The German environment minister has called for the world’s first green-hydrogen tender to begin next year, starting at 5,000 tonnes and rising by the same amount each year until 2030, when 5GW of electrolysis capacity would be installed.
Svenja Schulze — a member of the Social Democrats, the junior party in the ruling coalition — also called for a quota of at least 2% green hydrogen in jet fuel by 2030, arguing that this would incentivise the production of the zero-carbon gas, which is produced by using renewable energy to split water molecules into hydrogen and oxygen inside machines called electrolysers.
“I am convinced that the eligibility of green hydrogen in [oil] refineries is an attractive option for quota fulfilment," the minister told the Handelsblatt newspaper.
According to Recharge calculations, every 5,000 tonnes of green H2 would require about 250GWh of renewable energy, the equivalent of 79MW of offshore wind (at a capacity factor of 36%) or 130MW of onshore wind (capacity factor of 22%).
Germany is currently considering holding special offshore wind tenders to produce green H2, according to the draft of a national hydrogen strategy seen by Recharge. The draft document also states that green hydrogen should provide 20% of the country’s hydrogen needs by 2030, which would equate to nearly 1.5 million tonnes, according to Platts Analytics — far above the 275,000 tonnes of tenders suggested by Schulze.
Currently 70 million tonnes of hydrogen are produced each year, mainly for use in oil refineries and for ammonia production, more than 95% of which is produced from methane or coal, pumping nine to 12 tonnes of CO2 into the air for every tonne of H2 produced.
Schulze also questioned the use of blue hydrogen — derived from methane with carbon capture and storage (CCS) — saying that production costs would be higher than green H2, which is produced by using renewable energy to split water molecules into hydrogen and oxygen inside machines called electrolysers.
She said she did not want the potential controversy of a debate on CCS to overshadow the hydrogen debate.
Oil & gas companies argue that blue hydrogen could be scaled up much faster than green, as the natural-gas infrastructure is already in place — even though a massive upfront investment running into the hundreds of millions of euros would be required to create large-scale CCS.
It is unclear how much say Schulze will have in the final hydrogen strategy, which is expected to be published in late March. The final decision will rest with the economics and energy minister Peter Altmaier, a close colleague of Chancellor Angela Merkel.
According to analyst BloombergNEF (BNEF), green hydrogen costs between $2.50-6.80 per kilogram today, with the IEA putting the current price of grey H2 production at $1-1.80/kg and blue hydrogen at $1.40-2.40/kg.
At the moment, green hydrogen is largely being produced at pilot projects only, with 252MW worth of electrolysers installed worldwide at the end of last year and 3GW due to be completed by the end of 2024. The world’s biggest electrolyser, the 10MW Refhyne project at Shell’s Rheinland oil refinery, is under construction and due to be completed this summer, when it will begin generating about 1% of the hydrogen used by the refinery.
Three sets of analysts — McKinsey (on behalf of the Hydrogen Council), BNEF, and Wood Mackenzie and McKinsey — have issued reports in the past six months stating that green hydrogen could become cost-competitive by 2030 as economies of scale drive down the cost of electrolysers and the price of wind and solar power continues to fall.
BNEF argues that by 2030, the cost of green H2 may fall as low as $1.40/kg, and sink to $0.80/kg by 2050. while WoodMac argues that green hydrogen will be cost-competitive in Australia, Germany and Japan by 2030, if the cost of renewable energy falls to $30/MWh.