German minister calls for green hydrogen tenders starting 2021

Germany's environment minister Svenja Schulze has called for a swift start to green hydrogen production, starting with a 5,000 mt/year auction next year.

Schulze told German daily Handelsblatt that tendered volumes would rise by 5,000 mt/year each year in order to establish 5 GW of electrolysis capacity by 2030.

Related infographic: Sustainable hydrogen: blue and green pathways to decarbonisation

The German government is considering a 20% quota for green hydrogen by 2030, according to a draft strategy seen by S&P Global Platts.

The document from the energy and economy ministry (BMWi) is expected to be published in late March and currently consulted upon within government.

It sets out plans to spend Eur2 billion ($2.2 billion) on hydrogen projects with the 20% quota requiring electrolysis capacity of "at least 3 GW, but preferably 5 GW."

This would result in production of nearly 1.5 million mt/year of green hydrogen, according to Platts Analytics' Zane McDonald.

The draft notes a near-term opportunity for blue hydrogen (ostensibly steam methane reforming of natural gas plus carbon capture) to help decarbonize hard-to-abate sectors, but only green hydrogen (electrolysis of water using renewables) would be sustainable in the long term.

Schulze remained skeptical on blue hydrogen: "Why should we use blue hydrogen in the future if the climate balance is bad and production costs are high?" the minister asked in the interview.

The minister feared a negative debate on carbon capture and storage could overshadow the hydrogen debate.

Last week, Wintershall Dea board member Thilo Wieland said it was cheaper to produce blue hydrogen from natural gas than from renewable electricity (green hydrogen).

Schulze also called for a 2% quota for green hydrogen in jet fuel by 2030 as well as the ability for refiners to count green hydrogen towards emissions targets.

"I am convinced that the eligibility of green hydrogen in refineries is an attractive option for quota fulfillment," the minister told Handelsblatt, saying that this would incentivize green hydrogen production capacity.

Germany's biggest electrolyzer is set to start this summer at Shell's Rheinland refinery: the 10 MW Refhyne project will generate about 1% of the refinery's total hydrogen demand from water and grid-based electricity, according to developer ITM.