On December 23, 2021, the German Federal Ministry for Economic Affairs and Energy (BMWi) headed by Minister Dr Robert Habeck announced a financial allocation in excess of EUR 900 million that will be used to support the provision of green hydrogen by the H2Global Foundation.
The ability to buy and sell carbon dioxide (CO2) neutral hydrogen is perceived as key to the green energy transition. After the new German government had already taken a stance on the issue in its coalition agreement, the Federal Ministry for Economic Affairs and Energy (BMWi) has now signaled the launch of H2Global, based on the H2Global foundation concept.
The H2Global scheme to support investments in the production of renewable hydrogen in non-EU countries, which will be then imported and sold in the EU, has also recently been approved by the European Commission (EC) under EU State aid rules.
The Commission found that it will contribute to the EU environmental objectives, in line with the European Green Deal, without unduly distorting competition in the Single Market.
Commenting on the launch, the H2Global Foundation, which already includes the following companies – Siemens Energy Global GmbH, Thyssenkrupp AG, VNG Handel&Vertrieb GmbH, Deutsche Bank AG, Salzgitter AG, Uniper SE, Hamburger Hafen und Logistik AG, Neuman & Esser Verw. U. Beteil. mbH, F. Laeisz GmbH, Viridi RE GmbH, Enertrag AG, Nordex SE, Green Enesys GmbH, MAN Energy Solutions SE, Hydrogenious LOHC Technologies GmbH, Linde GmbH, AirProducts GmbH, Air Liquide S.A., Atmosfair GmbH, FEV Europe GmbH, RAG Austria AG, Engie Deutschland GmbH, and RWE AG – welcome the clear commitment of the new Federal government to green hydrogen.
Our goal is to establish a green hydrogen industry which will give us the assurance of a climate-neutral future, while at the same time safeguarding supplies to industry and business, said Dr Axel Wietfeld, Chairman of the H2Global Foundation and CEO of Uniper Hydrogen GmbH, when the funding allocation was announced.
The Foundation aims to advance the development of a global market for the hydrogen industry. As demand for energy rises, green hydrogen too will be increasingly in demand.
According to the BMWi, by 2030 power consumption in Germany alone will trend upwards from 545 TWh in 2020) to 655 TWh by 2030.
Consequently, it is all the more important for us to be able to make green hydrogen and derivatives available now without delay – for as long as these are not being provided in Germany and in Europe in adequate quantities and on competitive terms, Dr Axel Wietfeld continued.
Part of Germany’s hydrogen strategy
The H2Global program was developed in recent months as part of the government’s national hydrogen strategy. The idea is that as an instrument of the market economy, an intermediary will buy green hydrogen and derivatives at the lowest price possible at auction and sell these on into Germany and in Europe to the highest bidders.
The intermediary will then receive a subsidy from the BMWi to cover the anticipated negative difference in price as production costs for green hydrogen and Power-to-X (PtX) products are currently significantly higher than for fossil-based products.
This approach was developed by Timo Bollerhey, Managing Director of intermediary HINT.CO GmbH, and Markus Exenberger, Director of the H2Global Foundation, together with an interdisciplinary team of experts, and involving substantial participation of the BMWi.
The development was supported by the international cooperation specialists Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) in cooperation with the private sector and trade associations, including the German Hydrogen and Fuel Cells Association (DWV).
The global hydrogen industry of tomorrow needs planning and investment security today – and that is exactly what the H2Global concept aims to do, Timo Bollerhey explained.
According to Bollerhey, hydrogen will play a pivotal role in the decarbonizing industry, the energy economy, and mobility. In order to achieve this, Germany and Europe need green hydrogen.
International partnerships will smooth the way for adequate supplies of green hydrogen. The H2Global approach will allow us to rapidly ramp up the markets, said Markus Exenberger.
Over the next few months, the Foundation intends to recruit further European members in order to make a joint contribution to achieving the European climate goals and to advance the energy transition.
The first deliveries of hydrogen products are slated to commence as soon as the end of 2024.
The aim of the H2Global Foundation is to promote and advance climate and environmental protection. One element in achieving the foundation’s purpose is the testing of an efficient funding program for a rapid market ramp-up and import of green hydrogen and Power-to-X (PtX) products. For the first time, the funding mechanism enables the economic, sustainable operation of PtX plants and thereby allows the industrial market ramp-up that is now required.
Accordingly, H2Global differs from the previous investment support programs, which primarily provide investment subsidies to develop and test PtX technologies. In order to promote the ramp-up of a green hydrogen economy efficiently and in a market economy context, H2Global employs a double auction model to determine the price. The lowest bid price and the highest selling price are each awarded the contract. In this way, the price difference to be compensated is as small as possible. By way of divergence of terms in the purchase and sales contracts, the intermediary can also profit from possible price increases in the products sold – reducing the need for state subsidies and is therefore potentially far more efficient than previous subsidy instruments.
The purchase of green hydrogen and hydrogen-based PtX products includes their delivery to Germany. Further criteria in awarding the purchase of green hydrogen and its derivatives include sustainability requirements defined by the federal government as well as the maturity of the respective projects.