Germany has held talks with its largest energy supplier, Russia, about the role of hydrogen in carbon transition plans.
Germany’s Ministry of Economy and Energy met with Russia’s Energy Ministry and expressed an intent to cooperate in sustainable energy, including hydrogen production and its transportation, as the European Union seeks a greater role for the clean burning fuel.
Both countries are highly interdependent in terms of energy. Russian-German cooperation on hydrogen technology could make key contributions and provide a chance for joint technology in the future.
Germany is Russia’s second-largest foreign trade partner after China, and energy products account for the vast majority of Russia’s exports to the country. Russia is Germany’s main supplier of natural gas, which accounts for 25% of all energy consumed in Germany. Russia is also Germany’s largest supplier of oil.
The transition away from carbon-emitting fuels will be a key issue for Russia and Germany as the EU increasingly goes green. Russia will certainly pay attention to client preferences for energy consumption. And Germany, meanwhile, has picked up momentum in its national drive to become carbon neutral by 2050, which implies more diversification in its energy use and supply.
Germany’s National Hydrogen Strategy sees the fuel, which burns without emissions, as holding a key place in achieving carbon neutrality. The EU industrial leader is ready to allocate €7 billion to the “market launch” of the national hydrogen industry and €2 billion for international partnerships.
The current buzz on hydrogen comes from the fact that one of its types – known as green hydrogen – can be made from renewable energy. In this way, energy sources like solar or wind are converted into a reliable, traditional and transportable fuel which burns emission free.
That would appear to put development on a different trajectory than the current Russian-German trade relationship. Yet the problem with green hydrogen is cost. It requires energy to make it. Renewables themselves are still gaining scale and competitiveness, but the general expectation is that there will be a significant cost reduction over the next 30 years.
Russia still has a massive surplus of energy – including in natural gas, where the bulk of hydrogen is sourced currently. So as a solution for the transition period and an impulse for the current Russian-German trade relationship comes from “blue” hydrogen. This hydrogen, mainly produced from the natural gas, is carbon-neutral and allows carbon capture.
So, it’s understandable to see the two sides talking. Russia is yet to publish its own national hydrogen strategy, but one report from the Energy Ministry forecsts Russian exports of clean hydrogen to reach $100 billion by 2050. The country is pursuing a renewables development strategy that is pressing ahead despite recent budget cuts.
And Russian industry leaders are exploring new hydrogen opportunities. Gazprom is testing zero-emission hydrogen production technology from natural gas and has plans to build hydrogen plants next to the outlet of the North Stream 2 pipeline to Germany. Rosatom has launched a comprehensive R&D programme to develop a roadmap for hydrogen energy on a global and national scale. Novatek is working on its own hydrogen projects with Total.
The will to shift away from carbon emissions is a tall order by any estimation, as it doesn’t imply any lower energy consumption. Transitions, while necessary, aren’t necessarily smooth. Energy suppliers and consumers are going to need to talk and cooperate to make it work.