The word “Hydrogen” is written on a silver box
Copyright© Thomas Imo/photothek.de
Energy transition Green hydrogen and Power-to-X products
Green hydrogen and Power-to-X products – here’s how it works
Using a procedure known as electrolysis, water is split into oxygen and hydrogen. The electricity used for “green” hydrogen is generated in a climate-neutral manner from renewable energy sources.
By adding carbon (for example carbon dioxide, CO2), the green hydrogen produced in this way can then be turned, for example, into a climate-neutral gas fuel like green ammonia or methane (“power-to-gas”) or a synthetic liquid fuel like green methanol (“power-to-liquid”). This technology, known as “Power-to-X” (PtX), is regarded as a key element of an energy system based solely on renewable energy sources.
Green hydrogen and PtX products are a particularly useful option in contexts where it would be hard to use electricity directly, for instance in aviation and maritime shipping. The technology can also be applied in, for instance, the steel or chemicals industry.
National Hydrogen Strategy – Germany pioneers green hydrogen
Manufacturing green hydrogen and PtX products requires large amounts of electricity. Germany is unlikely to have the capacity to produce enough electricity from renewables to meet the future demand for climate-neutral fuels. So it will have to import PtX products on a large scale over the medium to long term.
BMZ partner countries have an important role to play here. However, hydrogen projects require high levels of investment. Germany supports its partner countries in creating a friendly environment for investors and buyers, thereby establishing sustainable and secure trade links and supply channels for the hydrogen industry – to the benefit of both sides. The BMZ sets store by high sustainability standards. A major criterion is that the hydrogen must be produced using electricity from renewable energy sources. Another concern is that new large-scale projects must be accepted by the local population. Local value creation, participation and avoiding conflicts around water consumption and land use are also important considerations.
The BMZ’s engagement also creates concrete business opportunities for German companies. They can implement projects, supply materials and know-how or be directly involved in building “green” production facilities, enabling them to play a pioneering role in the development of hydrogen technologies. Via BMZ support programmes for cooperation with the private sector, German companies are able to position themselves early on in these new markets, which gives them a competitive advantage. The Green Hydrogen Business Alliance also offers opportunities for companies to position themselves in partner countries.
Green hydrogen and PtX as an economic opportunity for the BMZ’s partner countries
The production of hydrogen and its derivatives offers countries in the Global South with abundant sun, wind and water resources significant opportunities for economic development. A green hydrogen economy strengthens local value creation, creates jobs and makes the economy more resilient to crises, for example if green ammonia for the production of nitrate fertilisers can be manufactured locally and does not have to be bought on the global market. At the same time, it contributes to energy security and helps these countries make the switch to a sustainable local energy supply.
That is why the Federal Ministry for Economic Cooperation and Development (BMZ) supports the production of green hydrogen and the development of related economic structures in partner countries of German development cooperation. High sustainability standards are central to this engagement. The BMZ does not support hydrogen production based on fossil fuels.
Green hydrogen and PtX products are to be manufactured in reference facilities in selected partner countries. This is helpful for acquiring valuable insights for the operation and scaling of production facilities and for supporting local social and ecological transformation.
Development of PtX: The BMZ plans to provide support for a reference plant
Under the National Hydrogen Strategy, the BMZ has entered into an alliance with Morocco for the development of the Power-to-X sector. Morocco is one of the pioneers in the renewable energy sector in Africa. A solar energy complex, one of the biggest in the world, has already been built in Ouarzazate with German support. It provides climate-friendly power for 1.3 million people.
To begin with, this partnership with Morocco involves building Africa’s first industrial-scale plant for green hydrogen and PtX derivatives. The target for the plant is an electrolysis capacity of roughly 100 megawatts. The aim is to show that competitive green hydrogen and/or PtX products can indeed be generated in the partner countries of German development cooperation.
The BMZ attaches top priority to ensuring that the energy and water resources for this project are used sustainably. It is important to avoid competing with the local population for the use of resources. This is ensured by expanding the supply of sustainable energy, identifying and developing sustainable sources of water, and also offering training.
Green Hydrogen Business Alliance
For green hydrogen to achieve a larger share of the market, the expertise and innovation of the private sector will be needed. That is why the BMZ launched the Green Hydrogen Business Alliance (H2BA) in 2019.
The Alliance means that the Ministry is able to draw in its planning on the expertise of European enterprises regarding all aspects of green hydrogen and PtX. The Alliance is made up of businesses and associations from various stages of the PtX value chain, ranging from plant engineering, operation and logistics all the way to potential end users.
PtX Platform
The German government and the KfW Group have created a platform that brings together all their available instruments for supporting and financing PtX projects. The platform is intended to help close the financing gaps for capital-intensive PtX projects. Support is being provided for projects along the entire PtX value chain.
The core element of the platform is the BMZ’s PtX Development Fund. The aim of the Fund is to create local value chains in developing and emerging economies and to support the use of hydrogen and its derivatives. This will open up these countries’ access to the technology of the future. In this way, the Fund is contributing to a “just transition”, the transformation of the economy in a socially and ecologically sound way that is also equitable. At the same time, the German economy will benefit from new export opportunities and the opening up of access to new markets.
Other ministries and their activities
A number of German ministries, each working within their own remit, have joined together to help develop PtX products. The aim is to make them commercially viable as quickly as possible. Whilst initiatives that focus on supply are being coordinated by the BMZ (production of green hydrogen in development cooperation partner countries), those that are concerned with the demand side (developing the market for PtX products in Germany) are mainly being led by the Federal Ministry for Economic Affairs and Energy (BMWE), the Federal Ministry of Transport (BMV) and the Federal Ministry for the Environment, Climate Action, Nature Conservation and Nuclear Safety (BMUKN). In addition, the Federal Ministry of Research, Technology and Space (BMFTR) is funding pilot plants and living labs (used for peer-to-peer learning in an experimental environment) in Germany for demonstration purposes.
The German government has created a central “one-stop shop” hydrogen website with the aim of providing the various players in the hydrogen sector with the best support possible. It serves as a first port of call, offering both general information on hydrogen and its derivatives and a compact overview of all the German government’s instruments for supporting and advancing the rapid market ramp-up of hydrogen technologies at the national, European and international level.
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