Climate policy and the modern state: A hydrogen package for Germany

The goal of climate policy is clear: no net emissions of greenhouse gases by 2045. But what is the path to achieving the goal? What does a modern climate policy look like that ensures the realization of the set climate targets? In a new study published as a Forum New Economy Working Paper, Tom Krebs of the University of Mannheim places renewable hydrogen at the center of a comprehensive climate strategy.

According to the study, there are two reasons for placing the development of a hydrogen economy at the center of a German climate policy. First, renewable hydrogen – that is, hydrogen produced on the basis of renewable energies – is essential for decarbonizing industry, the energy sector and heavy transport. Second, there is huge innovation potential in hydrogen technology that can form the basis for a green economic boom.

The core of the hydrogen strategy developed in the study is a public hydrogen package that goes far beyond the current plans of the German government. The proposed hydrogen package consists of six measures and has a total financial volume of 100 billion euros by 2030 (10 billion euros annually). Three of the six measures relate to the expansion of public infrastructure and three measures can be assigned to industrial policy. From an economic perspective, it makes sense to implement large parts of the hydrogen package by means of public companies.

Furthermore, the study shows that only a modern climate policy can successfully link climate protection with economic prosperity. Such a climate policy – like the proposed hydrogen package – is based on the idea of the modern state. The modern state creates the necessary infrastructure so that the climate-friendly products of the future (green hydrogen) can be transported from the production sites to the consumers. In addition, it pursues a strategic industrial policy in order to create planning security and to stimulate targeted investments in climate-friendly technologies of the future.

The full study is now publicly available as a Forum New Economy Working Paper. The study was first presented at our VIII. New Paradigm Workshop in Berlin at the end of May 2021.