Germany said on Friday (28 May) it would invest €8 billion in 62 large-scale hydrogen projects, including electrolysers and pipeline infrastructure, as part of the country’s bid to decarbonise its industry and become a world leader in the pioneering fuel technology.
The economy and transport ministries selected 62 of 230 large-scale projects to receive state funding, which is expected to be matched with €33 billion of additional private investments.
The infrastructure are classified as Important Projects of Common European Interest (IPCEI), meaning they will be able to receive government funding without having to observe the EU’s usually strict state aid rules.
“We want to become the world’s number one in hydrogen technologies,” said Economy Minister Peter Altmaier, pointing to the steel and chemical industries as key sectors where the use of hydrogen fuel could result in a significant reduction in carbon emissions.
The lion’s share of the funding will be directed towards building electrolysers and hydrogen pipelines. Germany’s major steel manufacturers will receive €2 billion between them in funding for hydrogen related decarbonisation projects.
“Companies competing internationally depend on political support for climate protection investments in order to make a decisive contribution to achieving climate targets,” said Hans Jürgen Kerkhoff, president of the German Steel Federation (WV Stahl).
Steel production has attractive prospects for cutting emissions, Kerkhoff added, given that a tonne of carbon neutral hydrogen could prevent 26 tonnes of carbon emissions in steel-making.
“This is an important milestone on the road to climate-neutral steel production and a strong signal from the German government,” said Nils Pfennig of steelmakers thyssenkrupp, which is to receive funding for a hydrogen project in Duisburg.
Steel decarbonisation projects near the French border have alarmed German environmental NGO Friends of the Earth Germany (BUND) that cross-border hydrogen networks risk subsidising hydrogen produced with nuclear power, which Germany itself is phasing out.
“The German government must now immediately clarify from which energy sources the steel industry in Saarland is to be supplied. Should this also involve the use of nuclear hydrogen produced with French nuclear power, funding for the Saarland projects must be stopped,” said Olaf Bandt of BUND.
Hydrogen production is another key focus of the investment, with selected projects set to add 2 gigawatts (GW) of electrolyser capacity. Germany’s hydrogen strategy foresees the country presiding over 5 GW of electrolyser capacity by 2030.
Infrastructure to transport hydrogen is another priority, with funding allocated for 1,700 kilometres of new pipeline along the German-Dutch border and running west to east across Germany.
Meanwhile BASF, the world’s largest chemical manufacturer, will receive funding for carbon-free hydrogen manufacturing projects and hydrogen use projects such as ammonia production and sustainable aviation fuels.
Transportation related projects such as fuel cell systems and vehicles are also slated to receive funding, albeit a smaller share than industry.
“Transport is still more than 95% dependent on the use of fossil fuels,” said Transport Minister Andreas Scheuer. “Green hydrogen and fuel cells – across all modes of transport – are a super complement to battery-only vehicles,” he added.
The projects, which all fall under the remit of the IPCEI scheme, benefit from not having to abide by the EU’s strict state aid rules. The move had been criticised by some EU states and NGOs as it could be misused as a way to provide state aid to gas-based infrastructure and hydrogen production.
The 62 projects selected must now pass state aid muster at the European Commission to progress further.
[Edited by Josie Le Blond and Frédéric Simon]