German national hydrogen pipeline network gets green light after upper house of parliament approves law change

The German upper house of parliament, the Bundesrat, has today approved an amendment to the Energy Industry Act that sets out a new regulatory framework for the government’s planned national hydrogen pipeline network.

It is now a formality that it will soon become law, once the German president Frank-Walter Steinmeier, in his largely ceremonial role, signs the bill.

German climate and economic minister Robert Habeck initially planned for a 9,700km core hydrogen network to be in place by 2032, enabling green hydrogen to be piped from its production location (or import terminal) to the industrial centres where it would be consumed.

But Habeck’s coalition agreed earlier this month to delay its competition by five years to 2037, with lawmakers from the Social Democrats (SPD), Free Democrats (FDP) and Habeck’s own Green party said the delay would ease the financial burden for operators by allowing extra time for green hydrogen projects to be built that would use its pipelines.

The entire €20bn ($21.4bn) network — which is due to largely use repurposed gas pipelines — is to be built by the private sector, which would recoup their investments through grid fees.

However, the government said it would guarantee a return on equity, before taxes, of about 6.7%. And in “the unlikely scenario that the core network ramp-up fails”, operators would only have to shoulder 24% of the costs, with the government liable for the remainder.

The government will also set up an “amortisation account” to cover the network’s construction costs, which would be gradually paid back by the operators before 2055.

The Bundesrat — which is made up of delegations from the country’s 16 state governments — can request that changes are made to proposed laws, through a mediation committee made up of members from both houses. But its lawmakers passed the amendment without such a request.