Germany adopts long-awaited import strategy for hydrogen, but greater support for the most promising import pathways is needed

Months after the publication of the revised national hydrogen strategy in July 2023, Germany has adopted the much-anticipated hydrogen imports strategy. In this blog, we explore what this new strategy entails and its implications for the energy future of Europe’s largest economy. 

Key Takeaways

• Due to limited domestic production capacity, Germany expects that up to 70% it’s hydrogen demand will need to be met through imports. 

• Germany should first carefully review its national clean hydrogen demand targets and the level that can realistically be met through imports by 2030. 

• The import strategy should prioritise pipeline transportation from neighbouring countries and shipping ammonia as the most efficient and cost-effective ways to import hydrogen, while taking a more cautious approach to exploring other potential options like liquid organic hydrogen carriers. 

• The strategy includes the import of both ‘green’ renewable and other low-carbon forms of hydrogen at least in the near term. However, it should go further and focus on emission-reduction merits rather than colour distinctions to ensure sufficient imported hydrogen will enter the domestic market in a timely manner and available at competitive prices to meet the needs of priority off-takers. 

What is Germany’s national hydrogen strategy, and how will it meet projected demand? 

Germany aims to be climate neutral by 2045 and has placed its bets on clean hydrogen being a significant player in its decarbonised energy mix. With Germany’s economy featuring a large and difficult-to-decarbonise industrial base, the 2023 revised strategy anticipates that domestic demand for clean hydrogen will increase to between 95–130 TWh by 2030 as sectors seek to utilise the molecule as a decarbonised feedstock and energy carrier. This estimate is viewed as ambitious and is roughly double the current consumption of conventional ‘grey’ hydrogen, which is around 55 TWh per annum. 

Meeting these significant demand volumes through domestic sources alone is challenging in an environment where production volumes are limited by available clean energy capacity (wind, solar, etc.). Because of this, the federal government estimates that up to 70% of expected hydrogen demand must be met by imports (around 45–90 TWh per annum), with volumes expected to increase exponentially up to 2045 in line with increasing end-use demand. To achieve this, Germany has outlined a dedicated framework of measures to meet these import volumes over the coming years. 

With a high reliance on imports to achieve its very ambitious hydrogen deployment over a period of only six years, Germany should first carefully review its national clean hydrogen demand targets and the level that can realistically be met through imports by 2030. Doing so will ensure that forthcoming investment and infrastructure plans are targeted to the most cost-effective and energy-efficient import methods from nearby regions at the scale required over adequate timeframes.  

What is included in Germany’s hydrogen import strategy? 

The hydrogen import strategy indicates that Germany will focus on two primary import methods: via pipeline and ship transport. Imports will be sought from a range of European and near-Europe export regions where hydrogen production capacities are expected to be higher. These plans align with recent CATF analysis, which found that the most cost-effective and energy-efficient methods of hydrogen transport is either via short distance pipeline or maritime transport of clean ammonia from neighbouring regions.  

Pipeline transportation from nearby countries can be the most efficient pathway to importing clean hydrogen, particularly when the distances are relatively short. Cross-border hydrogen trade within Europe – across EU Member States and with nearby extra-EU countries – could be implemented via existing pipelines converted for hydrogen transport. Initial projects are already being planned with Denmark, Norway and the UK, as well as larger ‘corridor’ pipelines bringing hydrogen to Germany from the North Sea, Baltic Sea and Southern European regions. Successful implementation, however, will require broad support from Member States, with actions coordinated at the EU level through the European Commission’s Important Projects of Common European Interest (IPCEI). It will also require swift execution of network development projects to convert existing pipeline infrastructure. Other cross-border collaborative projects, such as Hydrogen Valleys, may also help streamline such efforts and mitigate implementation barriers.  

Imported ammonia is recommended as the most efficient shipping-based import method and should first be used only for direct ammonia applications in industrial processes or as a future transportation fuel, such as for fertiliser production or as a maritime shipping fuel. Such an approach will maximise energy utilisation and keep costs low. The strategy indicates Germany will explore ‘cracking’ ammonia to release pure hydrogen from this compound state, but this will incur significant energy losses during the conversion process – as much as 30% of the hydrogen delivered at the point of import – and so far, no commercial scale reconversion plants currently exist in Germany.  

The import strategy considers additional ship-based import pathways, including methanol, e-fuels, and liquid organic hydrogen carriers (LOHC). Where these can be used for direct application, similar to ammonia, could provide a net benefit to Germany so long as a hydrogen conversion step is avoided. Other options, such as liquified or gaseous hydrogen or LOHC, would entail substantial energy penalties across the entire import value chain and the need for significant new infrastructure at the point of import. These pathways, therefore, make little sense from an energy, emissions, or cost standpoint – in fact, estimated levelized costs for these pathways could be close to double the estimated costs for importing hydrogen compared with clean ‘uncracked’ ammonia.   

Like the updated national hydrogen strategy, the import strategy includes the import of both ‘green’ renewable and other low-carbon forms of hydrogen at least in the near term – a decision taken to help establish a clean hydrogen market of adequate scale and cost. However, financing options are primarily allocated for renewable hydrogen imports, as seen with the outcomes of the first H2Global auction. Some support may be offered to low-carbon options where they meet the 3.4 kg CO₂-eq/kg hydrogen emissions threshold.  

What can be done to improve the the strategy’s likelihood of success? 

Supporting a more holistic approach to how imported hydrogen is produced, focused on emission-reduction merits rather than colours, will ensure sufficient imported hydrogen will enter the domestic market in a timely manner and available at competitive prices to meet the needs of priority off-takers. 

Any imported hydrogen should be measured against greenhouse gas emission reduction merits based on rigorous emissions accounting. German policymakers should introduce a comprehensive certification scheme for all clean hydrogen production pathways, including any imported hydrogen, which is embedded in an EU and internationally harmonised framework.  

To avoid costly but ultimately unsuccessful ventures and stranded assets, Germany must prioritise identifying where realistic hydrogen demand targets for 2030 could be met by uncracked clean ammonia and what part can be reasonably imported via pipeline from neighbouring countries, building out adequate infrastructure accordingly. A better understanding of sectoral demand and how possible import constraints could be mitigated will inform a stronger policy framework for hydrogen and its derivatives, anchored around the end use sectors that need the molecule the most for their decarbonisation.