H2Global

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H2Global is a German funding project launched in 2020 for the production of green hydrogen (H 2 ) and Power-to-X products (PtX), with the aim of converting excess electricity generated by renewable energies into hydrogen (or similar storage media). The aim of H2Global is to create sufficient planning and investment security for operating companies and investors to invest in production and plant capacities on an industrial scale today, without the existence of a functioning green H 2 and PtX market.

Motivation and intentions of H2Global

In line with the Paris Agreement , which came into force in November 2016 , the EU and Germany have set themselves the climate protection target of reducing greenhouse gas emissions by 80 to 95% by 2050 compared to 1990 levels. In order to achieve this long-term climate target and to advance the transformation into a CO 2 -neutral future, the German government has classified the promotion and production of hydrogen produced on the basis of renewable energies as "indispensable". However, according to current estimates, the demand for green hydrogen in Germany will, at least in the medium term, exceed the possible supply in Germany. Germany will have to import H 2 and H 2 derivatives in order to achieve its decarbonization goals. In addition, the production price of green hydrogen and its PtX derivatives ( e.g. so-called e-fuels such as green kerosene ) is currently significantly higher than the price of their established fossil-based counterparts. Therefore, there is also a significant price difference between the supply and demand prices for green hydrogen and its derivatives, which will prevent the segment from ramping up the market for the foreseeable future.

H2Global therefore addresses the following goals, which were laid down in the Federal Government's National Hydrogen Strategy (NWS) published in June 2020:

  • a swift and efficient global market ramp-up and the associated scaling and cost reduction of the production of green H 2 and its secondary products in a phase in which the necessary regulatory framework conditions have not yet been implemented (bridging function) that would be necessary for a market-relevant price. H2Global is clearly limited in terms of time and volume.
  • the support of private investments in the economical and sustainable production as well as the transport and the use of green hydrogen in order to stimulate a long-term market economy demand for emission-free produced hydrogen and its derivatives in Germany.
  • the establishment of hydrogen supply chains to Germany.

functionality

Double auction model and compensation of differential costs

In order to combine supply and demand, the concept provides for the establishment of a non-governmental intermediary (special-purpose operation with the name Hydrogen Intermediary Network Company "HINT.CO"). This determines the best or cheapest offer (worldwide or in a certain region) for a defined amount of green hydrogen or a derivative using competitive procedures and concludes long-term purchase agreements (Hydrogen Purchase Agreements - HPA) including delivery to Germany. The intermediary then concludes shorter-term sales contracts (Hydrogen Service Agreements - HSA) with buyers in Germany (“double auction model”). For the foreseeable future, the purchase price will still be significantly higher than the achievable market price in Germany. The intermediary compensates for the remaining difference between the purchase and sales price with a corresponding federal grant. Via this compensation mechanism, the model refers to existing Contracts-for-Difference (CfD) approaches. The long-term purchase agreements and the high creditworthiness of HINT.CO due to the existing risk assumption by the federal government provide the necessary planning and investment security for the development of large-volume electrolysis capacities and transport infrastructure.

Possibility of reducing the difference

Due to the prospective adjustment of the regulatory framework (e.g. ambitious implementation of RED-II) and the resulting gradual increase in demand and willingness to pay for CO 2 -free energy sources, the sale of green hydrogen and its derivatives will in all likelihood get a premium in Germany in the medium term compared to gray hydrogen or PtX derivatives. Due to the divergence of deadlines on the part of the purchase and sale contracts of HINT.CO, HINT.CO can participate in a potential increase in market prices for CO 2 -free energy sources when selling, in the sense of a symmetrical market premium model . The necessary compensation for the cost difference by the federal government would thus be reduced over the term of the purchase agreements (HPA). The funds provided by the federal government to offset the differential costs could thus be used for new, additional auctions or flow back to the federal government. With the same use of funds, additional auctions can be carried out and H2Global offers an upside potential, so that significantly more projects can be funded and a higher electrolysis capacity can be installed beyond the ex-ante defined minimum output.

