Global Challenges is a brand of DvH Medien. The new institute aims to promote the discussion of geopolitical issues through publications by recognized experts. Today a contribution by Prof. Dr. Veronika Grimm, professor of economics, especially economic theory, at the University of Erlangen-Nuremberg and member of the expert council. Further authors are Prof. Dr. Ann-Kristin Achleitner, Sigmar Gabriel, Günther H. Oettinger, Prof. Dr. Volker Perthes ,, Prof. Jörg Rocholl PhD, Prof. Dr. Bert Rürup and Prof. Dr. Renate Schubert.
Will Europe’s and especially Germany’s export-oriented companies get caught between the fronts if the conflict between China and the USA continues to escalate? The concern has existed since the term “decoupling” became popular.
Germany and the world’s largest coal exporter Australia are currently launching a project that is about nothing less than the establishment of a global trade in renewable energy – a crucial prerequisite for the climate change policy towards a defossilized economy. Both countries want to show within two years that a stable hydrogen supply chain based on renewable energies can be established between the continents.
The findings will not only point the way to a post-fossil age. Global trade in renewable energies will also trigger a reorganization of global value chains.
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But why do two geographically so far apart countries come up with the idea of generating electricity from renewable energy in Australia and transporting it to Germany? The answer: With the global trade in green hydrogen, the long-term transport costs are negligible. Climate-neutral energy sources can be transported over long distances by ship. Locations where large quantities of electricity can be generated from renewable energies such as photovoltaics, wind power, geothermal energy or hydropower are suitable for generating green hydrogen and its secondary products.
Import of green hydrogen is possible
There, hydrogen can be produced in a climate-neutral way by splitting water using electrolysis. In order to be able to transport the hydrogen by sea, it is advisable to liquefy it by cooling it down or to bind it chemically. Analyzes show that the import of green hydrogen from all parts of the world is technologically possible.
Germany and Europe are well advised to prepare for the global race for hydrogen in good time in order to compete with technologically leading countries like Japan in the long term on an equal footing. Because even with ambitious expansion scenarios for renewable energies, Germany, like most European countries, will always remain an energy importer on the way to climate neutrality.
Current estimates assume that Germany will in the long term import a good 80 percent of the demand for climate-neutral hydrogen, which plays a key role, for example, in the defossilization of heavy goods vehicles and air traffic, but also in the production of CO2-neutral steel. The feasibility study agreed between Canberra and Berlin in September is an important step in realigning global energy trading.
There are many potential suppliers of renewable energy sources worldwide, for example Iceland, Canada, Morocco, Patagonia or Australia. With some countries like Russia, which already supply us with fossil fuels, trading in renewable energy sources is also conceivable. It makes sense to push these partnerships forward and gradually convert established energy trading relationships to renewable energy sources.
Stability when choosing a partner
Partnerships with countries like Morocco, from which we have not yet drawn any significant amounts of energy, could help diversify dependencies. When looking for long-term partnerships, the respective political environment and the expected stability or instability of the regions play a role.
These aspects in particular have slowed down ambitions in the past to import green electricity from the desert via power lines to Europe as part of the Desertec project. If, however, the sea route is used instead of permanently installed high-voltage lines through politically unstable terrain, the supply chains are likely to be significantly less vulnerable.
Many countries hope that the export of climate-neutral energy sources will provide growth opportunities in the future. Argentina and Chile, for example, have good opportunities to export wind and solar energy, to create highly qualified jobs and to set up production steps directly linked to hydrogen production on site. This is supported by the fact that pure gaseous hydrogen is difficult to transport by sea.
The direct production of fuels or synthetic by-products such as ammonia and methanol in the country of origin, which are easy to transport in liquid form, would therefore be the logical consequence.
In the course of this, however, the added value that is currently taking place in the German chemical industry, for example, would be relocated abroad. The changeover to a resource-efficient economy therefore inevitably leads to a reorganization of the value chains.
Added value for the people in Africa
In return, the switch to renewable energy sources opens up considerable potential for German industry to export capital goods for the production, processing and transport of hydrogen and its secondary products – such as electrolysis systems, chemical plants or compressors.
Africa also has excellent conditions for producing green hydrogen. Many African countries have far more sun and wind potential than European countries. The entry into the export of this energy could bring jobs and development opportunities – as well as ensure more political stability in the long term. Non-governmental organizations rightly point out that energy partnerships must also have added value for the people of Africa.
It is critically noted that the supply of the local population with renewable electricity could be restricted by the use of plants and areas for export. In many places, however, it is precisely the inhospitable stretches of land far away from the metropolitan areas that are ideal for energy exports. Often these areas are not connected to a power grid, but are close to the coast and therefore cheap for the export of material energy sources by sea.
Although the climate neutrality that Germany is striving for in 2050 is still a long way off: The race for future partnerships in global energy trading has already begun. Feasibility studies like the one between Australia and Germany will uncover many things that still need to be mastered – for example the possibilities but also the limits of using existing infrastructure and the advantages and disadvantages of various forms of logistics.
But it is already clear today: If Germany and Europe want to be heard more on the geopolitical stage, they must invest a lot of energy in the green hydrogen race.