The hydrogen market in Germany

For some time now, hydrogen has been regarded as an energy source which plays a key role in the success of the energy transition (Energiewende) and in achieving the aspired greenhouse gas neutrality by 2050. On 10 June 2020, the German Federal Government announced the long-awaited "National Hydrogen Strategy". In addition to the goal of reducing greenhouse gas emissions, the hydrogen strategy should also serve in particular:

  • to develop a domestic market for hydrogen technologies in Germany in order to strengthen the German economy and to secure global market opportunities for German companies,
  • to make hydrogen competitive and establish it as an alternative energy source,
  • to make hydrogen sustainable as a raw material for industry,
  • to further develop the infrastructure for the production, transport, storage and use of hydrogen,
  • to support science on this topic and to train specialists, and
  • to establish international markets and cooperations for hydrogen.
  • Germany is assigned a leading role in connection with the development of the European hydrogen market. While other countries have in part already announced their own hydrogen strategies, it is expected that the ambitious strategy of the largest European economy outlined in the summer will be decisive for the development of a comprehensive hydrogen market in Europe. This objective is also pursued by the European hydrogen strategy, which was published only shortly after the German National Hydrogen Strategy.

    Based on the National Hydrogen Strategy, the aim is in particular to improve the framework for the development of the technology. The initiative is also intended to lay the foundation for private investments in the economic and sustainable generation, transport and use of hydrogen. At the same time, the National Hydrogen Strategy and the announced investments of EUR9 billion are explicitly intended to contribute towards coping with the consequences of the Corona crisis and to revitalizing the German and European economy.

    The Federal German Government has identified the following areas as strategic future markets aimed at by the National Hydrogen Strategy:

    The Federal German Government is, however, also placing the National Hydrogen Strategy in an international context. It emphasizes the importance of the market ramp-up of hydrogen technologies as a joint European project, the necessity of developing international markets and of expanding the transport and distribution infrastructure at home and abroad, and shows the export potential of German initiatives and research activities in connection with hydrogen technologies. This goes hand in hand with the objectives of the European hydrogen strategy, which emphasizes the international dimension of the hydrogen economy and at the same time aims to strengthen the EU's leading role in hydrogen technology worldwide.

    The National Hydrogen Strategy provides for a specific plan of action for the coming years, which comprises a total of 38 measures in connection with the generation of hydrogen, in the various future markets, in the fields of research, education and innovation and in the area of cross-border coordination and cooperation. The strategy places a strong focus on the use of so-called "green hydrogen" (i.e. hydrogen having been generated with renewable electricity and thus being CO2-free); so-called "blue or turquoise hydrogen" (i.e. hydrogen generated by the conversion of fossil fuels (in particular natural gas)) should at most be used on a transitional basis.

    From a legal point of view, the implementation of the National Hydrogen Strategy will confront the different market players with numerous issues. The main areas of focus are the following:

    Establishment of a hydrogen infrastructure

    • Planning and approval processes
    • Issues regarding environmental law
    • Product safety aspects
    • Financing of infrastructure projects
    • Subsidies
    • State aid law issues in the case of state subsidies

    Transport and storage

    • Use/Redesignation of existing gas infrastructure
    • Regulation of the transport and distribution infrastructure and access to networks and storage facilities
    • Landing of offshore pipelines
    • Aspects of unbundling
    • Pipeline rights
    • Use of different storage technologies

    Hydrogen generation

    • Use of renewable energies
    • Certification of the "green feature"
    • Exemption from taxes, duties and levies on the purchase of electricity for hydrogen generation
    • CO2 capture and storage (CCS)

    Trade

    • Establishment of an international trading market with standard products
    • Trading via regulated markets
    • Collateralization of commercial and supply agreements

    Use of hydrogen in the industry, transport and heating sectors

    • Access to hydrogen networks and storage / Development of (closed) distribution infrastructure
    • Support mechanisms
    • State aid law issues in the case of state subsidies
    • Carbon Contracts for Difference (CCfD)
    • Development of quality and access standards
    • Refurbishment of old plants
    • Building infrastructure / Fuel cell heating devices

    International coordination and cooperation

    • Harmonization of German and European regulations
    • Development of cross-border (also regulated) trading markets and standardized trading conditions
    • Regulation of and access to cross-border transportation networks and storage facilities

    Research and development

    • Securing of know-how
    • Patent law
    • Approval and funding of research institutions

    Our cross-practice sector teams are very familiar with the legal issues relating to the identified core areas and, for example, regularly advise industrial, transport and energy sector clients. The teams are closely linked internationally and can thus also benefit from experience in other regions.

    This places us in an excellent position to support you with respect to your plans and regarding all legal aspects and challenges associated with the hydrogen market.