The energy transition can be compared to a marathon instead of a sprint. As the costs of photovoltaic cells and wind turbines have significantly decreased, decarbonizing the economy has become attainable. The wealthier countries of northern Europe are, arguably, some of the most ambitious societies when it comes to the energy transition. Germany, especially, is an important country due to the size of its economy, political influence in Europe, and technological prowess.
Hydrogen is an essential part of the strategy to become carbon neutral by 2050. The characteristics of the Universe’s smallest and most abundant particle make it highly suitable to become an important part of future energy systems. H2 can be used in the transportation sector as an energy carrier in fuel cells as well as burned in combustion engines. Also, hydrogen produces the much needed high temperatures for the industry to phase out natural gas.
Therefore, the German authorities are investing tremendous energy in a H2 strategy. Recently, German pipeline operators unveiled plans for the world’s largest hydrogen network. Until 2030 approximately 1,100 km, or 745 miles, of former natural gas pipelines will be converted to make it suitable for hydrogen. Also, 100 km of new pipelines will be laid which in total will cost €660 million. The network will link 31 hydrogen production projects with consumers in Germany's most populous states North Rhine Westphalia and Lower Saxony.
Germany’s aspirations extend beyond the energy transition and climate change as policy makers realize that hydrogen could be the technology of the future and therefore, an important export product. The ambition to extend the network could be raised even further in the next couple of years if costs to produce, transport, and store hydrogen decrease further than expected. Related: Putin To Bail Out Russian Oil Industry
Germany’s Economics Minister Peter Altmeier last year announced Berlin’s ambition to become a global leader in hydrogen related technologies. Europe’s largest economy is exceptionally well suited to reach its goal because it already produces 20 percent of the world’s electrolysers. Berlin’s long-term objectives promise significant economic benefits for its industry which is already regarded as one of the best in the world.
On top of that, Berlin has raised its already ambitious goals when it comes to substituting fossil fuels. The mandatory share of renewable fuels in transportation by 2030, including hydrogen, is increased to 20 percent instead of 14 percent. Also, by the year 2030 three to five gigawatts of electrolysers will be built to convert green electricity into H2.
On July 1, 2020 Germany will take over the rotating presidency of the European Council for 6 months. Even before the Coronavirus outbreak, Berlin was preparing an ambitious agenda concerning the energy transition, digitalization, Brexit, and the relationship with China among others. Now the Germany’s presidency will more likely focus on crisis management. However, Berlin sees an opportunity to exit the current crisis into a more green world than it entered.
Several joint European projects will be proposed such as a hydrogen market. Also, the presidency is an opportunity to promote so-called 'sector coupling' between gas and electricity networks, which will boost the interest for hydrogen. Furthermore, the European Commission is working on a gas package in which hydrogen most likely will play a key role. The Germans, however, are not alone in their focus on hydrogen as a fuel of the future.
The Netherlands are also planning for an H2-based economy. The successful and rapid construction of large offshore windfarms is creating uncertainty concerning profitability as 70 percent of Dutch power production will be renewable by 2030. Increasing capacity will decrease financial efficiency as the market is flooded with cheap energy on windy days. Hydrogen is regarded as an important tool to improve profitability and prevent negative prices through peak shaving.
The Dutch government and Germany’s most populous state, North Rhine Westphalia, intend to cooperate when it comes to system integration and hydrogen production. The Ministry of Economic Affairs of the Netherlands, North Rhine Westphalia and the Germany federal government are conducting a joint study into the feasibility of transnational green hydrogen. The study includes the production of H2 from offshore windfarms in the Dutch North Sea which will be transported to major German industrial clusters through existing pipelines.
Hydrogen has gone through several boom-and-bust cycles. It seems, however, that this time is different due to a combination of factors. Primarily the urgency is much more apparent as the negative consequences of climate change are becoming undeniable to the majority of the world’s population. Also, governments across the globe have made hydrogen an important priority. Companies over the entire value chain are investing in technologies and reducing production costs to reap the rewards of a potentially massive market.
By Vanand Meliksetian for Oilprice.com
More Top Reads From Oilprice.com:
- Turkey Headed For An Unexpected Victory Libya's Oil War
- $30 Oil Isn’t Good Enough For U.S. Shale
- Is The U.S. Prepared For War With China?