Germany to establish climate contracts

Germany intends to establish climate contracts with industrial companies in 2023 to support a transition towards cleaner production and a switch to hydrogen, according to Economy Minister Robert Habeck.

“The aim is to efficiently develop a green industry along the value chain that becomes marketable,” Habeck said, according to reports.

However, Habeck did not provide details of what the so-called climate protection contracts would look like.

Habeck has previously indicated that he plans to award companies in energy-intensive industries – including chemicals and steel – 15-year subsidy arrangements, in return for reducing carbon emissions in their production.

The move comes as part of a wider strategy by Germany to develop an 1,800-kilometre (1,118 miles) hydrogen energy pipeline network by 2027 with state participation, according to an economy ministry draft strategy paper.

The paper also envisages Germany fostering the use of blue hydrogen and importing it during a transition period towards green hydrogen.

Europe’s largest economy wants to pivot towards cleaner energy sources and diversify its supplies, especially after the invasion of Ukraine underscored the pitfalls of a heavy reliance on Russian natural gas.

The creation of a hydrogen network company with state participation was needed to build a system that was both fit for purpose and affordable, the paper said. The government is expected to present its plans to industry shortly.

The government also envisages Germany doubling its electrolysis capacity to ten gigawatts by 2030, the paper said.

Chancellor Olaf Scholz in September said Germany to create a boom in the use of hydrogen as a way of diversifying its energy sources and meeting its climate goals.