Germany has reignited the debate over the EU’s official definitions of green hydrogen by signalling its intent to replace them with its own ‘simpler’ criteria.

The move, set out in mid-September in a broader ‘reality check’ policy paper on the country’s transition strategy, appears to challenge one of the main pillars of the EU’s hydrogen strategy.

Compliance with the EU’s Renewable Fuels of Non-Biological Origin  definition of green hydrogen is a prerequisite for producers bidding for EU funding through its flagship European Hydrogen Bank.

“Overly complex requirements—such as the strict definition of ‘green hydrogen’ at the EU level—will be reduced and replaced by pragmatic criteria,” the Federal Ministry of Economics and Energy said in the paper.

Adoption of different standards by Germany, Europe’s largest economy, could fragment the future hydrogen market and alter import trade flows as exporters view Germany’s definitions as being easier to comply with than those set out by the EU.

Germany’s move increases the pressure on the European Commission, which has drawn criticism for imposing overly complex definitions, which include rules on matching renewable power production with hydrogen production. It also comes as the role of the European Hydrogen Bank comes under scrutiny following the recent withdrawal of some of the largest recipients of its subsidies.

Backing blue

The new German definitions also look set to be broadened out to include blue hydrogen. “Low-carbon hydrogen will be treated equally,” the ministry said.

Germany has opened the door to blue hydrogen production after the cabinet in August adopted draft legislation allowing the widespread deployment of CCS and CCUS for the first time in Germany. Opening the hydrogen sector to blue, as well as green, hydrogen, would align Germany with the UK’s technology neutral approach.

“The energy transition can only succeed with greater pragmatism and realism” Reiche, energy ministry

The policy paper also signals a review of Germany’s ambitions on domestic hydrogen production targets. Under the proposals, the government will replace current targets on the deployment of electrolysers with “flexible targets based on concrete demand-side projects in Germany”.

Germany’s existing target is for 10GW of electrolysers by 2030. “Domestic production can increase security of supply and provide flexibility in the electricity system,” the paper said. However, the target of 10GW of domestic generation by 2030 “appears hardly achievable given the current project pipeline”, it added. One scenario outlined in the paper suggested a maximum achievable capacity by 2030 of around 7.5GW.

Willingness to pay

The main thrust of the ministry’s argument is that the rollout of hydrogen production, transportation and storage must align more closely with demand.

“Currently, there is hardly any market demand. Supply costs, especially for renewable hydrogen, are significantly higher than current willingness to pay,” it said.

“The ramp-up phase will initially focus on markets where there is already a willingness to pay for hydrogen (e.g., in the refinery sector) or where demand can be stimulated with financially and administratively justifiable effort (e.g., through the promotion of climate-neutral process heat),” the ministry said.

10GW – 2030 capacity target

The implementation of the domestic hydrogen core pipeline network, as well as the development of import infrastructure, will be “carried out gradually and in close coordination with measures and developments on the demand side”, the ministry added.

Germany’s transition policy reset comes as the coalition government of centre-right CDU/CSU and centre-left SPD, which took power earlier this year, comes under pressure to moderate the cost of the transition while maintaining Germany’s effort to meet its ambitious emission reduction goals.

“The energy transition can only succeed with greater pragmatism and realism,” said Federal Economics and Energy Minister Katherina Reiche. “Energy policy decisions must not lead to mis-investments or overregulation, but must focus on the market, technological diversity, and innovation.”

---

Author: Stuart Penson