Implementation through the foundation

H2Global is implemented by a foundation under civil law (possibly as a consumption foundation according to Section 80 (2) sentence 2 BGB). The foundation will be the recipient of BMWi grants, which it will use to compensate for the losses from the H 2 sale. In accordance with its budgetary obligations (§ 23, 44 BHO), the BMWi defines the exact purpose and use of these grants in coordination with other departments. The intermediary, the HINT.Co, is designed as a special purpose operation of the foundation in the legal form of a GmbH, of which the foundation is the sole shareholder. The HINT.Co is responsible for buying and selling the green hydrogen and the H 2 derivatives via corresponding tenders and auctions. HINT.Co will use an external service provider to carry out the auctions. The Foundation's Board of Trustees ensures compliance with the purpose of the grant and the requirements for the use of funds as set out in the grant notices of the BMWi. For this purpose, all regulations are developed, (market) publicly communicated and monitored in the foundation, which form the basis of the procurement and sales-side auctions as well as the participation of the respective market participants. The foundation will regularly make use of suitable external specialist institutions and service providers. The foundation is represented in public by an elected president.

development

In autumn 2020, a project team from the German Society for International Cooperation (GIZ) submitted an initial concept sketch of H2Global to the Federal Ministry for Economic Affairs and Energy (BMWi) in order to achieve the goal of a timely market ramp-up of green hydrogen products. After a funding commitment from the ministry , this was further developed in a second phase by a team of experts under the project sponsorship of the German Hydrogen and Fuel Cell Association (DWV), in cooperation with GIZ and other partners. At the “Berlin Energy Transition Dialogue” conference in May 2021, the BMWi announced the start of H2Global. In June 2021, a foundation, the H2Global Foundation based in Hamburg , was set up, through which green hydrogen or derivatives are to be purchased abroad with long-term contracts and resold in Germany via annual auctions. In December 2021, the German Hydrogen and Fuel Cell Association received a dedicated grant of 900 million euros from the Federal Ministry for Economic Affairs and Climate Protection. The funds are available for finalizing the H2Global concept.

Individual evidence

  1. ↑ Klaus Stratmann: How Germany wants to secure access to green hydrogen. In: Handelsblatt. November 17, 2020, accessed April 10, 2021 (German).
  2. ↑ BMBF Internet editorship: National Hydrogen Strategy - BMBF. Retrieved April 7, 2021 .
  3. ↑ BMWi plans auction program for the import of green hydrogen. Retrieved on May 21, 2021 (German).
  4. ^ Klaus Stratmann: Green hydrogen: Germany paves the way for industrial production. In: Handelsblatt. January 8, 2021, accessed April 10, 2021 (German).
  5. ↑ Klaus Stratmann: Turbo with green hydrogen: The global breakthrough for the energy carrier is in sight. In: Handelsblatt. February 18, 2021, accessed April 10, 2021 .
  6. ^ Frankfurter Allgemeine Zeitung: New instrument for promoting green hydrogen. June 14, 2021, accessed June 22, 2021 .
  7. ↑ Including the law firms Wellmann & Klein, Redeker Sellner Dahs , Becker Büttner Held , the East Bavarian Technical University of Regensburg , the Energy Economics Institute at the University of Cologne and the Fraunhofer Institute for Solar Energy Systems
  8. ↑ https://twitter.com/bmwi_bund/status/1371883969399070723. Retrieved May 21, 2021 .
  9. ↑ H2Global Foundation established in Hamburg. Retrieved June 22, 2021 .
  10. ↑ Federal Ministry for Economic Affairs and Energy: Altmaier: "Advancing the international market ramp-up of green hydrogen". Retrieved June 22, 2021 .
  11. ↑ Federal government releases almost a billion for hydrogen funding instrument , Wirtschaftswoche, December 23, 2021.