Germany has reportedly proposed establishing a fund of €200 million from each nation to establish an auction scheme which would provide long-term sales agreements for fuels such as green ammonia and green methanol that will be crucial for Germany in its drive to decarbonise its industrial, heavy transport and power sectors.1
There are obvious mutual incentives for the proposed partnership. Green fuels are critical for Germany’s ambition to decarbonise its key industrial, power and heavy transport sectors while boosting the emerging Australian hydrogen economy with long-term commercial consumers.
There have been already been several joint initiatives to establish a green hydrogen supply chain.
On 13 June 2021, Australia and Germany announced the Declaration of Intent between the Government of Australia and the Government of Germany on the Australia-Germany Hydrogen Accord, which aimed to capitalize on the respective strengths of both countries, with Australia looking to be a major hydrogen exporter going forward and Germany holding expertise in hydrogen technology and planning to import significant quantities of hydrogen in the future.
In March 2022, the HyGate programme – the German - Australian Hydrogen Innovation and Technology Incubator - was launched, in which Australia and Germany each provided AU$ 50 million and €50 million respectively to fund pilot, trial and demonstration projects along the hydrogen supply chain.
The German-backed entity in charge of developing the hydrogen market will reportedly run the proposed auction scheme, with the idea being to set up a so-called joint window where there would be a dedicated auction for Australia only.
The initiative would help to address the issue of green fuels costing appreciably more than fossil fuels and would help secure more than half of Germany’s demand for hydrogen. It also ties in well with the Australian Government’s aim to accelerate the development of the country’s hydrogen sector, with recent investments such as the A$2bn Hydrogen Headstart Program (see Hogan Lovells article Australia’s Pathway to a Hydrogen Energy Future).
Hogan Lovells is at the forefront of Australia’s renewable energy industry with our global collaborations in working with our clients in the renewable spaces. It has advised Australian superannuation funds and global infrastructure asset managers in several large renewable energy projects, including the acquisitions of hydrogen and solar plant projects and wind farms, as well as establishing renewable energy investment platforms. With our strong renewable energy team in Germany, we are well placed to assist clients with developments in this field.
Authored by Valentina Zhuge and Nigel Sharman.
1 Germany’s $660 million pitch for Australia’s green hydrogen, Australian Financial Review, 24 January 2024