embraces

Just a couple of years ago, the atmosphere in German energy policy was one of pure euphoria. The small town of Bremervörde (Lower Saxony) had just opened the first train route operated solely on hydrogen. With an estimated saving of 4,000 tons of CO2 per year, the project was the perfect showcase for the Government’s great plan: relying the entire weight of its decarbonization on the purity of green hydrogen However, time has cooled enthusiasm and the current hydrogen landscape in Germany faces harsh economic realities. Refueling stations for hydrogen cars languish; in fact, H2 Mobility, the country’s main operator, announced the closure of several of its stations due to the lack of demand in passenger vehicles and constant supply bottlenecks. This face-to-face collision with reality has forced a drastic political turn: Germany, the country that most opted for the purity of green hydrogen, is modifying its laws to embrace “blue” hydrogen, that which is produced from natural gas using carbon capture and storage (CCS) technologies. Urgency changes the rules. The fractions of the government coalition (Union and SPD) have agreed to amend the Hydrogen Acceleration Law so that the production of blue hydrogen now enjoys the status of “overriding public interest”. Originally, this regulation sought to streamline bureaucracy only for 100% renewable projects, but the new draft expands its scope of application. As the specialized publication points out Tagesspiegel Backgroundthis change equates at the permit level the facilities that extract hydrogen from fossil gas (capturing CO2) with those that use wind or solar energy. This shift towards natural gas raises an obvious question for a country that has just gone through a severe energy crisis: where will the raw material come from now that the Russian tap is closed? The answer look north. Gas from the Barents Sea, of Nordic and Norwegian origin, is emerging as the ideal geopolitical lifeline to fuel this new European blue hydrogen machinery, guaranteeing industrial supply without falling into dependence on Moscow. A devastating wake-up call. This political shift does not come out of nowhere, but comes after a devastating report from the German Federal Court of Auditors (Bundesrechnungshof). According to this supervisory bodydespite the billions of euros injected in subsidies, the government is flagrantly failing to meet the objectives of its own strategy, as neither supply nor demand are growing as planned. Kay Scheller, president of the Court, publicly demanded a “reality check”, warning that, if it is not assumed that green hydrogen will not be competitive in price in the short term, federal finances will collapse under the weight of subsidies. The energy transition simply cannot wait for green hydrogen to be technically and economically viable on a large scale. The central problem is the cost. While natural gas (including CO2 emission rights) is between 43 and 67 euros per megawatt hour (MWh), the forecasts for imported hydrogen in 2030 rise to a range of between 137 and 318 euros per MWh. This abysmal price difference — which can reach 275 euros per MWh — makes it unfeasible for companies to make the change in the short term. Train crash. The business sector has breathed a sigh of relief. As explained in another article by Tagesspiegel Backgroundkey entities such as the Association of German Energy and Water Industries (BDEW) and the Chamber of Industry and Commerce (DIHK) had been demanding this pragmatic step for some time. They argue that the transformation of heavy industry cannot sit idly by waiting for there to be enough wind and solar farms to flood the market with green hydrogen at affordable prices. On the contrary, environmental organizations They denounce that this movement It is a serious setback that will only consolidate and perpetuate the dependence of the largest European economy on fossil fuels. To unclog the sector, the Minister of Economy, Katherina Reiche, promised a few months ago simplify procedures “from the ground up”, recognizing that current processes are too slow. The declaration of “overriding public interest” will function as an administrative fast track that will cover not only production, but vital infrastructures as maritime import terminals and Liquid Organic Hydrogen Carriers (LOHC). The risk of the “white elephant” and the fiscal hole. But legislative flexibility may not be enough to cover the enormous financial hole that is looming. The specialized portal CleanTechnica goes deeper, warning of the severe danger of “sunk costs”. Building and pressurizing pipelines without assured customers turns a theoretical infrastructure into an active spending sink. The Court of Auditors supports this thesis and warns of a serious synchronization problem: Germany has planned a huge 9,040-kilometre pipeline “core network”, but it is being built for a demand that today is a mirage. Large steel projects that were going to consume 18 TWh annually are faltering; of the four main ones, one has already been canceled and the rest face uncertain deadlines. The financing mechanism of this network is based on future users paying tolls to repay a state loan from the KfW development bank of up to 24 billion euros. If demand does not materialize and the pipelines remain empty, the mechanism will fail miserably, leaving German taxpayers exposed to losses exceeding €18 billion. The “Plan B” of the European locomotive The utopia of a Germany driven exclusively by green molecules has collided head-on with State accounting and the non-negotiable deadlines of heavy industry. Faced with the imminent risk of losing competitiveness and generating a fiscal crisis, the government has been forced to sacrifice the purity of its initial ecological ambitions. The country has understood that it needs an urgent “Plan B.” That Buxtehude train that in 2022 promised an idyllic future powered only by the wind and the sun, will have to share the track, at least for the next few decades, with the pragmatism of natural gas. At this crossroads, blue hydrogen has ceased to be the “dirty brother” and undesirable and has become the indispensable temporary lifeline of one of the great European economies. Image | freepik 1 and … Read more