Is Time Running Out for Germany's Ambitious Green Hydrogen Dream?

In a spotless factory near Hamburg, industrial robots are poised to enhance the production of electrolysers, devices essential for producing green hydrogen through the process of electrolysis. However, the company Quest One faces a significant conundrum: while their manufacturing capabilities are robust, the demand for electrolysers and consequently green hydrogen is surprisingly sluggish. Nima Pegemanyfar, the executive vice president of Quest One, highlights a critical issue in the market—demand is lacking, not supply.

The sluggish demand stems partly from the high costs associated with green hydrogen compared to traditional fossil fuels. Currently, low-emissions hydrogen production accounts for less than 1% of global hydrogen production. Although scaling up could potentially lower these costs, the bulk of hydrogen projects remain small-scale. Quest One hopes to reduce production costs to about €4 per kilogram, significantly below current market rates.

The article points out another fracture— a disconnect exists between the industries requiring green hydrogen (like chemical, steel, and shipping) and the less efficient uses often discussed, such as heating and automotive applications. Criticisms arise regarding the association of green hydrogen initiatives with traditional fossil fuel companies, complicating the narrative around clean energy. For instance, Volkswagen, a parent company of Quest One, is rumored to be reevaluating its involvement in the hydrogen sector, leaving uncertainty about the future.

Government policy will play a pivotal role in adjusting hydrogen costs and supporting the industry. Without strategic backing, the extensive infrastructure plans, including hydrogen pipeline networks from the Port of Hamburg and underground storage solutions, risk being underutilized. Furthermore, there are ongoing discussions about establishing hydrogen transport networks extending to countries like India, Saudi Arabia, and others, raising potential concerns over environmental impacts.

Despite promises, the German government’s hydrogen ambitions are now being adjusted against the backdrop of high expenses, leading many in the green hydrogen industry to call for increased domestic support, especially in light of competition from China, which dominates the electrolyser market.

As outlined by Ivana Jemelkova, CEO of the Hydrogen Council, the enthusiasm that marked the hydrogen project’s inception five years ago has dimmed, leading to the cancellation of numerous projects. However, some industry leaders remain optimistic, believing that while challenges persist, the overall market for green hydrogen continues to develop. For German producers, the message is clear: there is an urgent need to foster a sustainable market before opportunities slip away entirely.