When someone calls me a string puller working behind the scenes, I take that as a compliment. It is clear that neither the combustion engine nor the oil-fired boiler are the problem, but rather the fuels used. In terms of oil-fired heating, I advocated more efficiency very early on. Even then, however, it was foreseeable that it could not just be about using less primary energy: we would also have to integrate an increasing amount of energy from renewables, meaning we would need hybrid heating systems and also green fuels.
The goal now is for us to become climate-neutral. This means a fundamental shift in the business model for our industry. This is also the conviction of the industry on whose behalf I speak. We want to do more than pay lip service: we want our actions to speak for themselves.
I have the impression that many people underestimate the scope and magnitude of the challenge, especially those in the political realm. It’s about restructuring industry, the entire economy. For many industries, we are talking about billions in investments and, above all, extremely large amounts of affordable renewable energy. What’s more, it is important to get consumers on board as well. The building sector has been a focus of mine for many years and I know its specific challenges. A good 70% of residential units are still heated with oil and gas today. So here, too, we still have a big challenge ahead of us.
That is why I believe that one would be wise to make use of all possibilities – even the offbeat solutions – so that, in the competitive world, the best one or ones will come out on top. For us, competition is the decisive factor here. That is why we are very sceptical when hearing calls for total bans on combustion engines or certain types of heating. All climate-neutral options must be given a fair chance.
Yes, in Germany today we have around 20 percent electricity in the energy mix and 80 percent molecules. In more electrified countries like France, electricity counts for around 25 percent. Of course, that must and will change. From our point of view, it is also obvious that direct electrification is required to a significant extent. None of us know, however, whether for many sectors this is the only solution that will work on its own in the long term. One can definitely have doubts in that regard. In politics, however, simple messages are naturally better received than complicated ones. That makes it challenging if you really want to ultimately protect the climate, but are not among the proponents of simple strategies.
Hydrogen is needed for many industrial applications that can only become climate-neutral in this way. This need is actually rather underestimated. The decision of the German Federal Constitutional Court on the Climate Change Act will probably also lead to climate-neutral hydrogen becoming even more important. A study by the chemical industry from around two years ago shows that the industry itself, as a customer, views it this way too. The study revealed that complete decarbonisation of this industry through the use of green electricity would require 600TWh of electricity per year, which on its own would double the demand for electricity in Germany. Currently, in Germany solar and wind generate around 200TWh of electricity. From this alone it is evident that we need to import climate-neutral hydrogen: we cannot meet this demand strictly with electricity generated in Germany.
There are also other areas of application, like for steelmaking or process heat in many industrial sectors. We also believe that there are significant fields of application for climate-neutral hydrogen in the transport sector, at least for heavy transport and certain parts of rail transport. Freight traffic is important, and I have my doubts about the electrification of long-distance trucks: there is too much to be said against it, such as the performance of the batteries, their weight, downtime due to charging, etc. So, there is also a lot to be said for the use of hydrogen in this area.
We’ll just have to see what happens with cars in the future. It is by no means certain that e-mobility is the only option for all customers, with their wide variety of usage profiles. I definitely see a market for climate-neutral synthetic fuels as part of the solution. Many studies do not consider the whole spectrum. Driving electric is, of course, an option if you only have to drive 20km to work every day; holiday trips or long business trips are a different matter, however, especially if half of Germany wants to go on holiday at the same time. Providing sufficient charging capacity will remain the challenge, not supplying the required amount of energy.
I think we need fewer discussions on leaving fossil fuels behind and more on introducing climate-neutral alternatives. And the challenges are so great that we cannot afford to do without certain technologies: the risks would be far too great. Rather, we need to discuss how we can get started with new technologies quickly and on a large scale. For some, this open attitude is frowned upon, and I have to deal with that. But I take it good-naturedly because there are good reasons for it. For many of our members, too, it is true that they need to keep investing in the fossil fuel sector to a reasonable degree, also to ensure security of supply, but at the same time they need to become involved in hydrogen projects, like the one at NortH2 in the Netherlands.
