Modern gas-fired power plants can reduce the CO₂ emissions associated with energy generation by up to 70 % compared to coal-fired power plants and can be converted to hydrogen in the long term. The energy supply must strike a balance between climate protection and security of supply. Gas-fired power plants are able to provide electricity flexibly and therefore support the integration of renewable energies. They help to secure the base load and keep the energy supply stable, especially at times when the sun and wind do not provide enough energy.

Ensuring security of supply through storage

Storage systems play a central role in security of supply and have an essential function in the energy system. They make it possible to reliably provide the required power throughout Germany, even in times of peak consumption. In order for this task to be fulfilled, it is necessary to ensure a certain storage level throughout the year. In principle, the market is capable of performing this function. However, it also makes sense to plan a strategic reserve to reliably ensure a sufficient fill level over longer periods of time.

Expansion of a flexible infrastructure for the energy transition

The existing gas infrastructure is an important part of Germany and Europe as a business location. It is already fully developed, efficient and comparatively inexpensive to operate. This infrastructure forms the backbone for the use of biomethane, synthetic methane and the future use of blue and green hydrogen.

The investments in electricity grids that are forecast for the coming years already far exceed anything previously imaginable and will lead to a significant increase in electricity grid fees in the foreseeable future. The use of existing assets such as pipelines and storage facilities significantly reduce these costs and allows climate-friendly technologies to be scaled up quickly. In the future, we will continue to need two independent energy supply systems based on electrons and molecules to guarantee the energy supply for industry, mobility and households.

For this reason, investment conditions suitable for the capital market are also essential for natural gas infrastructure compared to other investment opportunities.

The pipeline system continues to require a secure and reliable regulatory and legal framework for the targeted development and expansion of infrastructure. Existing assets should not be decommissioned prematurely.

LNG as a diversified energy source for a German supply strategy

The introduction of LNG as a key component of the German gas market was a strategic response to the energy crisis triggered by Russia. LNG imports enable an independent and diversified energy supply that is not tied to pipelines from individual countries. The example of the Wilhelmshaven connection pipeline (WAL) shows that it is possible to respond quickly to crisis situations in the energy supply with the appropriate speed under licensing law. This speed should serve as a model for the further expansion of the LNG infrastructure and the switch to greenhouse gas-neutral technologies.

The use of LNG as a diversified energy source and securing imports to Germany should be an essential part of German energy policy and supply strategy for the coming years. In addition to the LNG strategy, domestic value creation in the supply of natural gas would ensure security and low prices.

A market-based hydrogen economy is the goal. This requires government start-up aid, as climate protection and prosperity are shared tasks. The central building blocks are a solid infrastructure with transportation and distribution networks, sufficient storage facilities, import corridors and efficient ports for international trade. At the same time, framework conditions must be created that promote a functioning market. Producers and users of hydrogen must be given economic incentives that enable them to conclude long-term purchase agreements.

Expand infrastructure, accelerate implementation

A functioning hydrogen infrastructure is the basis for the ramp-up of a competitive hydrogen economy. We need sustainable financing conditions for the expansion of the necessary infrastructure. We are in international competition for capital here. For the H₂ core grid, this specifically means that the return on equity must be increased and the planned deductible on the amortization account must be reduced. This is the only way to create a sustainable risk-return profile.

In addition, the regulation of storage facilities and distribution grids is essential to create security of supply and efficient grid structures. The EU gas and hydrogen package also needs to be transposed into national law quickly and decisively. Infrastructure is the backbone of the energy transition - it must not become a bottleneck.

In the last legislative period, the Hydrogen Acceleration Act (WassBG) was intended to create the conditions for the H₂ ramp-up to receive a boost. It must be implemented, otherwise hydrogen projects will not be approved and implemented in accelerated procedures in the long term.

Anchoring volume ramp-up, boosting production and demand

One option for the volume ramp-up is a state-supported intermediary (midstreamer), which serves as a central player for procuring the necessary quantities of hydrogen. This creates the necessary security to promote investment and accelerate the market ramp-up.

In addition, further incentives are needed on the production and supply side. Electrolysis capacities, H₂-ready power plants and industry must be specifically promoted to establish hydrogen as an energy source.

