Anyone who thinks that energy and climate protection policy is only an issue during election campaigns or coalition negotiations is wrong. These two closely related areas will be at the center of German politics over the next few decades.
Now the Federal Republic cannot save the world climate on its own. But the world is looking at Germany with particular interest because it is one of the few countries that has committed itself to a double turn in energy production: reducing the use of fossil fuels such as coal, mineral oil and natural gas in favor of renewable energies while at the same time renouncing nuclear power Option to reduce greenhouse gas emissions.
In addition: Germany, with its high proportion of industry, is dependent on a stable energy supply like hardly any other country. Therefore, high hopes rest on the development of a hydrogen economy, as the Federal Government’s “National Hydrogen Strategy” published in June 2020 shows.
Hydrogen is considered to be a key element for a successful energy transition – the chemical element is intended to replace fossil fuels, raw materials and intermediate products and thus decarbonise those areas of the economy where electricity cannot be directly used from renewable sources, such as material use in manufacturing .
Hydrogen does not occur in nature
In the iron and steel industry, for example, great hopes are placed on being able to reduce CO2 emissions by 95 percent through the use of hydrogen. The problem with this is that hydrogen does not occur naturally and its production is very energy-intensive. Hydrogen can therefore only become a climate saver if large quantities of cleanly generated electricity are available.
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The federal government is therefore calling for the economy to be converted in a climate-neutral manner on the basis of CO2-free “green” hydrogen. It is produced by splitting water with the help of electricity generated from renewable sources. But that is no more than a dream of the future. Currently, around 55 terawatt hours (TWh) of “gray” hydrogen based on natural gas are processed in Germany every year, that is around 3.3 million tons of hydrogen. The production of gray hydrogen causes high CO2 emissions.
The federal government expects domestic hydrogen demand to double by 2030. In the long term, most of the demand is to be imported, but it is planned that around 14 TWh of green hydrogen will be produced in Germany over the next eight years, i.e. around 850,000 tons. According to the latest statements by Federal Minister of Economics Peter Altmaier, it should even be 19 TWh. Around 20 TWh of renewable energy were required to produce 14 TWh of green hydrogen. Around a third of the amount of energy generated is therefore irretrievably lost.
The critical factor when building sufficiently large production capacities for green hydrogen in Germany is not the construction of electrolysers, the hydrogen production facilities, but the necessary parallel expansion of renewable energies. A strong expansion of renewable energies is inevitable in order to fill the gap left by the exit from nuclear power and coal-fired power generation.
Another 10,000 wind turbines would have to be installed
A study by the Handelsblatt Research Institute on behalf of the energy company Uniper shows: On the basis of the federal government’s official expansion path in the current Renewable Energy Sources Act (EEG), the share of renewable energies can increase from around 46 to 65 percent by 2030 in the optimistic scenario – assuming a constant gross electricity consumption. However, this does not even take into account the electricity required to produce green hydrogen.
The federal government has now noticeably revised its forecasts for overall economic electricity consumption in July 2030 upwards. If 65 percent of this additional electricity demand is to be covered by renewable energies, as provided for in the climate protection plans, renewable energies would have to be expanded significantly more than currently planned under the EEG.
Federal Environment Minister Svenja Schulze has announced that onshore wind turbines will be significantly expanded over the next eight years. In addition to the already rotating 30,000 turbines, 10,000 more wind turbines would have to be installed by 2030. Schulze did not explain how this goal is to be achieved in view of the declining acceptance of onshore wind power among the population.
In addition, the minister increased the expansion targets for photovoltaics by another 50 percent. However, similar to onshore wind energy, it remains to be seen how this can be achieved. For a general solar roof requirement, at least so far, the political majorities are missing. With a view to the development of the hydrogen economy in Germany, this means that the generation of the additional renewable electricity required by 2030 is extremely uncertain.
Is private demand being squeezed out by state demand?
The commissioning of the electrolysers may therefore lead to a crowding-out, a displacement of private demand by state demand. As a consequence, this could mean that companies have to use electricity from fossil sources for their electrolysers. However, if the electrolysers are operated with electricity, around a third of which will still be obtained from fossil fuels in 2030, the hydrogen is no longer CO2-free, but at most low-CO2.
The protagonists of a green hydrogen economy are well aware of this problem. That is why they always emphasize how necessary a rapid expansion of renewable energies is in order to be able to link the expansion of the hydrogen economy to it. However, this does not solve the dilemma: Either the market expansion takes place in consideration of the expansion speed of renewable energies – i.e. comparatively slowly – or the hydrogen economy is developed quickly, but then cannot be based exclusively on renewable energies.
The National Hydrogen Strategy is therefore both under- and over-ambitious. On the one hand, the production of only 14 TWh of green hydrogen is planned by 2030, although the expected demand is significantly higher. On the other hand, there is no guarantee that the additional regenerative electricity production will be sufficient to produce only 14 TWh of green hydrogen in Germany.
The next federal environment and energy ministers will not only have a lot of work to do. It is also time for a new honesty. After all, we will not get anywhere with pure wishful thinking.
The author: Jörg Lichter is Director Research at the Handelsblatt Research Institute. The research areas of the economist and habilitated economic historian are monetary policy and energy policy.
More: When it comes to hydrogen, the economy wants clarity quickly from the future coalition.