Hydrogen between vision and reality: BBH annual conference 2021
However, numerous details still need to be clarified and the opinions on the possible applications of hydrogen, its market launch and infrastructure are, in part, strongly divided. Hence, “building bridges with hydrogen” was chosen as the motto of BBH’s annual conference 2021, which also marked an additional milestone: 30 years of BBH. In his welcoming speech, Prof. Christian Held, who moderated the event together with Prof. Dr. Ines Zenke, emphasised: “We are all very grateful also to you for accompanying us on this journey.”
The foundation of the “hydrogen bridge” was laid last year in Germany with the adoption of the National Hydrogen Strategy. Since then, the Federal Ministry for the Environment (Bundesumweltministerium) has developed into a veritable “hydrogen department” according to Svenja Schulze, Federal Minister for the Environment.
Nevertheless, after the initial enthusiasm, a certain sobriety has started to set in, because the “coherent framework” called for in the National Hydrogen Strategy is still not in place. “If hydrogen is to serve as the bridge to greenhouse gas neutrality, we need the right political signals,” said Prof. Dr. Ines Zenke. There was a risk that the Apollo 11 mission, with which European Commission President Ursula von der Leyen compared the journey to climate neutrality, turns into an Apollo 13 crisis: Houston, we have a problem!
The Federal Minister for the Environment remained optimistic and spoke of hydrogen as providing a “window of opportunity”, first and foremost in those areas where there are no alternatives, i.e. in the industrial sector as well as in maritime transport and aviation. However, the additional costs related to the use of hydrogen as a bridging technology must be taken care of, not only in regard to investments but also operation costs. At the same time, Ms Schulze urged for quick action as regards climate protection: “In the next 25 years, we must be twice as fast as in the past 25 years”. Time was of the essence also in regard to the expansion of renewable energy sources which are fundamental to achieving “green” hydrogen.
Hydrogen has also been put on a firm foundation in Europe with the European Strategy for Hydrogen. As rapporteur of the European Parliament, MEP Jens Geier is an expert on this topic. Europe was now paving the way for hydrogen and a legal framework would follow at the end of the year, Jens Geier told the attendees at the annual conference of BBH. Working together with the European neighbours was particularly crucial in the establishment of a hydrogen industry: Electricity from countries with lots of energy and a potential electricity surplus, such as the Mediterranean regions, could be transported to other regions in Europe. How all this was to be regulated would also depend on the infrastructure.
There will be no hydrogen supply without a suitable infrastructure. However, the key question as to how such infrastructure is to be regulated is very controversial. At the BBH annual conference, Jochen Homann, President of the Federal Network Agency (Bundesnetzagentur), reaffirmed the view of Germany’s highest regulatory authority, according to which the gas and hydrogen industry should be governed by separate regulatory regimes in order to prevent the hydrogen grid from being cross-subsidised by the gas grid charges. He added that it is, however, possible to convert individual gas grids to hydrogen “if necessary”.
Would this agenda not lead to all gas grid operators being wound up all at once, wondered conference moderator Prof. Dr. Ines Zenke, who considered this to be a bleak scenario. Mr Homann took a different view: For him, it is important to establish the infrastructure only in the places where it is needed.
But is that a future-proof approach? Even if hydrogen currently plays a key role primarily in isolated industrial applications and even if natural gas is needed as an energy source in the foreseeable future, particularly in the area of heat supply, we still need to ask ourselves the question: What is next? The answer is: climate-neutral gases. According to the revised Federal Climate Change Act (Bundes-Klimaschutzgesetz), climate neutrality is to be reached by 2045. Would now not be a good time to start setting up the necessary infrastructure and regulatory scheme if we want to achieve a climate-neutral energy and heat supply? For Prof. Christian Held, the key issue is not maintaining the status quo for gas grid operators but ensuring a future-proof infrastructure. A starting point could be the current revision of the German Energy Industry Act (Energiewirtschaftsgesetz), which – presently – also aims at separate regulatory regimes for hydrogen and natural gas.
