Hydrogen is an indispensable central building block of the energy transition
Katharina Immoor, Head of Communications, Public Affairs & ESG, in conversation with Jorgo Chatzimarkakis, CEO of Hydrogen Europe, and Dr. Werner Ponikwar, CEO of thyssenkrupp nucera, on the situation in the global hydrogen market.
There is a great deal of uncertainty in the hydrogen market at the end of 2024. Final investment decisions are being made less frequently than expected. How do you assess the current market development?
For a long time, hydrogen was considered the champagne of the energy transition. But this statement is wrong. Hydrogen is the mineral water of the energy transition. Without hydrogen, a sustainable energy transition cannot take place. This is a fact, and accepting this is a crucial step towards the necessary green transformation process.
Will the newly elected EU Commission be able to change this?
The messages from Commission President Ursula von der Leyen are clearly along the lines of: We have understood, we want to simplify, we want clean tech. The Industrial Clean Deal must come from the EU – and the nice thing about it is that hydrogen has already played a major role in the European Green Deal. So, the prospects are good that we will also succeed in the follow-up concept, the Industrial Clean Deal. Then we can completely overcome the low mood in the hydrogen market. It’s finally time to put our words into action and follow the example set by countries like Saudi Arabia, India, and the United States.
Let's move on from the political to the industrial level – electrolyzers. What is the situation there?
In contrast to the past few years, we now have far too much black-and-white thinking. We can justifiably say that we have really achieved a lot. Over the past years, more than 25 gigawatts of electrolysis capacity have been created worldwide. This is a very strong performance that we should also appreciate. And we see that project announcements continue to increase worldwide. In the last six months alone, announcements for projects with around 70 gigawatts of capacity have been added around the world by November 2024. Of course, realizing this is a very big challenge. But these announcements demonstrate the unwavering conviction that we absolutely need green hydrogen as an essential component of a zero-emission energy system. And now it’s time to implement the plans.
Jorgo Chatzimarkakis
Jorgo Chatzimarkakis is the CEO of the European hydrogen association Hydrogen Europe. The organization represents the interests of the hydrogen industry and its stakeholders
and promotes hydrogen as a pioneer for an emission-free society. With almost 500 members, including over 25 EU regions and more than 30 national associations, Hydrogen Europe covers the entire value chain of the European hydrogen ecosystem. Georgios “Jorgo” Chatzimarkakis
is a German-Greek politician and former Member of the European Parliament for the FDP in the ALDE Group. From 2014 to 2015, he was an honorary ambassador of the Greek government. He holds both German and Greek citizenship.

Does the regulatory framework promote or hinder this?
Unfortunately, it is true that we in Europe are overly constrained by the regulatory framework. That said, there are other factors slowing the ramp-up of the hydrogen industry. First, we are seeing the usual progression from PowerPoint presentations to actual projects – in other words, from theory to reality. In this phase, it is often found that ideas such as profitability expectations cannot be easily realized. Now we have to survive the reality check – and unfortunately some will not make it. Secondly, the global framework conditions are very challenging…
...the days of cheap money are over...
… yes, instead of that we have to deal with high inflation rates and high interest rates. Therefore, of course, we also have more difficult investment conditions in many regions of the world. Thirdly, although there are sufficiently high subsidies to ultimately support the ramp-up of the hydrogen industry, in some key countries, there is a great deal of uncertainty when it comes to the conditions and rules under which subsidies can be obtained.
Has the Inflation Reduction Act (IRA) in the US delivered what was promised?
When the IRA was launched, the euphoria was very great. It has given way to disillusionment, because two years later, we still have no fixed set of rules defining when I will receive which funding. One example is Section 45V, the Clean Hydrogen Production Tax Credit (PTC). It has still not been finalized. That’s why investors are waiting to make decisions until issues like this have been resolved.
What is the situation in Europe?
