German Plastics Maker Signs Milestone Hydrogen Import Agreement

January 2022

German plastics manufacturer Covestro has announced the signing of an MoU to buy 100,000 tons of environmental “green hydrogen” a year from Australian producer Fortescue Future Industries (FFI), starting in 2024. It’s the first such large-scale hydrogen delivery agreement in the EU.

The German government’s National Hydrogen Strategy foresees the country importing massive amounts of H2 as part of its drive to become carbon neutral. The Covestro-FFI  agreement can be seen as a milestone in that process.

“Much the hydrogen economy is still theory, so it’s very important to have concrete projects like this,” says Germany Trade & Invest (GTAI) hydrogen expert Heiko Staubitz.

The chemicals industry in Germany accounts for some 19 percent of German industrial greenhouse gas emissions. It also has a dual use for hydrogen as an energy carrier and a replacement raw material for substances like ammonia. Covestro has publically committed to sustainability and a circular economy.

“Our collaboration with FFI underlines our ambition to pioneer the transition towards a circular economy and climate-neutral production,” said Covestro CEO Markus Steilemann in a statement. “Green hydrogen and its derivatives play a key role for the chemical industry, both as an alternative feedstock [fuel used as a raw material] and a source of clean energy.”

The International Energy Agency says that around half of the chemical subsector’s energy output is consumed as feedstock. Building up the green hydrogen economy in terms of both capacity and performance to the point where it can play a central role in the chemicals sector is at least a “medium-term” project, explains GTAI chemicals expert Raphael Goldstein.

He adds that imported hydrogen can be cheaper and more readily available than domestically produced H2 and that Germany will not be able to generate all the renewable electricity required to cover its hydrogen needs.

“Especially for businesses in areas that have no alternatives to green hydrogen, for instance, because the hydrogen is used as a raw material, collaborative arrangements like this will be a key element of the future,” says Goldstein. “So the Covestro agreement is quite significant.”

Covestro plant in Dormagen © Covestro