German Hydrogen Commissioner: “This is about establishing an integrated, systematic solution”

Markets Germany spoke to Dr. Stefan Kaufmann, Innovation Commissioner for Green Hydrogen at the German Federal Ministry of Education and Research about Germany’s unique approach to hydrogen.

September 2020

Mr. Kaufmann, what is the significance of Germany’s recently adopted National Hydrogen Strategy for long-term investments in power-to-hydrogen and power-to-x technology?

Kaufmann: Green hydrogen solutions have enormous economic importance for our industry and for our mechanical engineering and plant construction exports, among other things. With the National Hydrogen Strategy, the German government has set itself ambitious goals, so that Germany, as a country of innovation, will be among the world leaders in this key technology.

One decisive factor, for example, is a clear framework for companies to make investment decisions. The ambitious goals of the National Hydrogen Strategy send an important signal to industry: “Get ready, let’s go!” We want to become the leading market and the leading provider of solutions for everything concerning green hydrogen.

We’re in a good position. We have a broad-based community of innovative companies and world-class research institutions that are already networked internationally. Those are promising conditions for rapidly and successfully priming a market as well as creating new ones. The strategy’s plan of action contains a number of measures to stimulate long-term investments, ranging from a review of taxes and social insurance contributions to the establishment of industrial electrolysis capacities, and the creation and expansion of international partnerships.

Please give some insight into the decisions that have been made in recent years. Was there a lot of competition with other green technology options? Why did the government decide to focus on power-to-x?

Kaufmann: There wasn’t any great competition between green technologies. The trick is to find the right solution for every situation. For example, concerning motor vehicles, we need to jettison the idea that there is only one correct solution. We need the proper mixture of many innovative strategies if we’re to reach our climate goals. We need all the green technologies available to us – that is also the conclusion of various studies.

Nonetheless, power-to-x approaches in their entirety will play a special role in attaining our climate goals. Even in the future, there will be no such thing as an “all-electric society.” For technical reasons, we will have to rely on chemical energy carriers, for instance, in the basic materials industries. Additionally, there are logistic considerations, for example, importing energy. For those reasons, solutions that turn renewable electricity to other energies represent a key component in the success of our transition to clean energy and the realization of our climate goals.

How can the hydrogen-to-x sector avoid the fate of the German solar energy industry, which benefitted from high government subsidies in its initial phase, only to collapse when the technology matured?

Kaufmann: The German government is taking a different approach toward advancing hydrogen technologies. The comprehensive goals set by the National Hydrogen Strategy have been set explicitly with an eye toward industrial concerns. We’re not talking here about a lone technology like photovoltaics. This is about establishing an integrated and complex, systematic solution comprised of a variety of individual components. Take, for example, industrial electrolysis. A 1 gigawatt electrolyzer uses roughly the same amount of energy as is produced by a nuclear power plant. To run it, we need large-scale, planning-intensive wind and photovoltaic parks and a high-performance electric grid to power the electrolyzer reliably. On the consumer side, the basic material industry will have to reorganize whole process chains, before green hydrogen can be of use.

Coming up with intelligent, tailor-made solutions is a traditional strength of German mechanical engineering and plant construction that can’t be easily copied. Particularly in these areas we have lots of integrative value chains and an organic network of individual companies. That means that many of the components we need to build hydrogen plants can be built and coordinated with one another within the German and European industry.

What we need now is a rapid leap to the phase of automated serial production. If that happens, we will gain a solid advantage over the international competition in terms of product quality and production costs. Our automotive supply industry leads the world in these respects – and it can provide major impulses here.

What makes Germany particularly well suited for hydrogen-to-x as an energy storage option? Do you think the technologies developed here are good candidates for export to other markets?

Kaufmann: One particular strength of Germany as a country of innovation is our ability to think and get things done within systems. This is a trump card we now need to play with green hydrogen. For that reason, it’s not enough to sell individual system components such as wind turbines, electrolyzers and fuel cells. We have to offer a convincing overarching system. To me “climate protection made in Germany” means offering sustainable energy production from A to Z for industry, transportation and buildings as a complete package and from a single source. And if things work out, this approach may also allow Germany to get back some of the value creation it has lost in photovoltaics.

Hydrogen and methane produced with green energy can be used for heating or for industrial applications like producing steel and chemicals. Do you think one use will be favored over others in the future?

Kaufmann: That’s primarily something for the market to decide. The question is: Who’s prepared and able to pay how much for green hydrogen? That depends on many factors, for example, the price of CO2 units. Right now there is certainly the greatest need for action in those areas where there is no alternative to hydrogen or its derivatives – for example, in industry or in air or sea transport. Because of the expected massive demand of large-scale industrial consumers, we could a lot of doors being opened that would then make hydrogen affordable and of interest for other applications as well.

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