Germany is planning to provide another US$569 million for the establishment of new hydrogen funds at one of Germany’s largest banks, KfW. The decision was announced on November 15 by German Development Minister Svenja Schulze and Stefan Wenzel, Parliamentary State Secretary at the German Economic Affairs Ministry, at the 27th UN climate conference in Sharm el-Sheikh, Egypt. Two special hydrogen funds will be created to provide tailored support. The PtX Development Fund will foster hydrogen investment in developing and emerging economies, while the PtX Growth Fund will contribute to accelerating the global market and infrastructure development for green hydrogen across all countries.
“It is not only climate change but also the current energy crisis that is showing us worldwide just how important it is to develop alternatives to coal, oil, and natural gas,” said Development Minister Svenja Schulze. “Green hydrogen is a key technology in this regard. Many developing countries have ideal conditions for green hydrogen production. But there is a risk that they might still be excluded from the value chains of the future since support programs currently mainly exist in wealthy countries. The new green hydrogen economy will have to be characterized by greater justice than the old fossil economy. This means that the value chains of the future must benefit the developing countries, too. That is why the new PtX Development Fund is not just intended to foster the production of green hydrogen in developing countries but also its use on the ground.”
“Germany is working both nationally and internationally to advance the development of climate-neutral energy networks — based on green hydrogen if possible, because in all instances where we cannot make the energy supply carbon-free through renewable, clean electricity and more energy efficiency, we will need green hydrogen and PtX products,” said Parliamentary State Secretary Stefan Wenzel. “The current energy crisis has sped up the development of the hydrogen economy beyond what had been expected. Now, it will be vital to create an enabling environment for the emerging international market for green hydrogen. We now have the unique opportunity to bring more solidarity and justice to that market than we used to have in international energy markets before — working closely with the new producing countries in the Global South. KfW’s new hydrogen funds are a blueprint for that.”
The new support program, which will be administered by KfW, will close a significant support gap. While “H2 Global” is a double auction mechanism to support the import of hydrogen to Germany, the new funds are intended to significantly accelerate the development of the global hydrogen value chain. To that end, they will put a focus on financing projects in developing and emerging economies.
The effort will be based on two pillars. The Development Fund, under the responsibility of the Federal Ministry for Economic Cooperation and Development (BMZ), will be provided with US$259 million. The Growth Fund, under the responsibility of the Federal Ministry for Economic Affairs and Climate Action (BMWK), will be provided with US$310 million. The funds will be set up before the end of 2022 to facilitate investment in the near future and significantly accelerate the development of the global hydrogen value chain.
They are intended to help reduce the funding gap for large-scale green hydrogen projects. They will provide grants for investments along the entire value chain — from green hydrogen production to processing all the way to storage and hydrogen and PtX product transport infrastructure. The PtX products can be used locally in the partner countries or be exported for purposes such as fertilizer production from green ammonia, replacement of natural gas for carbon-free steel and metal production, and e-kerosene for aviation, shipping, and heavy goods vehicles.
The PtX Development Fund is intended to assist developing and emerging economies in building local value chains around green hydrogen. The PtX Growth Fund will support German and European companies that have an office or production facilities in Germany. Its purpose is to provide grants to support investments that boost the economy and contribute to accelerating the global market for green hydrogen.
