Germany scraps renewable fee on green hydrogen to encourage new technology

Germany’s government on Wednesday lifted a charge levied on power prices to support renewable energy for producers of so-called green hydrogen, part of a bid to encourage the nascent technology for low-carbon fuels.

Germany scraps renewable fee on green hydrogen to encourage new technology

The Berlin cabinet decided to waive the renewable energy fee under the EEG feed-in tariff law for electricity derived from wind and solar sources following an economy ministry initiative, government sources said.

Green hydrogen, which is produced via electrolysis while conventional hydrogen is produced using fossil fuels, is meant to help decarbonise energy used in industry, transport and for heating buildings.

Germany hopes to close the cost gap between the two products within 10-15 years, helped by a 9 billion euro ($10.8 billion) national strategy it passed earlier this year to meet long-term climate goals and transform its industries.

The draft law said hydrogen could be key to building up climate-neutral energy sources and storage, but that it was important to cut its costs.

“In view of the currently still high costs of hydrogen production, a market ramp-up – and the associated reduction in investment costs through economies of scale and learning effects – is only possible through creating cost-cutting framework conditions,” it said.

The government estimated that between 230 and 290 projects would apply for the waivers up to 2030.

The government also intends to monitor effects of the measure in 2022 and look into further activities to boost green electricity in power systems.

The EEG surcharge was introduced to support the expansion of carbon-free green power from wind and solar plants.

The government capped it earlier this year to help household customers for whom it makes up a fifth of their power bills, and because renewable production costs have fallen steeply.

Originally published at Auto economic times