The hydrogen transport conundrum – imports to Germany via pipelines or shipping?

Reaching ambitious climate protection targets will require the use of green hydrogen, especially in sectors or applications that are difficult to electrify.

Some countries such as Germany will not be able to cover their future hydrogen demand without imports, as stated by the German government within its National Hydrogen Strategy. The transport of hydrogen over large distances can be done by ship (as ammonia, liquid hydrogen or via LOHC) or via pipeline. Regarding pipeline transport, it is possible to either newly build dedicated hydrogen pipelines or to rededicate existing natural gas pipelines for hydrogen transport. Additionally, smaller quantities of hydrogen can also be blended to natural gas.

As a follow-up study to the PtX Business Case Study, the German Federal Ministry for Economic Cooperation and Development (BMZ) has commissioned Frontier Economics to estimate the costs of imported green hydrogen from North Africa and Ukraine to the German market using different transport options. The main findings of our analysis include:

  • Transport in rededicated natural gas pipelines is the least-cost transport option (for the transport distances analysed, see Figure 1) – However, this option is only available if existing natural gas pipelines are no longer required for the transport of natural gas. Similarly, due to large diameters of existing pipelines, this option is only suitable for the large-scale transport of hydrogen.
  • Whether transport of hydrogen by new pipelines or by ship is less costly, mainly depends on the level of transport volume (Figure 1) – While shipping is more expensive than using new built large-scale pipeline transport (pipeline diameter of 48-inch), shipping is less costly than pipeline transport in small pipelines (12-inch). For medium sized pipelines (24-inch), there is no clear result when comparing cost ranges for pipeline transport and shipping. One advantage of shipping in the short- to medium-term is that transport can be scaled in smaller units and the required infrastructure can probably be built-up within shorter time-frames.
  • Lower transport costs can outweigh higher production costs of green hydrogen (Figure 2) - Comparing the production and transport costs of green hydrogen from North-Africa and the Ukraine, respectively, to the German market, it can be seen that higher production costs in the Ukraine can be outweighed by lower transport costs due to shorter distances.

Figure 1: Costs of green hydrogen produced in North Africa and transported to Germany

Source: Frontier Economics

Note: Lower bound of shipping costs according to IEA (2019). Production costs refer to investment in 2030, usage of 250-MW electrolysis plant and to cost assumptions of reference scenario.

Figure 2: Production and transport costs of green hydrogen from North Africa and the Ukraine

Source: Frontier Economics

Note: Transport costs to Germany. Production costs refer to investment in 2030, usage of 250-MWel – electrolysis plant and to cost assumptions of reference scenario.

Frontier regularly advises on the energy turnaround and on the use of green hydrogen and its derivates.

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