Solar system Solar Jama in the Atacama Desert in Chile

Green hydrogen and Power-to-X products

Global energy consumption is set to grow by 50 per cent by 2050; in developing countries and emerging economies it will increase by as much as 70 per cent. This means that green hydrogen is absolutely essential to a successful energy transition and to achieving international climate goals. It can be used, among other things, to produce climate-neutral fuels. They are called Power-to-X products (PtX). Green hydrogen can also be used to store energy. That makes green hydrogen a key commodity in a successful energy transition.

How it works

Using a procedure known as electrolysis, sustainably generated electricity is used for the decomposition of water into oxygen and hydrogen. By adding carbon dioxide (CO2) from the air, the hydrogen can then be turned into climate-neutral synthetic liquid fuel (power-to-liquid) or fuel gas (power-to-gas).

Green hydrogen and PtX derivatives can make a crucial contribution towards reducing the carbon emissions of industries where electrification would be very difficult, for instance aviation and marine transport. The technology can also be applied in other emission-intensive areas, like the steel and chemical industries.

Wind farm in the Atacama Desert, Chile

Wind farm in the Atacama Desert, Chile

Wind farm in the Atacama Desert, Chile

Green hydrogen and PtX as an economic opportunity for the BMZ's partner countries

The production of green hydrogen and PtX products requires massive amounts of electricity from renewable sources. However, Germany does not currently have enough renewable energy to produce all the climate-neutral liquid fuel and fuel gas it will need in future. Germany will therefore have to import PtX products over the medium to long term.

The Federal Ministry for Economic Cooperation and Development (BMZ) regards green hydrogen as an opportunity for Germany's partners in development cooperation. The production of green hydrogen and PtX derivatives provides new opportunities for economic development, especially for developing and emerging economies that have a wealth of renewable energy sources.

It will enhance local value chains and economic diversification, and it will contribute to energy security and the creation of jobs, including for young people. The sites for production will be chosen jointly with the partner countries.

Simultaneously, the development of a hydrogen industry offers a broad range of opportunities for boosting a transformation process towards sustainable local energy supplies. In all its cooperation projects, the BMZ will only support green hydrogen from renewable sources, not hydrogen from fossil energy.

A training class in the ProAndres training centre for the training as solar technician in Santiago de Chile

A training class in the ProAndres training centre for the training as solar technician in Santiago de Chile

A training class in the ProAndres training centre for the training as solar technician in Santiago de Chile

National hydrogen strategy – Germany pioneers green hydrogen

One challenge to be faced – in addition to sourcing sufficient renewable energy – is how to develop the market for PtX products. Improved technology and, in particular, economies of scale in the field of production, together with smart regulation, can help to bring costs down dramatically, thus stimulating greater demand.

There are great opportunities to be had here for German businesses. They can use the skills and technologies they have to build and operate “green refineries” and become pioneers of hydrogen technology.

In order to seize this opportunity for industry and put Germany at the vanguard of green hydrogen, the German government has published a National Hydrogen Strategy (External link) (PDF) and an action plan. The purpose of the strategy is to foster the production of affordable climate-neutral hydrogen and to make Germany a global provider of state-of-the-art hydrogen technology. Pilot projects for the production of green hydrogen are to be implemented in the BMZ's partner countries.

The BMZ is also putting together “green hydrogen atlases” to present the potential for green hydrogen production in our partner countries and highlight opportunities for sustainable development in Africa.

Solar power plant in a desert

Solar power plant in a desert

Solar power plant in a desert

Development of a PtX supply – BMZ plans construction of 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 a reform partner country of the BMZ and a pioneer in renewable energy in Africa. In Ouarzazate, one of the world's biggest solar power plants has been built with German support. It provides climate-friendly power for 1.3 million people.

Under the partnership with Morocco, the first step will be to build Africa's first industrial plant for green hydrogen and PtX derivatives. The two sides are planning to establish some 100 megawatts in electrolysis capacity. The aim is to show that competitive PtX products can indeed be generated in the partner countries of German development cooperation.

One point of vital importance to the BMZ when the plant starts operating is that the energy and water resources required be used sustainably; any competition with the surrounding community over the use of resources must be avoided. During project implementation, the two sides will therefore ensure that there will be measures to expand the energy supply, tap sustainable sources of water and offer training.

Business Alliance on Energy

The expertise and innovative drive of the private sector will be required for the development of the market. With a view to integrating the technology and skills of German businesses in the field of hydrogen and PtX into the Ministry's plans at an early stage, the BMZ launched the Business Alliance on Energy in 2019.

The Alliance is made up of businesses and associations from the various stages of the PtX value chain, ranging from plant engineering, operation and logistics all the way to potential end users. The purpose of the Alliance is to enable the BMZ to involve the private sector in its activities, for instance in order to launch PtX projects in partner countries. Among other things, market studies will be conducted regarding the expected development of specific business scenarios. There are also regular meetings with the companies participating in the alliance so as to provide an opportunity to exchange ideas on technical issues related to the PtX value chain.

Other ministries and their activities

The 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. Initiatives that focus on supply are being coordinated by the BMZ (production of green hydrogen in the 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 Climate Action (BMWi), the Federal Ministry for Digital and Transport (BMDV) and the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV). The Federal Ministry of Education and Research (BMBF) is funding pilot plants and living labs in Germany for research and demonstration purposes.

Under its Power-to-X action programme, the BMUV plans to establish a PtX Secretariat that will help to advance demonstration projects in partner countries and to ensure the exchange of knowledge through an international Power-to-X network. (BMUV action programme (External link))

The BMBF plans to conduct several studies and set up research partnerships to exchange knowledge on hydrogen with international partners.