Sometimes a moment is enough to realize the magnitude of a task. Like last December when energy prices went through the roof. Because gas is scarce in Europe and the demand in Asia has increased enormously, because electricity from coal and nuclear power plants is becoming less and less and dark geopolitical clouds are hanging over Eastern Europe.
No wonder Germans worry about their energy bills. No wonder that industrial companies fear for their existence when energy costs are suddenly higher than sales. Thankfully, that was just a snapshot. The prices have come down a bit since then. But the situation has made it clear that our country’s economic strength is not set in stone. It depends on many factors; a secure and affordable energy supply is undoubtedly one of them.
And now of all times should the energy transition be accelerated? Should wind and solar power replace nuclear and coal? And produce expensive green hydrogen? Yes. Just now!
Because the faster Germany becomes climate-neutral, the sooner the costs will fall.
Wind power and solar systems are already significantly cheaper today than they were in the past. This development will be repeated for hydrogen. Of course, the transition from the conventional to the renewable age will be costly.
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That is why the major challenge is to shape the energy transition in such a way that industry remains competitive. Politicians have recognized this and want to take countermeasures. That’s right, because our economy is not being rebuilt on the fly. The good news is that it is in our own hands as a society.
Green hydrogen will be crucial
Green hydrogen will be crucial to the success of this transformation. Only with it can industrial processes be decarbonized for which electrification is not an option – for steel producers, chemical companies or heavy goods traffic it is the only way to achieve their climate goals.
But hydrogen is still scarce. In order for it to become as available and affordable as tap water, a functioning hydrogen economy is needed – with green generation capacities, producers, traders, customers and, above all, infrastructure. All of this must be set up as quickly as possible, integrated, simultaneously and pragmatically.
Building up is to be taken literally. New buildings are needed everywhere. Starting with the wind farms and solar systems that produce the renewable electricity for the electrolysers. About massive electrolysis capacities. Right down to the pipelines (repurposed where possible) through which the energy source is transported from the producer to the consumer. And because reserves are required, storage is also becoming indispensable.
That sounds complex, but it can be solved. We’re not starting from scratch. National and European hydrogen strategies have defined ambitious goals. The task now is to support them with suitable instruments. The new federal government wants to expand the electrolysis capacity for the production of green hydrogen to ten gigawatts by 2030. Twice as much as previously targeted. Nevertheless, it will only be enough to cover a tenth of the hydrogen demand of seven million tons per year that experts expect for 2030.
The framework conditions for everyone involved must be right
In Germany and throughout Europe, companies have come together to form hydrogen consortia. Especially in the ramp-up phase of the hydrogen economy, integrated projects are important, for which actors along the value chain come together and whose projects complement each other like cogs to form a functioning system.
One example is the GET H2 project at the RWE site in Lingen, one of the most advanced projects in Germany. In December, the company started planning approvals for the first two 100-megawatt electrolysers with the industrial gas specialist Linde.
But even we can’t really get started yet. First of all, the general conditions have to be right for everyone involved at the same time. And so that mature projects like GET H2 can start on time, companies need financial planning security.
“Important Project of Common European Interest” (IPCEI) projects are transnational, important projects of European interest. Germany has promised eight billion euros in federal and state funds for this. Appropriate funding commitments are needed in the spring, otherwise the schedules cannot be met. It is crucial to get the entire system going. It’s like a big tent: if you want to set it up, all the supports have to be erected at the same time, otherwise the structure will remain on the ground.
Therefore, framework conditions should now be created that enable pragmatic investment decisions at all stages of the value chain. This also includes setting the course for hydrogen imports. Because even in the best-case scenario, only a fraction of the hydrogen required in this country will be produced.
There is not enough time for perfect regulation down to the very last detail. Example: the green electricity criteria that are being discussed at European level. They will determine which renewable electricity can be used to produce green hydrogen. The currently discussed idea of only allowing electricity from new, unsubsidized wind power and solar systems makes no sense
Do not delay the start of the hydrogen economy
At least not if industrial companies are to switch to climate-friendly production with green hydrogen as quickly as possible. In practical terms, this proposal means that it will be years before such new wind and solar power plants come online.
No one builds electrolysers on that basis. And no steel producer converts its blast furnace from coke and no refinery from gas to green hydrogen. Such companies need certainty that the green energy source will be reliably available in sufficient quantities. In short: Such suggestions don’t get the whole system going, it stalls.
The further the start of the hydrogen economy is delayed, the greater the uncertainty among companies. This increases the risk that future investments will be made elsewhere.
Nobody can seriously want that. Instead of textbook regulation, pragmatism is the order of the day. We all know that everything goes green overnight – that won’t work. But with cleverly chosen intermediate steps and compromises, we will drastically reduce our CO2 emissions in the key decade of the energy transition.
I am convinced that the more pragmatic we act, the faster we will approach the common goal of a climate-neutral society.
dr Sopna Sury is Chief Operating Officer Hydrogen at RWE Generation SE
More: Hydrogen is indispensable in the heating market – A plea for the transformation from the managing director of Stadtentwasserung Dresden, Gunda Röstel