It is also important to quickly implement projects from the previous legislative period. The Power Plant Safety Act (KWSG) enables the coal phase-out, promotes the transformation in our electricity production and at the same time supports the hydrogen ramp-up. The funding guideline for system-supporting electrolysers must be aligned with the target of 10 GW of electrolysis capacity by 2030.

Aligning European rules with the ramp-up

Decisive foundations for the ramp-up of the hydrogen economy are laid down by numerous European Union regulations. The German government must therefore step up its efforts at EU level to promote pragmatic regulations that enable market participants to invest in new infrastructures quickly and easily.

The focus here is on the criteria presented by the EU Commission for the production and marketing of low-carbon hydrogen. The German government should also push for the existing strict criteria for the production of renewable hydrogen based on the Renewable Energy Directive to be revised in the near future. If the restrictive approach adopted for the recognition of hydrogen as renewable or low carbon continues in this form, the timely availability of sufficient quantities of hydrogen for the development of a liquid market will be severely jeopardized.

The rapid implementation and success of carbon management as the third pillar of the energy transition - alongside renewable energies and hydrogen - requires the creation of a suitable legal and regulatory framework that triggers investment. It is therefore important that the following legal and regulatory adjustments for the development of the carbon management value chain are implemented very quickly, as otherwise there is a risk of further delays to the projects.

Enable a legal framework for the development of a CO₂ infrastructure immediately!

The amendment to the Carbon Dioxide Storage Act creates the basis for CO₂ transport and the corresponding transport network for the purpose of CCU/S and thus contributes to achieving the net zero targets for industries such as lime, cement, waste, steel and chemicals. Without the law, approval procedures for the construction of the CO₂ infrastructure cannot be started. This leads to delays in project development and has a direct impact on the decarbonization projects of the industries mentioned.

The rapid development of the infrastructure will only succeed if the overriding public interest is included in the law. Otherwise, there is a risk that the business location may lose these industries. Overall, speed is required here — a Germany-wide CO₂ infrastructure by 2040, which would take on a decisive transit function in Europe, will only be possible if optimal framework conditions are created quickly.

Enable cross-border transportation and storage of CO2!

The London Protocol as well as the High Seas Act (HSEG) play a crucial role for the CO₂ value chain, as they define the legal framework for the cross-border transportation and storage of CO₂ in the German EEZ. Without the ratification of the London Protocol and the amendment of the HSEG, legal uncertainties and regulatory hurdles could significantly hamper progress and investment in CO₂ management technologies. This would not only jeopardize the achievement of national and European climate targets but would also impair the competitiveness of German industry.

It is therefore of the utmost importance that the protocol and the law are ratified and adopted as quickly as possible in order to create the necessary legal basis for a sustainable and future-proof CO₂ value chain.

Create financing framework and de-risking for CO₂ infrastructure development

Appropriate investment conditions and de-risking are essential for the successful development of the carbon management value chain, particularly the CO₂ transport infrastructure. The development of a CO₂ transport infrastructure requires considerable investment, especially in the first few years when the infrastructure is not yet fully utilized.

Without suitable financial incentives and hedging mechanisms, potential investors could be deterred by the high initial costs and uncertainties. A reliable financing and hedging mechanism is necessary to ensure investment security and accelerate the ramp-up of infrastructure. This could be achieved through state subsidies, long-term contracts or other financial incentives such as guarantees or warranties that minimize the risk for private investors.

Such a framework would not only increase the attractiveness of investments in CO₂ transport infrastructure but would also ensure that the necessary capacities are available in time to achieve the climate targets.

European carbon management as an enabler for a Europe-wide CO2 network

Various legislative proposals on CO₂ management are expected at European level in the new legislative period. The new EU Commission will publish a communication on the Clean Industrial Deal in the first 100 days. This will include a proposal on the CO₂ regulatory package for the storage and transportation of CO₂. The EU Commission will also present legislative proposals for achieving the climate target for 2040. Specific regulations are expected to achieve the ambitious emission reduction targets, including negative emissions and CO₂ storage.

From OGE's point of view, it is important for the legislative framework to draft regulations that promote the development of the CO₂ infrastructure, serve the market and enable a Europe-wide network. The European Union's net-zero targets can only be achieved through early CO₂ management.