Germany and the EU are committed to achieving climate neutrality, which requires completely turning away from fossil fuels by 2050. However, it is not possible to substitute these by the direct use of renewable energies in every area – for instance in aviation and shipping or the basic chemical industry – due to the required energy densities or process technology restrictions. This is where green hydrogen or green synthesis products derived from it such as methanol, methane or ammonia come into play.

Since neither Germany nor the EU has sufficient low-cost renewable electricity available to produce green hydrogen domestically, importing sustainably produced green hydrogen and synthesis products is currently being discussed. Countries with favorable climatic conditions could manufacture these products cost-effectively using renewable electricity and then export them to Germany or other countries. This means that Germany would remain a major importer of energy in the future as well with far-reaching consequences that should be carefully weighed up at an early stage.

New policy brief on importing hydrogen

Against this background, Fraunhofer ISI has published a new policy brief “Opportunities and challenges of importing green hydrogen and synthesis products”. Its objective is to look beyond the previously discussed techno-economic questions of importing hydrogen in the future and to approach this topic from all possible angles. It addresses the issues of climate neutrality and sustainability, technical and economic potentials, but also the available capital, governance, and local impacts.

For example, the policy brief highlights the fact that green hydrogen can be used as a material in steel-making, refinery processes, and basic chemicals, or energetically to generate process heat in various industrial applications, such as in the glass or paper industry for CO2-neutral production. Using hydrogen in applications with high energy densities, such as international air and sea transport, is currently more difficult. These have to rely on the synthesis products of hydrogen to reduce greenhouse gas emissions. However, these products require additional conversion steps and CO2, and the applications are dependent on combustion processes, which lead to further losses of efficiency and additional costs.

Cornerstones of a future market

In addition to greenhouse gas reductions, the policy brief also outlines the cornerstones of a future market for hydrogen imports to Germany and Europe, a market which could be worth between 100 and 700 billion euros per year. The range here is due to uncertainty about the possible applications of hydrogen and the energy sources derived from it. However, imports are considered necessary, because the renewable energy potentials in Germany and the EU will most likely not be sufficient to meet the future demand for hydrogen cost-efficiently due to availability, economic efficiency, and acceptance issues.

In addition to many potentials, importing hydrogen is also accompanied by challenges. First of all, the relevant production and transportation capacities have to be established, which will take time and capital. To keep possible new import risks low, long-term relationships based on partnership should be built to democratic, politically, and economically stable countries producing the hydrogen. It is also important to develop and apply sustainability criteria so that these countries are able to meet their domestic energy and climate policy goals. Measures such as investment support or a guaranteed demand for hydrogen can help to create attractive market conditions for the exporting countries to produce and transport hydrogen. Finally, the creation of jobs in the hydrogen producing countries and the expansion of local value added are major drivers for the development of a globally networked hydrogen economy.

It is especially important to integrate the hydrogen economy into the general governance of transforming the energy system. This results in a hierarchical “energy efficiency first” principle, which gives priority to reducing energy demand, decarbonizing the power sector using renewables, and using renewable electricity directly before developing a hydrogen economy. This can help to limit the effects of conversion losses in hydrogen production.

Technology sovereignty issues for hydrogen technologies

From the viewpoint of the importing countries, the policy brief also addresses and assesses technology sovereignty issues for hydrogen technologies. For Germany and Europe, there seems to be more of a risk regarding the reliability of the countries exporting green hydrogen than regarding access to existing technologies. Conversely, from the viewpoint of many exporting countries, both the available technology knowledge and the manufacturers of the technologies are located abroad, which is why the concept of technology sovereignty needs to be extended to include the perspective of developing countries.

The head of the Competence Center Energy Technology and Energy Systems at Fraunhofer ISI, Prof. Martin Wietschel, who coordinates all the research conducted on the topic of hydrogen, concludes: “At present, too little is understood about importing green hydrogen in all its complexity, and, as a result, the future challenges and tasks to be solved are partially underestimated. This is why a comprehensive analysis should be made of possible hydrogen imports and their consequences, to which we want to contribute with our policy brief”.

The Fraunhofer Institute for Systems and Innovation Research ISI analyzes the origins and impacts of innovations. We research the short- and long-term developments of innovation processes and the impacts of new technologies and services on society. On this basis, we are able to provide our clients from industry, politics and science with recommendations for action and perspectives for key decisions. Our expertise is founded on our scientific competence as well as an interdisciplinary and systemic research approach.