The path to decarbonising the economy: New momentum for creating the hydrogen economy

On 29 May 2024, Germany’s federal government passed a bill to speed up the availability of hydrogen and to amend other legal framework conditions for the hydrogen ramp-up, as well as to amend other energy law regulations. By doing so, the federal government is thus taking a further step towards implementing the reforms agreed in the coalition agreement, which are intended to enable and accelerate the transformation of the economy towards climate neutrality. This article will outline the key points of the bill (see I.) and explain the impact on the hydrogen industry (see II.).

I. Key regulatory content

As its name suggests, the bill is primarily intended to accelerate the ramp-up of the hydrogen economy – a technology many hope will speed up the decarbonisation of the economy. The Hydrogen Acceleration Act (Wasserstoffbeschleunigungsgesetz) focuses in particular on speeding up the authorisation procedures for producing, storing and importing hydrogen. To this end, it modifies the application of environmental and planning regulations. In addition, the acceleration package will amend numerous provisions of procedural and energy law, which are summarised below.

1. The Hydrogen Acceleration Act

In addition to plants for the production, storage and import of hydrogen, the Hydrogen Acceleration Act is also intended to apply to corresponding ammonia plants. It also applies to power lines that connect plants generating electricity from renewables with hydrogen or ammonia plants for the purpose of direct supply. The intention is therefore to speed up and simplify the whole process for all key plants associated with the hydrogen ramp-up.

a) Overriding public interest

The main lever for accelerating planning is in section 4 of the Hydrogen Acceleration Act, which stipulates that constructing and operating a plant within its scope of application (i.e. hydrogen and ammonia infrastructure) is in the overriding public interest and serves public security. The same mechanism has already been implemented in Germany’s Renewable Energy Act 2023 for electricity power plants from renewables (see section 2 of the Renewable Energy Act 2023). Until now the process of weighing up numerous conflicting interests has led to delays in planning and authorisation. A key result of defining the special significance of certain plants is that the process of weighing up the relevant interests will be simplified and thus accelerated. The fact that such privileging of certain plants inevitably leads to the downgrading of other legal interests and a reduction in legal protection options must be accepted as a consequence of a new prioritisation of interests that is necessary given the urgency of the climate crisis. Nevertheless, to ensure that the prioritisation only favours hydrogen and ammonia projects that are actually conducive to achieving the climate targets, the prioritisation only applies to plants connected to a plant for generating electricity from renewables for the purpose of direct supply, or for which it is stated that over 80% of the electrical power for operation will be generated from renewables by the end of 2029. After all, only green hydrogen (hydrogen produced from renewables) makes a sustainable contribution to climate protection.

Particularly interesting is the difference in time limits for the prioritisation rule: while this applies to onshore electrolysers and hydrogen storage facilities until net greenhouse gas neutrality is achieved in 2045, it currently ends on 1 January 2035 for the other plants covered by the Hydrogen Acceleration Act.

Finally, the water scarcity in some parts of the country is taken into account by the fact that the privileged status of plants in water law authorisation procedures for water extraction by electrolysers does not apply if this could significantly impair the public water supply and resources.

b) Accelerated planning in water and immission control law

The Hydrogen Acceleration Act stipulates various digitalisation measures for the application of certain provisions of the Water Resources Act. For example, all documents and in particular plans must be made available electronically, and notices and plans can be published online.

In addition, tighter processing deadlines have been set; the authority must review within one month if the submitted documents are complete and the decision on planning approval or the planning authorisation in accordance with section 74 of the Administrative Proceedings Act (Verwaltungsverfahrensgesetz) must be made within 18 months. A decision on granting a permit or authorisation under the laws governing water resouces must be made within 12 months. Furthermore, a public interest within the meaning of water resources law for an early start to construction work.

There are corresponding requirements for digitalisation and shortening the review period for certain provisions of the Federal Immission Control Act (Bundesimmissionsgesetz).

c) Acceleration in public procurement law

The Hydrogen Acceleration Act also provides for acceleration measures with respect to public procurement law. For example, several partial or specialised lots may be awarded together if justified by economic, technical or time-related reasons. The review procedure will be expedited because a decision can already be made on the basis of the mere expected acceleration effect (without additional requirements) based on the files available. In addition, section 16(6) of the Hydrogen Acceleration Act stipulates that the overriding public interest generally prevails, meaning that the contract can also be awarded during an ongoing review procedure.

d) Reduced legal protection

Section 17 of the Hydrogen Acceleration Act stipulates that appeals and actions for annulment against a decision to authorise a plant or pipeline pursuant to section 2(1) of the Act and against the decision on the early commencement of a measure have no suspensive effect. Subject matter jurisdiction is assigned to the higher administrative courts and, in the second instance, to the Federal Administrative Court, which shortens the appeals process.

2. Other measures: Accelerating the expansion of the transport infrastructure

The Hydrogen Acceleration Act contains parallel regulations for hydrogen pipelines which are subject to regulation under Germany’s Energy Industry Act (Energiewirtschaftsgesetz). The Energy Industry Act is to be amended so that the consultation procedure is digital, i.e. all documents are transmitted electronically. The consultation authority can also dispense with certain forms of public involvement.

In addition, the Federal Trunk Roads Act (Bundesfernstraßengesetz) will be amended to the effect that facilities to produce, store and import hydrogen in the immediate vicinity of trunk roads will no longer be subject to the approval requirement in section 9(2) of the Federal Trunk Roads Act, provided that the road construction authority responsible is involved in the authorisation and notification procedures required for the facilities.

Finally, plants to produce or store hydrogen will be included in the principles of spatial planning as an important element of climate protection. As it is already the case with renewable energies, hydrogen plants must also be taken into account in future when specifying the development details in spatial development plans. In this respect, too, the legal implementation of the acceleration aims is synchronised.

II. Significance of the amendment for the hydrogen industry

For the hydrogen industry, the intended acceleration means first and foremost the simplification of authorisation procedures. Provided that the required digitalisation is implemented consistently, this alone should have the potential to speed up matters. Similarly, lengthy procedures are likely to be significantly shortened by clearly prioritising hydrogen projects when balancing the interests concerned, by classifying them as being in the overriding public interest with the associated restriction of legal protection options for third parties.

The synchronisation with the recently created framework conditions for solar and wind power plants also shows the stringent approach of the legislators, who now seem determined to systematically advance the key elements of the transformation (at least in the energy sector). The increase in the number of licences granted for solar and wind power plants certainly speaks in favour of the path taken. This gives rise to the hope that the much-vaunted ramp-up of the hydrogen industry will now also receive the necessary boost.

Now that the bill has been passed by the Federal Cabinet, the upper and lower chambers of parliament (Bundestag and Bundesrat) still have to consult on it. The Federal Ministry for Economic Affairs and Climate Action, which is responsible for the bill, expects it to come into force at the end of 2024.