German advisory body the National Hydrogen Council has called on the government to accelerate a pilot scheme for carbon contracts-for-difference (CCfDs) for industries switching to use green hydrogen and to broaden the scope of the scheme.

The council, set up by the government to assess the implementation of the National Hydrogen Strategy, includes senior figures from German firms Siemens, Uniper, Linde and ThyssenKrupp.

“CCfDs are a key tool for balancing out higher operating costs” National Hydrogen Council

CCfDs, which are included in Germany’s National Hydrogen Strategy, bridge the difference between carbon prices and the cost of deploying clean hydrogen in industrial processes.

“CCfDs are a key tool for balancing out the higher operating costs, including debt servicing, of hydrogen-based low-carbon industrial processes,” the council says in a hydrogen action plan for 2021-2025, aimed at the next federal government following elections in September.

CCfD support should be long term with binding funding commitments to create a sufficiently robust planning basis for industrial investments, according to the council. Germany’s use of CCfDs would need to comply with EU state aid rules.

“The CCfD must be anchored in the EU state aid framework in the short term. In the long term, EU harmonisation should be sought,” the council says.

The council also reiterated calls for the government to clarify the role of blue and turquoise hydrogen in Germany. The German hydrogen strategy puts a strong emphasis on green hydrogen, but there are calls to acknowledge the role of blue hydrogen while green hydrogen production is ramped up.

Germany has shunned carbon capture and storage, which is a key element of blue hydrogen production, following the failure of pilot projects in the past.

“The federal government must make a political decision on the role of blue and turquoise hydrogen,” the council says. “The extent to which these forms of production are promoted will have a significant impact on the design of the various funding instruments.”

 

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Author: Stuart Penson