Germany's Hydrogen Strategy: Securing Industrial Leadership in a Carbon-Neutral Economy

This chapter provides a review of Germany’s ambitious import-oriented hydrogen strategy. It places the German policy approach in the context of its broader Energiewende (energy transition) strategy, aimed not only at a transition of Germany’s energy and industrial system to carbon neutrality by 2045 but also at the promotion of the German Energiewende approach abroad. The chapter begins by providing a short review of the German Energiewende policy legacy, relating it to it emerging hydrogen policy. On this basis, it provides a comprehensive review of Germany’s National Hydrogen Strategy (NHS) with a particular focus on its outward-oriented elements. It discusses Germany’s external hydrogen policy along the following five dimensions: political dialogue and diplomacy (both bilateral and multilateral); interventions aimed at building international supply chains; cooperation in research and innovation; capacity building and skill development; and activities aimed at addressing questions of sustainability. The chapter closes with discussion of key strengths and weaknesses of the strategy and highlights areas for its further development. While Germany's outward-oriented approach is identified as an important strength of the strategy, it could place greater emphasis on cooperation with partners in the EU. Moreover, collaboration with partner countries, both in- and outside the EU, should go beyond the relatively narrow focus on the promotion of hydrogen production and trade. Rather, it should take a broader perspective, aimed at promoting competitive and resilient industrial value chains centered on the EU and its policy and regulatory model. In particular, countries in the European Neighborhood represent important partners in such a strategy. Broadening the scope of cooperation with these countries will also increase the incentives for these countries to engage in partnership development. Finally, the chapter points out that Germany has taken an ambiguous stance on the role that blue hydrogen should play in a future hydrogen economy. While its strategy comes out strongly in favor of green hydrogen, it is also pursuing partnerships for the import of blue hydrogen. This has resulted in a mismatch. While analytical capacities and standardization-related activities are being advanced for green hydrogen production, the government also needs to clearly define its stance on blue hydrogen imports and develop the needed analytical tools and policy instruments for this purpose.