen ambitions centered around renewables.

The country’s issue here is that its lack of natural resources for renewables will be largely unable to satisfy its rapid electrification of transport, industry, and heating.

A Rethink Energy report released this week outlines how a 250% growth in zero carbon generation by 2050 will be outweighed by a 320% growth in demand for electricity and green hydrogen. While 54% of Germany’s power is currently provided from zero carbon sources, by 2050 the figure will have fallen to just 46%, leaving the rest dependent on imports. The success of Germany’s net zero push to reach net zero emissions by 2045 depends on how green these imports are.

The immediate allure of blue hydrogen as a steppingstone to green was also seen this week through the collaboration of Uniper, Hydrogenious, Jera, and Adnoc, as part of a plan to initially transport blue hydrogen between the two countries. Adnoc also signed first supply deals for test deliveries of blue ammonia with German copper producer Aurubis, RWE, utility Steag, and GEWEC.

The plan will see a so-called liquid organic hydrogen carrier (LOHC) technology used to transport an unspecified amount of hydrogen per year from the UAE to Germany. Developed by Hydrogenious, LOHC aims to provides a safe, low cost means of bulk hydrogen distribution by bonding hydrogen molecules to a non-flammable liquid called benzyl toluene.  Its energy density claims the ability to store approximately five times more energy compared to compressed hydrogen, according to the company.

Elsewhere this week, fellow German utility RWE announced plans with Gasunie and KfW to build a terminal for the import of green ammonia at Germany’s North Sea port of Brunsbuttel. Siemens Energy, Lufthansa and Masdar also are working on a project for the production of synthetic jet fuel, called ‘Green Falcon,’ linked to an initial 20 MW electrolyzer facility.

With Germany pledging €200 billion over the next four years to dissociate its energy system with Russia, as well as a previous €900 million package to support green hydrogen, companies and countries alike are racing to secure a chunk of Germany’s hydrogen provision. As part of the country’s national hydrogen strategy, announced last year, the country plans to use up to 3 million tons of hydrogen per year by 2030 – most of which will be imported, given that there are plans for just 5 GW of electrolysis capacity. Rethink Energy believes that this figure will rise to nearly 37 million tons per year by 2050.

Prior to Russia’s invasion of Ukraine, Germany had already signed agreements to secure hydrogen imports from Canada, Chile, Japan, Morocco, Saudi Arabia, the Netherlands, and the United Arab Emirates. Other prospects will include Denmark, which this week approved a new green hydrogen tender and target to installed between 4 GW and 6 GW of electrolysis capacity by 2030.

The country recently also pushed its $1 billion Berlin H2Global initiative through the European Commission, which aims to subsidize the production of green hydrogen projects in non-EU countries for import. Many expect that it will be cheaper for Germany to source hydrogen this way than through using its stretched domestic renewables resources, with the funding set to kickstart around 500 MW of electrolyzer projects.