Home » How German business interests have shaped EU climate agenda

How German business interests have shaped EU climate agenda

Germany has been at the forefront of the hydrogen hype, propelling what is essentially a niche industrial resource used to produce fertilisers, petrochemicals and methanol to the centre of European climate and industrial policies.

In recent weeks German politicians have derailed an EU-wide agreement to phase out combustion engines by 2035, and successfully pushed for the inclusion of hydrogen boilers for heating homes in the EU Parliament, responsible for 35 percent of greenhouse gas emissions in Europe. It is no secret German politics is beholden to ‘das Auto,’ but the scale of the hydrogen lobby in Germany and its influence on EU policies is less well-documented.

In a report published on Thursday (23 March) detailing the lobbying activities of a broad network of German companies, industry associations and consultancies, Corporate Europe Observatory (CEO) has now identified 100 businesses that have driven the ‘hydrogen dash’ in Germany, influencing the wider EU policy in the process.

“Again and again, the German government — in close cooperation with the pro-hydrogen fossil fuel lobby — has used its influence to push hydrogen on the EU level, for example, during the German presidency of the EU Council in 2020,” researcher and author of the report, Pia Eberhardt, wrote.

Just how close public officials and corporate lobbyists can become is revealed by internal documents from the German ministry of research and education, seen by EUobserver.

When the research minister Bettina Stark-Watzinger from the German liberal FDP party, travelled to Australia in May 2022 with the German industry federation BDI, and representatives from energy giant RWE, Shell, and the Port of Rotterdam, “to further forge the German-Australian hydrogen partnership and fill it with life,” the delegation ended dinner by singing ‘The Hydrogen Song’, which was composed especially for the trip.

Although singing songs with captains of industry is not a crime in itself, “overhyping hydrogen can endanger net-zero targets,” as science journal Nature concluded in November 2022.

Why is this a problem?

Direct electrification in almost all cases is more efficient, cheaper and easier to deploy than hydrogen. Solar and wind power, electric home heating systems and electric vehicles are all growing exponentially.

Hydrogen is often touted as a potential competitor in these spaces, but a hydrogen market has not taken off for these applications because it is much more expensive, less safe and uses up to six times more energy to achieve the same output as direct electrification.

Therefore, independent researchers widely agree that green hydrogen should only replace existing hydrogen uses, mainly limited to fertiliser, cement production, and petrochemicals like methanol.

Replacing the 90m tonnes of fossil fuel hydrogen that is needed to produce these things with green hydrogen, created with wind and solar energy, requires 1.5 times the amount of all solar and wind power ever installed.

Using it as fuel for shipping and long-haul flights, as many expect to be necessary in the mid to longer term, increases that figure to five to six times more renewable electricity than is currently available globally.

Yet hydrogen lobbyists continue to push to expand the use of green hydrogen past these niche applications, to home heating, personal cars, home cooking, buses and other light transport such as hydrogen bikes.

Powering such a wide range of hydrogen applications using just green hydrogen would suck up an almost infinite amount of energy, dooming the green transition in the process. So the industry has proposed blue hydrogen.

Blue hydrogen, produced with gas and coal, is proposed as a safe by the likes of Shell, as previously reported by EUobserver, because emissions are caught using carbon capture technology and stored underground in depleted oil or gas fields. However, independent research has shown that blue hydrogen pollutes as much as existing supply due to methane leaks and higher energy use.

“Hydrogen is just an excuse to continue using fossil fuels,” said Claudia Kemfert, climate economist and deputy chair of the German advisory council on the environment.

Germany’s blue shift

But the German case study by CEO shows that companies — like the chemical giant BASF and German energy lobby group BDEW (whose member companies are responsible for 90 percent of fossil gas sales in Germany) — have successfully pushed for the maximalist agenda. BDEW alone employs 51 lobbyists with a budget of €7.1m in 2021.

CEO revealed that the current coalition of Social Democrats, Greens and Liberals running the German government met with gas lobbyists on average once-a-day for almost a year.

“It is a blessing that we have this federal ministry of economic affairs,” BDEW president Marie-Luise Wolff said about the Green’s economy minister Robert Habeck, reportedly in a “visibly touched” state according to German press.

According to recently leaked plans, the German government has doubled its hydrogen target and aims for a capacity of ten gigawatts (GW) of hydrogen by 2030. According to the most recent German plans, 50 to 70 percent of hydrogen will be imported from outside of the EU.

The previous iterations of the plan only allowed for green hydrogen. But Germany will now accept blue hydrogen, and Habeck recently reached agreements with Norway and the United Arab Emirates to import supplies.

Activists were furious. “That blue hydrogen made it into Germany’s updated hydrogen strategy is one of the biggest wins of the hydrogen lobby in recent years,” said Neelke Wagner, Climate Alliance Germany in February.

But the German government defended its blue shift saying that blue hydrogen would be “needed in the transition phase to meet demand, especially from industry”.