Separate regulatory regimes would also mean a separate financing of the natural gas infrastructure on the one hand and that of hydrogen on the other. Bernd Westphal, Member of the Bundestag and spokesperson for economic and energy policy of the SPD parliamentary group, emphasised that this approach would not ensure the coverage of the costs for setting up a hydrogen infrastructure. He called for an agenda under the motto “infrastructure first” in the framework of which costs are regulated to enable investments in the first place.
Lukas Köhler, Member of the Bundestag and spokesperson for climate policy of the FDP parliamentary group, also argued in favour of an integrated hydrogen and natural gas strategy. In his opinion, the separation of hydrogen and natural gas should come to an end – preferably as early as in the current revision of the German Energy Industry Act by replacing the term “natural gas” with “gas”, a change that would suffice to expand the scope of applicability to hydrogen.
Alas, simple copy and paste cannot solve all energy policy issues. Another issue that needs to be tackled is the future treatment of the EEG surcharge – specifically in connection to hydrogen as well as in regard to the general mechanism. The former is still in the hands of the current legislator, while the latter has already found its way into a number of election manifestos; and it will generally be the task of the next Bundestag to promote the energy and climate transition and ensure that it is designed in an affordable manner. According to Prof. Dr. Ines Zenke’s summary, this is necessary to make sure that industrial companies and the economy will prosper in Germany also in the future.
Andreas Steier, Member of the Bundestag and rapporteur on AI in, among others, the CDU/CSU parliamentary group, argued that a discussion about the efficiency of hydrogen is of secondary importance. It would be relevant only in the event that resources were limited, which was not the case with regard to wind and sun.
Dr. Ingrid Nestle, Member of the Bundestag and spokesperson for energy policy of the Bündnis 90/Die Grünen parliamentary group, immediately objected stating that there definitely is a limited availability of renewable energy in Germany as its expansion is not yet sufficient. The determination of future development corridors will in any case be another task of the next federal government.
While it is necessary to look ahead, one thing must be borne in mind: A range of hydrogen projects are already being implemented right now. This concerns not only projects in industrial settings but also municipal model regions. The lunchtime talk with BBH partner Dr. Martin Altrock and BBHC board member Marcel Malcher provided the attendees with a good overview of the current best practices.
But how can we build a bridge into a diverse future? For Ingbert Liebing, CEO of the German Association of Local Utilities (VKU), it was clear that hydrogen has a role to play with regard to heat supply and decentralisation. He argued in favour of the continued use of the existing infrastructure. Torsten Maus, CEO of EWE NETZ GmbH, also emphasised the importance of hydrogen in heat supply and called for a mixed system. Holger Lösch, Deputy Director General of the Federation of German Industries (BDI), believed that the role of hydrogen is not limited to that of a bridging technology; in his opinion, hydrogen may even be a driver of climate neutrality. Nevertheless, he felt that there was no integrated view on climate protection in the current discussion concerning hydrogen which overly compartmentalised the issue. Dr. Peter Feldhaus, CEO of Onyx Germany GmbH, agreed that “the establishment of the hydrogen industry is of immense importance for the industrial sector.” At the same time, he called for an open-minded approach to the subject which should also extend to the different types of hydrogen. Andreas Kuhlmann, CEO of the German Energy Agency dena, referred to hydrogen as the missing link that is urgently needed but also said that “we will still have to cope with numerous delays, which is why we have to explore many other routes in parallel to ensure that we meet the climate objectives.”
Finally, a difficult task of BBH’s annual conference fell to Dr. Dörte Fouquet, partner of counsel at BBH, who provided the attendees with a short summary of the abundance of topics addressed over the course of the day. Quo vadis, hydrogenium? This is yet to be clarified. The revised Energy Industry Act will be an important step. But in which direction?
Becker Büttner Held is a leading provider of advisory services for energy and infrastructure companies and their customers. Energy and supply companies, particularly public utilities, municipalities and local authorities, industrial companies and international groups are among its core clients. BBH advises these and many other companies and organisations in all legal matters and also assists them with business and strategic advice.
Prof. Dr. Ines Zenke
Lawyer (Rechtsanwältin), Partner
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