The German government has decided to reboot Europe’s largest economy with a Euro 130 billion stimulus package that contains steps to further the country’s landmark energy transition. A key aspect of the package is the finalization of the national hydrogen strategy, earmarking Euro 9 billion ($10 billion) for the expansion of hydrogen capacity at home and abroad in a bid to meet emission targets. Under the plan, Germany eyes hydrogen capacity of up to 5 GW by 2030. A further 5 GW each are planned by 2035 and 2040 respectively.

The stimulus includes Euro 7 billion for domestic expansion, while a further Euro 2 billion euros is to be spent on forging partnerships with countries where hydrogen can be efficiently produced. Support for hydrogen production will include tenders for electrolyzer capacity focusing on a switch from fossil energy in large industrial processes. So-called Carbon Contracts for Difference are also set to play a key role in assigning support for pilot projects. According to the package, the government plans to exempt electricity used for green hydrogen production from the green power levy (EEG Umlage). Further, quotas will be reviewed for green kerosene as well as green steel, hydrogen-ready gas-fired power plants will receive additional support under the CHP law and hydrogen for heavy vehicle transport will be supported through refueling stations.

“The measures are aimed at making Germany the world’s supplier of state-of-the-art hydrogen technology,” the stimulus paper released by the government said, adding the government would explore the creation of a European hydrogen initiative to accelerate expansion.

Meanwhile, the country’s ambitious stimulus package will also reduce electricity costs by reducing the renewable energy levy (EEG) from 2021. The government will subsidize from the national budget the expansion in solar and wind power capacity. The EEG will drop to 6.5 euro cents per kWh in 2021 and 6 euro cents in 2022, compared with 6.76 euro cents this year.

REGlobal‘s views: Governments around the world are drawing up emergency plans to cushion the economic effects of the coronavirus crisis. Germany’s government expects it to cause the worst economic recession in the country’s post-war era, with the gross national product (GDP) dropping by more than 6 per cent in 2020. In its response to the pandemic, the government already introduced an initial rescue package in March. Beyond this immediate relief to save jobs and business from going under during the nationwide lockdown, a second installment now focuses on more long-term goals and highlights key areas for promoting innovation and more sustainable practices. And a key aspect of this long-term strategy is a greater focus on renewable energy which is believed to help in a faster economic recovery.