We have a similar situation there. Ultimately, we have created a very extensive and, in some cases, over-regulated system. With RED I, II and III, we are now in the phase in which these directives are to be implemented in applicable law at the national level. In doing so, we are realizing that this process is, firstly, very complicated and, secondly, once again raises many questions because many issues are still open in principle. Thirdly, the rules we have created are making projects unprofitable because we are demanding too much from companies too early.
Dr. Werner Ponikwar
Dr. Ponikwar began his career as Manager Controlling at Degussa AG. He has worked in various positions and locations, including Finance and Controlling, Project Management, Business Development and Marketing. In 2006, he joined Arthur D. Little as a strategy consultant. In 2008, he joined Linde AG, where he held various management positions in engineering and industrial gases. From 2017 to 2021, Dr. Ponikwar was CEO/Managing Director of Linde Hydrogen Fuel Tech GmbH. Since 2022 he has been the CEO of thyssenkrupp nucera. Dr. Ponikwar studied at Ludwig Maximilian University in Munich and holds a Ph.D. in chemistry.

Can you give an example?
According to the EU’s current thinking, electrolyzers may only run when renewable energies are also being produced. This means that the operating times of electrolyzers are very much restricted. It definitely makes hydrogen more expensive. Then there is the complexity that arises from the fact that the development of renewable energies is planned more or less in parallel with the development of the green hydrogen infrastructure. The principle of additionality for hydrogen requires electrolyzers to be connected to newly built facilities that generate electricity from renewable sources to produce hydrogen. This introduces an almost unmanageable level of complexity. So I think we would all be well advised to think again about whether this is the right approach or whether we would be better advised to support the growth of the young green plant of hydrogen during the transition phase.
What specifically do we need to ensure that developments in Europe move in the right direction?
I fully support Werner’s idea of suspending the over-complex regulatory system for the time being. That would send a very important signal! The top priority here is to ensure that the current definition of green hydrogen is formulated in such a way that the market can work with it. The so-called revision clause must be introduced quickly. Then there is the issue of additionality, which needs to be changed. The third is the accumulation of funding. And, last but not least, the abolition of the bidding zones, which are a total bottleneck, especially for imports. This is a total showstopper for German electrolyzer manufacturers, who also sell their plants to India, Saudi Arabia and other countries.
When the IRA was launched, the euphoria was very great. It has given way to disillusionment.
What about funding?
It is the second central topic. A lot of private funds are waiting for a good investment if the conditions are right. Much has been done for certain technologies but in such a fragmented manner that it can hardly be called a commitment. Two calls for proposals from the hydrogen bank are not enough if they are to hold their own against international competition from the Chinese or Americans.
Speaking of the USA, what will change in the era of President Donald Trump?
The American funding system is not likely to change. Yes, the saying “Drill, Baby, Drill!” has once again become the battle cry of the US energy industry since Donald Trump’s victory in the presidential election. The Republicans want to see a renaissance of oil, gas and coal. But they are also very active in renewable energies. We need this pragmatism from the Americans at the EU Commission when it comes to funding as well. That is why we need a fixed sum for hydrogen funding in the EU’s seven-year budget, the so-called “Multiannual Financial Framework MFF”. We have now reached the point where a new agency needs to be created to coordinate the necessary infrastructure measures in the EU in order to be successful.
That is why we need a fixed sum for hydrogen funding in the EU's seven-year budget, the so-called ‘Multiannual Financial Framework MFF’.
Don't we already have excessive bureaucracy?
Definitely not. Take the example of hydrogen pipeline construction. Scandinavian countries are refusing to build pipelines to Germany because they have different preferences for the type of hydrogen – blue or green – or even differences in the definition itself. So, there is a lack of coordination in the development of the European hydrogen infrastructure. The consequence? A green steel plant in Germany, for instance, might not receive the hydrogen it requires from the originally planned pipeline. That is why we need stronger coordination, and that is what this agency could provide. Ultimately, it does not create more bureaucracy but leads through the jungle of different regulatory systems and brings structure and order to the wild and untidy toolbox of the already established funding arithmetic.
