Subproject: Techno-economic research
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In the jungle of public hydrogen funding in Germany:
How complex instruments are shaping the market ramp up
How can the market ramp-up of the hydrogen economy in Germany and Europe be made more efficient? Prof. Veronika Grimm, Markus Albuscheit, Florian Biniosek and Johannes Wirth as well as Dennis Strempler and Timo Schneider from the Lab for Energy Systems and Market Design at the University of Technology Nuremberg and Stefan Rahim from OTH Regensburg have addressed this question as part of the project “IMA-GH2: Instruments to accelerate the market ramp-up of green hydrogen and its derivatives”. The policy brief, which was published as a working paper, sheds light on the existing funding landscape surrounding the ramp-up of the hydrogen economy and highlights key challenges and conflicting objectives.
Hydrogen is considered an important energy source for the transformation to climate neutrality. A variety of support instruments have therefore been established in Germany and Europe – from direct subsidies and auction-based support mechanisms to regulatory measures such as emissions trading and sustainability certification obligations. These are intended to create investment incentives and enable the market integration of low-carbon hydrogen technologies.
However, the reality shows a different picture: the multitude of instruments and bureaucratic procedures significantly increases complexity, which can lead to difficulties for small and medium-sized companies in particular. In addition, there are conflicting objectives between the politically desired rapid market ramp-up and strict sustainability and certification requirements. These tensions impair investment incentives and make it difficult to develop a stable market.
A key challenge in analysing this is the lack of transparency: there is no reliable data to assess the effectiveness of the measures taken. The costs, benefits and leverage effects of individual projects are often unclear. This makes it difficult to make a well-founded assessment of efficiency – as well as the strategic development of the funding landscape or a constructive public debate.
This is where the IMA-GH2 research project, a cooperation between the UTN and OTH Regensburg, comes in: The aim is to close these gaps and enable a well-founded analysis of the various instruments. The project, which will run until 2027, aims to produce detailed analyses that create a reliable basis for political and economic decisions.
The full analysis is available here: In the jungle of public hydrogen funding in Germany: How complex instruments are shaping the market ramp up by Markus Albuscheit, Florian Biniosek, Veronika Grimm, Stefan Rahim, Timo Schneider, Dennis Strempler, Johannes Wirth :: SSRN
Download PDF German Version only
Funding: German Federal Ministry for Economic Affairs and Climate Action (BMWK)
Abstract: The research project focuses on analyzing instruments that support the ramp-up of international hydrogen markets. These include instruments such as the European Hydrogen Bank, the H2Global auction mechanism, the German “Klimaschutzverträge” and the Inflation Reduction Act in the USA. The research project classifies the development and results of the various instruments, assess their potential impact and develop proposals for the further development of instruments so that political and economic goals can be pursued and achieved over the ramp-up phase. These include, in particular, the establishment of initial supply, logistics and value chains, the development of domestic production and use, the underpinning of hydrogen partnerships, the creation of import corridors and an impetus for global commodity markets in cooperation with neighboring European countries. Underlying aspects in this context are on the one hand different time horizons, but also strategic preferences and targets. This requires a detailed analysis of hydrogen and its derivatives.
The focus of the sub-project “Techno-ökonomische Forschung” at the UTN is on modeling the supply side for H2/PtX products for a combination of possible partner countries and on concepts for the further development of the instrument design. To this end, existing models for techno-economic modeling of the process chain (production, transport and storage) of various hydrogen-based products will be further developed and integrated into the joint modeling of the mechanisms on the demand side, which is focused on by the OTH Regensburg as a project partner. Furthermore, the regulatory environment of the market ramp-up of low-emission hydrogen and, in particular, the instruments for supporting and accelerating the ramp-up of hydrogen markets are monitored in order to be able to assess the individual and combined effects of the instruments.
Project manager: Veronika Grimm
Stuff: Kiana Niazmand, Johannes Wirth, Markus Albuscheit and Florian Biniosek
Project term: 01.07.2024 – 30.06.2027