For the climate-neutral transformation of the economy to succeed, we need alternatives to fossil fuels. A precondition for the successful decarbonisation of industry is the supply of sufficient volumes of climate-friendly electricity and hydrogen at competitive prices – alongside a functioning circular economy and carbon capture, use and storage (in German only). The transformation of industry towards climate neutrality can therefore only be successfully achieved through a mix of technologies.

Federal Cabinet adopts draft legislation to create a hydrogen core network

To accelerate the decarbonisation of industry, Germany needs fast and cost-effective hydrogen grid infrastructure that grows with the hydrogen market and is integrated into the European Single Market. On 24 May, the Federal Cabinet presented the adopted revision of the Energy Industry Act, which includes rules for the swift initial approval of a hydrogen core network by the Federal Network Agency (Bundesnetzagentur).

Federal Minister Robert Habeck said,

“Our aim is to rapidly ramp up the hydrogen market in order to further advance the decarbonisation of economic sectors with particularly high greenhouse gas emissions. In creating the framework for hydrogen networks, we are taking a decisive step towards this.”

Funding programme for IPCEI on hydrogen enables ramp-up

Integrated projects are funded along the entire hydrogen value chain under the IPCEI (in German only) on hydrogen, from the production of green hydrogen and the construction of the necessary infrastructure, to its use in industry and in the mobility sector. The IPCEI on hydrogen is jointly funded by the Federal Ministry for Economic Affairs and Climate Action, the Federal Ministry for Digital and Transport, and the Länder. A total of more than €10 billion in funding is available.

In Germany, 62 projects have been selected. These include generating facilities that, taken together, account for over 2 GW of electrolysis capacity for the production of green hydrogen, and hydrogen pipelines with a total length of around 1,700 kilometres. The carbon-intensive steel sector lends itself to considerable emission savings. All the major steel producers operating in Germany – ArcelorMittal, Stahl Holding Saar, Salzgitter Stahl and Thyssenkrupp Steel – were selected. The projects are to reduce carbon emissions by more than 10 million tonnes per year before 2030.

Start of the carbon contracts for difference funding programme

The preparatory procedure for the carbon contracts for difference funding programme of the Federal Ministry for Economic Affairs and Climate Action kicked off on 6 June. Carbon contracts for difference (in German only) are intended to set in motion climate-friendly production processes that use renewable energies such as hydrogen in energy-intensive industries, for example, in the steel, cement, paper and glass industries. In sectors where climate-friendly production procedures are currently not yet competitive, carbon contracts for difference offset the added cost involved compared with conventional procedures.

The Federal Ministry for Economic Affairs and Climate Action has earmarked tens of billions euros in funding for the conclusion of carbon contracts for difference. The main part of this funding is to go towards protecting companies against unexpected price volatility. Companies interested in receiving funding will enter into a competitive bidding procedure for the carbon contracts for difference. The best and cheapest bid wins.

H2Global becomes European hydrogen project

H2Global (in German only), the German programme for green Power-to-X products (in German only) launched in 2022 with its first auctions, will become a European hydrogen project and be open to all EU governments interested in conducting hydrogen auctions in the future. On 1 June, the European Commissioner for Energy Kadri Simson and Federal Minister Robert Habeck decided to link the new European Hydrogen Bank (EHB) with the instrument developed by Germany to support the market ramp-up.

The agreed cooperation is expected to be a major step towards securing Germany’s and Europe’s hydrogen demand and the global market ramp-up of green hydrogen. H2Global will also work with the European Hydrogen Bank on joint European auctions to make an additional contribution to international hydrogen imports to the EU.

Germany and Norway intensify partnership dialogue on the decarbonisation of industry

At the beginning of January in Oslo, Germany and Norway reaffirmed their interest in expanding their bilateral cooperation beyond traditional energy issues. Their main focus is forward-looking technologies for the green transformation of industry and the hydrogen needed for this. The partners want to build a pipeline by 2030 that will enable Germany to be supplied with hydrogen from Norway. To this end, Norwegian Minister of Trade and Industry Jan Christian Vestre and Federal Minister Robert Habeck met in Berlin on 9 May with Norwegian companies that can build hydrogen production capacities and potential major customers from Germany.