Climate neutrality by 2045 requires a reduction of CO2 emissions in the energy sector. Quite recently, hydrogen, especially green hydrogen, has become a favourite of the German government, alongside classic renewable energies.At the latest since the publication of the coalition agreement of the new coalition at the end of last year, it has been clear that one focus is on the “ramp-up of hydrogen technologies” (Hochlauf der Wasserstofftechnologien), and that Germany wants to become the market leader in the production and use of hydrogen (more on this here (German)).
The political plans are – rightly – ambitious. There are a wide variety of challenges that need to be addressed as quickly as possible: from the land needed to generate the renewable energies with which green hydrogen is to be produced, to European-influenced questions of the legal definition of green hydrogen, to the development of a coherent legal framework for the hydrogen infrastructure. It is clear to all involved that Germany cannot become the market leader in hydrogen overnight. It will take time to produce hydrogen in the required quantities, to transport it, to use it in a targeted manner and to develop the appropriate legal framework in the meantime.
Turning away from Russian gas
For a few months now, achieving climate neutrality alone has no longer been the only challenge. Triggered by the Russian war of aggression in Ukraine, Germany is now facing another energy crisis. Reducing dependence on Russian gas has become one of the biggest challenges for the German government, within only a few weeks. It is clear that hydrogen offers no short-term solution here. Instead, attention is now focused on expanding and commissioning several German LNG (Liquefied Natural Gas) terminals as quickly as possible in order to become less dependent on Russian gas.
At first glance, one wonders how the import of liquefied natural gas, a fossil fuel, fits in with the ambitious climate goals, but above all what the expansion of LNG terminals has to do with hydrogen. While the import of liquefied petroleum gas is not in itself in the sense of the intended climate neutrality, the German government is trying to develop and promote the hydrogen infrastructure on a detour under the keyword “H2 -ready” or “hydrogen readiness”.
The contents of the bill
This is reflected in the bill of the coalition parliamentary groups on the Act to Accelerate the Use of Liquefied Natural Gas (LNG Acceleration Act), which was first published on 10 May 2022 on the basis of a formulation aid of the federal government (see BT-Drs. 20/1742). The 1st reading in the German Bundestag (Federal Parliament) took place on 12 May 2022, which was followed by a referral to the committees.
The German Bundestag passed the LNG Acceleration Act on 19 May 2022 with only a few amendments. The German Bundesrat (Federal Council) also approved it on 20 May 2022. The law is to come into force as early as 1 June 2022.
The LNG Acceleration Act essentially aims to simplify the approval procedures for possible LNG terminals in Brunsbüttel, Wilhelmshaven, Stade/Bützfleth, Hamburg/Moorburg, Rostock/Hafen and Lubmin. The procedures are to be accelerated above all by a possible waiver of the environmental impact assessment, shorter public display and objection periods, a possible waiver of public hearings, measures for the early initiation of possession rights and the early start of construction as well as accelerated award and review procedures. Finally, the bill contains well-known acceleration methods such as the first and last instance jurisdiction of the Federal Administrative Court and the lack of suspensive effect of legal remedies. The aim of the bill is clearly to be able to carry out the authorisation procedures for the LNG terminals as quickly as possible, so that construction of the terminals and connection pipelines to the gas supply network can begin as soon as possible.
Conversion to hydrogen
With regard to the keyword “H2 -ready”, Sec. 5 para. 2 of the bill provides that plants which are to be operated beyond 31 December 2043 shall only receive a permit for continued operation if they are operated for climate-neutral hydrogen and its derivatives. According to the explanatory memorandum to the bill, the aim of the regulation is to plan the LNG plants and connecting pipelines to be “hydrogen-ready”, to enable a later conversion to hydrogen. Based on this provision, the LNG Acceleration Act is in line with the climate protection goals of the Federal Climate Protection Act and with the requirements of the Federal Constitutional Court on the transparent design of greenhouse gas reduction.
Due to the time limit for the approval of LNG plants set out in the LNG Acceleration Act until 31 December 2043, the operators are to be given planning security with the option of an extension for operation with hydrogen. An application for an extension of the permit is to be submitted by 1 January 2035 to allow sufficient time for the approval procedure and necessary conversions.
Outlook
Since the LNG Acceleration Act has now passed the legislative process, it remains to be seen what the possibility of conversion to hydrogen and continued operation after 2043 will yield. “H2-ready” LNG terminals and pipelines are a step towards the hydrogen future, but not the sole answer to the challenges of converting from fossil fuels to hydrogen. For in order to be able to achieve the climate targets by 2045, further, shorter-term measures are necessary. Converting the LNG terminals (yet to be built) and connecting pipelines to hydrogen from 2044 onwards is likely to come too late for the climate targets by 2045.
Nevertheless, it is to be welcomed that, despite the currently very time-critical conversion of gas imports, hydrogen and the climate goals are not completely forgotten. The federal government must ensure a secure supply of gas in the short term. Perhaps it will actually succeed in streamlining the excessively long permitting procedures. Perhaps the combination of LNG and hydrogen will also help to manage the longer-term costs of supply security and the ramp-up of hydrogen technologies. The LNG Acceleration Act should make an important contribution to this.
This article was first published on 13 May 2022 in German and can found here.
For further information, please contact:
Anja Holtermann, Bird & Bird
anja.holtermann@twobirds.com