CEO research now shows this to be a long-held wish pushed for by Germany’s hydrogen council, an expert body appointed by the government.

Although supposedly independent, its 25 experts include 15 companies from across the hydrogen supply chain: gas company Linde, grid operator Open Grid Europe, car manufacturer Daimler Truck, chemicals producer Covestro and more.

Germany has also announced a “Hydrogen Acceleration Act” for 2023, enabling the speedy construction of new terminals and other port infrastructure to import blue hydrogen.

EU plans are still geared towards green hydrogen. But “if the myth that blue hydrogen is a minor detour on the road to green hydrogen takes hold internationally,” professor of human geography Natalie Koch wrote in November “then these privileged [oil and gas] industries are especially well positioned to tap into their existing infrastructures to produce blue hydrogen for potentially decades.”

“Once the infrastructure is in place, path dependency has an astonishing power to keep people buying even after they realise that the myth of a ‘green’ future has been a lie all along,” she added.

‘Mr Hydrogen’

CEO reveals lobby groups have secured top-level access to the German government by hiring ex-politicians. The German lobby register shows Habeck’s party colleague Kerstin Andreae, a former member of parliament for the Greens and now chair of BDEW, was present at almost every meeting between the gas lobbyist and the government.

Former MP for the conservative CDU Stefan Kaufmann is also mentioned. Before joining steel giant Thyssenkrupp as a lobbyist in May 2022, he was the previous government’s innovation commissioner for hydrogen in Germany and a key figure when Germany’s hydrogen strategy was launched in 2020.

Timm Kehler, chairman and CEO of Zukunft Gas, Germany’s leading gas advocacy group, in 2021 described him as “Mr Hydrogen of the German government.”

The report shows Kaufmann set up partnerships for his new employer, who has been able to benefit from his insider knowledge to secure major hydrogen projects in Germany and further afield in Namibia and Saudi Arabia’s planned megacity Neom, where ThyssenKrupp will install a large electrolyser to produce hydrogen for export.

The Neom project has led to the destruction of villages, the death by shooting of a local who protested the demolition, and the sentencing to death of other protestors.

“They killed him to set an example — anyone opening their mouth gets the same treatment,” Alia al-Howeiti, a member of a local tribe and exiled activist, told the Guardian newspaper in 2020. “Neom is being built on our blood and bones,” he added.

Nonetheless, the 2021 German-Saudi Arabia hydrogen cooperation seeks to implement further projects in Neom. To get the ball rolling, the German government has provided €1.5m in support for the first Thyssenkrupp electrolyser plant at the site.

Hydrogen Europe

It is no coincidence these projects also feature prominently in European hydrogen plans. Germany “has had the strongest influence on hydrogen discussions in Brussels,” said Eleonora Moro, formerly from E3G, a climate think-tank, quoted in the CEO report.

Hydrogen Europe is the umbrella organisation for hydrogen lobby groups in Europe, and Hydrogen Backbone Initiative, a coalition of gas grid operators, are heavily populated by German members.

Nearly 90 of the 400 members of Hydrogen Europe are from Germany. The lobby group’s head, Jorgo Chatzimarkakis, is a former MEP in the EU Parliament for the German FDP.

The EU Hydrogen Bank launched last week by green deal commissioner Frans Timmermans closely mirrors H2Global, a German instrument “tailor-made” by Business Alliance for Green Hydrogen, a German business lobby group representing 100 companies, including Shell and Lufthansa.

Both the hydrogen bank and the H2Global are programmes primarily designed to cover the cost difference between green hydrogen and cheaper fossil fuel-based supply to kickstart the green alternative in the coming years.

Cost estimates are tied to the official EU hydrogen target of 20 megatonnes by 2030, which Andreas Graf, energy expert at Agora Energiewende, a German think tank, feels is “massively inflated”, with some estimating total consumption of hydrogen used in refineries and for fertilisers to be closer to 5.5mt.

According to the commission, the EU would need to attract a total investment worth between €335bn-€471bn to achieve its 2030 goal, but so far only €800m has been allocated, indicating the overall target may also be out of financial reach.

Das Auto

Another front where German lobbying influence can be felt EU-wide is the recent last-minute push to break the phase-out of combustion engines by 2035, which many believed to be a shoe-in.

Germany is now pushing for a loophole for synthetic petrol and diesel — also known as e-fuels — created from hydrogen and CO2. A plan first championed by German oil and auto industries through the eFuel Alliance, another lobby group launched after the EU announced its Green Deal in 2020

Seven of the eFuel Alliance’s 15 board members are working, or have previously worked, in the oil industry, including Jens-Christian Senger, ExxonMobil’s managing director in Germany.

Reflecting on the latest German hydrogen upset, Eberhardt said: “hydrogen is being used as a Trojan horse to prolong the use of fossil fuels.