We definitely need climate-neutral energy imports, from near and from far. We will also have to bring in hydrogen, ammonia, ethanol and synthetic crude oils from further away. I think we need all of this, and ruling out one of these possible solutions for a climate-neutral future now already is not very constructive.
For decades, the Netherlands has supplied a lot of natural gas to Germany alongside other supplier countries like Russia and Norway. We should also try to ensure that we have a diversified supply structure in the future when it comes to renewable energy carriers. We need to avoid being too dependent on any one source, and this is the best way to achieve security of supply and competitive prices. On the other hand, it should be clear that hydrogen is a bit more complex to transmit in pipelines than natural gas, also in terms of energy consumption. The shorter the distance, the better. Only the future will show how transmission costs will develop. I do think, however, that the short distance will make it more profitable if the Ruhr area, for example, were to be linked to the Netherlands on the hydrogen side, as NortH2 is planning.
We now have to discuss how we can create the right framework conditions so that these different options can develop and also become business cases. At the end of the day, this should become more than just interesting thoughts on paper: many billions of euros need to actually be invested in such projects.
In any case, we are conducting an energy policy debate that is very much focused on Germany and therefore too limited, and one which is often directed too much towards self-generation of renewable electricity. I think that’s naive, at least when it comes to industry and manufacturing. If Germany wants to remain a strong industrial location, we need to have a competitive energy supply in the future as well. Global markets for green energy carriers can and will need to make a significant contribution to this. Given the limited space in relation to the energy demand, and, of course, also due to the not particularly favourable solar and wind conditions compared to other places in the world, when it comes to the supply of renewable electricity in Germany we have a perpetual disadvantage with regard to location. If we want to remain competitive, we cannot succeed in this with an energy supply debate that focuses strictly on Germany.
You’re right, and we don’t yet have a business case either. And that can only be achieved through regulation. Green steel, which is set to be subsidised in order to compensate for the additional costs compared to carbon-intensive steel production, is perhaps another very good example. If the auto industry could have the use of the more expensive green steel count towards their carbon-reduction targets for their fleet, this would create a demand for this product. In the end, the end customer – the car buyer – would pay for it and not society as a whole through tax or debt-financed subsidies. This would transfer the high carbon tax, which is already implicitly included in many regulations relating to road traffic, to the primary industry. From my point of view, something like this would be a very smart regulatory approach. It would also make global trade easier.
I see that as a luxury debate and not in any way productive. We or the state are talking about distributing a good we don’t yet have. And we have no idea how to get it, other than wanting to subsidise the higher costs. If we take this route, we will get exactly as many kilogrammes of green hydrogen as we bankroll and not one molecule more.
Many other associations are also of the opinion that, with funding alone – as justified and important as this is – we will not be able to ramp up the market for green hydrogen as quickly as required. With such an approach, we are passing up not only a climate-policy opportunity, but also an industrial-policy opportunity.
A good example is the numerous IPCEI projects, in which member companies of our association are also involved. Massive amounts of funding are involved here. With so many applications, not all by far will be given a chance. There are already questions about making large projects smaller, but that’s actually the wrong approach, with a view to the Federal Constitutional Court ruling and the Green Deal. We need more and larger projects, otherwise we will never be able to reach the targets.
In addition to generous public funding, we must also ensure, in the interests of investors, that we will achieve demand primarily through markets that are already paying higher carbon taxes today, like road traffic for example. In the area of heating you could possibly address this with quotas. In my opinion, with heating you always see this socio-political issue, which is not a simple one. This is already evident in Germany with carbon pricing.
Yes, I believe the discussion must and will start up again, I am convinced of it, also because we need areas of negative emissions if we are to achieve climate neutrality. After all, there will always be sectors that are not entirely carbon-neutral and which have to compensate for that. Here, too, you have to approach it with an open mind if you don’t want to miss out on possible solutions. However, the potential for CCS in Germany is limited, which is why we need more than a national debate here as well. When it comes to blue hydrogen – that’s to say hydrogen generated from natural gas during which process the fossil carbon is captured – this can make an important contribution to enabling the hydrogen economy to emerge more quickly.