We are calling for a domestic market for the green hydrogen economy
For green hydrogen to fulfil its potential in terms of climate protection and industrial policy, the foundations must be laid for the market to take off. This will require incentives on the production and application side.
Developing a green hydrogen economy requires an adequate network and storage infrastructure. This infrastructure must keep pace with developments in the production and sales markets in line with demand. This entails the adaptation of the regulatory framework.
To achieve this, planning of electricity and gas infrastructures must be integrated into the system. The networks of these two markets are currently being developed separately. To optimise the costs of the transformation, a market-based mechanism that takes all consumption sectors into account is needed. The regulatory framework must also ensure funding for investments in the construction and retrofitting of pipelines and storage. In this early stage, a market-based approach should be pursued through initial large-scale projects, with a gradual transition to the regulation of access and terminal tariffs.
Hydrogen storage systems play a crucial role in a sustainable energy supply system, as they are the only way to fully harness the possibilities offered by the flexibility of green hydrogen. A targeted planning and financing mechanism is also needed for hydrogen storage, similar to that for network infrastructures. To do justice to the projects currently being planned on the generation and sales side, the first market projects for the use of hydrogen storage systems should also be supported by appropriate support schemes.
In order for green hydrogen to gain a foothold in the market, demand must be stimulated in potential sales markets. These are the areas where direct electrification is not practical. The main sectors in this regard are industry and transport, and possibly heat and electricity as well.
Green steel production plays an important role in the industrial sector. A combination of different approaches will be needed to absorb the current additional costs. In addition to a market-based incentive to use green steel, instruments such as Carbon Contracts for Differences (CCfDs) and related incentive programmes can support a market ramp-up for green steel. Another important step is to create a competitive market environment through CO2 pricing and the possibility of border taxes for grey steel.
In the transport sector, green hydrogen has the potential to complement battery electric mobility, especially in the commercial vehicle sector. In the chemical sector, green hydrogen eliminates significant amounts of CO2 that are produced when conventional hydrogen is used. The Renewable Energy Directive represents an important step for the refinery sector towards the acceptability of green hydrogen in the production process, and is transferable to other areas of application.