Are we taking sufficient account of the necessary individual needs in the various countries when it comes to regulation?
We have to think differently and in new ways – and also act differently and in new ways. It doesn’t help us if we have a hydrogen core network in Germany, but in the end, we can’t get any feed-in from other countries, so to speak. We urgently need to build infrastructure to cost-effectively bring hydrogen to where the customers are – and that’s not necessarily always where it’s best to produce. That’s because we can produce best where we can use renewable energies as cheaply as possible and don’t necessarily have the largest customers. I am convinced that if we act on this insight, hydrogen prices will be significantly lower.
What is Europe's role in relation to China and the Gulf States?
On the one hand, we often condemn autocracies, but at the same time, we are the largest buyers of their fossil products. Europeans were the first to have their companies in China. At first, we used China as a workbench and later also as a sales market. And suddenly a real competitor is emerging for us. We should abandon our hypocrisy and instead ask ourselves what our interest is. These are sales markets for our electrolyzers and clean technologies. First and foremost, we need to become resilient, not by unilaterally and unequivocally depending on just one power, but by distributing supplies among several countries and engaging with them as equals.
What about the grid structure?
Hardly any other region in the world has as many electricity and gas grids as we do in Europe – especially in Germany. To drive the renewable energy revolution or the clean industrial revolution, we have to link these two grids. We are in a unique position here. Furthermore, we also have a better understanding of the necessary processes than others. And we can export the necessary understanding and standards of the processes – and become, so to speak, the control room of a global revolution that brings the networks together. This is extremely exciting.
So, what is the next step?
This may come as a surprise, because we Europeans have to be taken seriously worldwide. To do that, we have to take action. We have to lead the way with a core network. We are in the control room of the global energy transition and should exercise this role pragmatically. We should finally make our ideas a reality. To do this, we need to present our ideas, take the lead, and not dwell on the negative half of Goethe’s quote, but instead, reclaim the enthusiasm and joy of striving for great heights. This holds true regardless of election outcomes.
Werner, how do you see this from the perspective of a global company?
Europe has an enormous technological treasure trove when it comes to green value chains. Europe can be described as the technological home of electrolyzers. This is a competitive advantage in the global race for the energy transition. We should play this trump card consistently and without hesitation. I believe that we basically have to look to the future more positively, even in the face of what we all have to realize. The global south will always have an advantage over the global north when it comes to renewable energies. Conversely, the global north is typically the one with the greatest hunger for energy and therefore has to get energy from somewhere, so to speak. We will all have to face this universal rule.
What does this mean for electrolyzers?
They will most likely be more common in the southern hemisphere than in the global north. However, this also means that the global north will have to diversify much more when it comes to guaranteeing imports of green energy. Consequently, to meet the energy needs of the northern hemisphere, we have to look at all the countries that can ultimately meet those needs. This includes less democratic and perhaps even more autocratic systems.
Where will we be in a year?
I would like to take up Werner’s idea. We have to think in new and different ways – and act accordingly. So, we should think further about our commitments to climate targets. How can we use technology, for example, to fight hunger? With green hydrogen, we can produce fertilizers with low CO2 emissions in Europe – and thus contribute to solving one of the most pressing problems facing humanity. That is why I am calling for climate targets and clean technologies such as electrolysis for the production of green hydrogen to be linked to specific activities of a global hydrogen program that is yet to be established. I would like to be able to present this program in a year’s time.
The industry has fulfilled its obligation to build capacity in Europe to a large extent. In a year’s time, we may already be talking about the next obligation to create capacity in order to achieve our climate targets and the associated decarbonization goals. Furthermore, we have to start thinking about energy storage along with energy generation. This has been neglected far too much in recent years. If we develop a new wind farm, then we also have to think about how to store the wind energy. Such forward thinking will also lead to renewable energies becoming more cost-effective.