How does the war in Ukraine affect the German and European strategies for importing hydrogen?

Together with its research partners, Fraunhofer ISI has published a new position paper in the HYPAT project, which deals with new approaches to evaluating partner countries for importing hydrogen, the development of import costs and the potentials for producing hydrogen in the EU, among other things. The paper also addresses the future economic development of Ukraine through the production and transportation of hydrogen.

Importing hydrogen and synthesis products such as methanol and ammonia forms an important pillar of the hydrogen strategies of both Germany and the EU. Both envisage billions of euros in state investments and high future import shares from countries such as Russia, Kazakhstan, Morocco, Saudi Arabia and Ukraine. But the war in Ukraine and the desire for greater energy independence from Russia are raising numerous questions about the stability of energy and hydrogen supply.

The formerly held certainty that trade always induces mutual dependence which, in case of doubt, has less effect on the economically strong West than its partners, must now be critically reviewed given the energy crisis with Russia, as must too strong dependencies on too few countries.

Against this background, the HYPAT position paper “War in Ukraine: Implications for the European and German strategies for importing hydrogen and its derivatives” was compiled with the participation of scientists from Fraunhofer ISI, IEG and ISE, the Ruhr University Bochum, the IASS Potsdam and ESA² GmbH. The paper takes a critical look at the former strategic assumptions, discusses approaches for a possible new evaluation, and aims to contribute to strengthening resilience in the field of hydrogen supply – after all, the strategic decisions pending here will have long-term economic and political impacts.  

Based on the previous research activities and projects of all the participating organizations, the paper derives eight impulses regarding future imports of hydrogen to Germany and the EU:

1. Clear criteria should guide the evaluation of potential supplier countries and greater weight should be assigned to political risks:

In addition to technical availability and price, greater attention should be paid to supply sovereignty, and the evaluation of partner countries should consider their systemic and political resilience to a greater extent as well as their reliability. Geopolitical considerations and value-based trade relations should play a more important role in hydrogen strategies.

2. New evaluation of supplier countries:

A broad network of partner countries in different world regions could contribute to a diversified supply of hydrogen. Possible candidates include the US and Canada, Chile, Brazil, Argentina, South Africa, Morocco, Egypt and Namibia. It is still unclear how large quantities of hydrogen could reach Europe in an affordable way in future.

3. Diversifying the countries supplying hydrogen leads to higher import costs and takes time, but offers protection against economic risks due to dependencies:

Liquefaction and transport by ship raises the total costs by approx. 25 % compared to pipelines, and the construction of production and transport capacities takes time – but all this contributes to greater diversification, and protection against too few suppliers wielding too much market power.

4. High potentials for producing and transporting hydrogen form a good basis for Ukraine’s possible economic development:

The country has a high long-term potential for producing green hydrogen based on renewables. – potentially up to 1400 TWh by 2050, and could therefore become a reliable partner.

5. It is becoming more important for the EU to utilize its own potentials for producing hydrogen:

The EU expects the total demand for hydrogen to be 670 TWh in 2030 and 2250 TWh in 2050. This is commpared to utilizable potentials for producing hydrogen of 5,000 to 6,000 TWh, especially due to photovoltaic and solar-thermal plants in the south and wind power plants in the north – in this way, the EU could largely meet its own hydrogen demand.

6. Synthesis products may become more attractive in the short- and medium-term for economic reasons and from the viewpoint of supply security:

Due to their higher transportation density, methanol or ammonia are cheaper and easier to transport than hydrogen. Synthesis products could be transported more quickly to Germany and the EU, and contribute to supply security there.

7. High natural gas prices and supply concerns are increasing the uncertainties around developing a large hydrogen system in Germany and the EU:

So far, the transformation of the energy system has assigned an important role to natural gas and the gray hydrogen produced from it. In view of the uncertain price development and supply security issues, this could also complicate the planned expansion of the hydrogen system.

8. The EU needs a coordinated approach:

In order to achieve a similarly strong network in Europe for hydrogen as for electricity or natural gas, a joint European transport and storage infrastructure strategy is required, which ensures a resilient hydrogen supply throughout Europe. The geopolitical challenges arising from the crisis in Ukraine should also be used as an impetus to create a common European energy and hydrogen foreign policy.

The eight impulses are presented in detail in the HYPAT paper "War in Ukraine: Implications for the European and German strategies for importing hydrogen and its derivatives" (publication in German).

The Fraunhofer Institute for Systems and Innovation Research ISI analyzes the origins and impacts of innovations. We research the short- and long-term developments of innovation processes and the impacts of new technologies and services on society. On this basis, we are able to provide our clients from industry, politics and science with recommendations for action and perspectives for key decisions. Our expertise is founded on our scientific competence as well as an interdisciplinary and systemic research approach.

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