Germany will rule out direct financial support for low-carbon hydrogen production from natural gas and waste, limiting subsidies for these technologies to the demand side, an updated draft of its revised national hydrogen strategy suggests.
"Direct financial support for hydrogen production is limited to production of green hydrogen," the government said in the draft seen by Argus. On the demand side, the government wants to support the "use of low-carbon blue, turquoise and orange hydrogen to a limited degree", with strict requirements for emissions reductions in mind, it said.
Blue hydrogen refers to production using natural gas with carbon capture and storage, while the turquoise pathway refers to methane pyrolysis and orange means production from waste.
A previous draft of the strategy from earlier this year had left open the possibility of support for blue hydrogen production, stating that "we will support and import blue hydrogen". The previous draft had made no mention of hydrogen from methane pyrolysis and waste.
The revised strategy suggests that Germany does not want to encourage domestic hydrogen production via these pathways, but that imports of such hydrogen would be welcomed to help meet demand for lower-carbon supply. Berlin has long held a preference for hydrogen from renewable power, but has eased its stance towards blue hydrogen recently. The government now regards it as a potentially key component of the transition towards more hydrogen use — given that only limited renewable hydrogen is expected to be available in the coming years — and has actively worked towards facilitating imports, such as from Norway.
Blue hydrogen is included as a decarbonisation option in the government's carbon contracts for difference scheme, a key demand-side measure aimed at helping large industrial consumers reduce their emissions. Methane pyrolysis involves the separation of methane into gaseous hydrogen and solid carbon and is said to be carbon-free. But providing financial support for domestic projects using this technology to produce hydrogen would likely be difficult to justify to the public, as Germany is trying to reduce its natural gas consumption.
Waste-to-hydrogen facilities promise to help with waste disposal besides producing low-carbon hydrogen, but the technology is still comparatively nascent and yet to be demonstrated at scale. Several projects are under development in Europe and elsewhere and some specifically target Germany as a potential offtake market.
The revised strategy has been submitted to Germany's national hydrogen council for review. Germany first drew up a strategy in 2020, but since then the government has already revised up the 2030 electrolyser capacity target to 10GW from 5GW.
