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“As much electrification as possible, as much hydrogen as necessary“

Interview with Dr. Felix Matthes

Electricity or hydrogen? Germany is debating this question passionately once again. Dr. Felix Matthes is the research coordinator for energy policy at the Ökoinstitut and a member of the National Hydrogen Council. In this interview, he explains which technology makes sense in which areas and how the energy transition can succeed. We talked to him just a few weeks ago.

The EU wants to set itself more ambitious CO₂ targets. Is Europe on course for climate neutrality in 2050?

To a certain extent. In terms of emissions trading, the EU is on track with its interim targets for 2030. This applies to CO₂ emissions from the energy sector, energy-intensive industry and domestic European air traffic. The same does not apply to other sectors. In transport, buildings and agriculture, the EU needs to step up its game to get to zero by 2050.

What needs to happen?

In the sectors that are not covered by emissions trading for energy and industry, investment incentives for climate-friendly cars and the modernization of buildings are an important lever. We should link the running costs of vehicles and heating more closely to CO₂ emissions. One possibility for such CO₂ pricing would be a European emissions trading system for petroleum products – which, however, should be set up separately or alongside the existing system.

What should a climate-neutral energy supply look like?

The key is electricity from renewable energy sources. To be on track for climate neutrality, we need to increase the share of renewable energies in Germany to 70 to 75 percent by 2030. To do this, we must develop the available areas for wind power and solar energy as fully as possible and achieve growth rates like those seen in peak years.

Wind power is key to climate-neutral energy supply. Felix Matthes: “We must develop the available areas as fully as possible and achieve increases like in peak years.”

Where is the problem?

The Renewable Energy Sources Act does not meet the requirements. Admittedly, the amendment that has been passed has certain strengths in renewable power generation for personal usage, for example in the subsidization of solar systems on private roofs. But in other areas of solar energy and wind power, we still have the brakes on. Simpler planning procedures are also an important adjusting screw. We need the next EEG (German Renewable Energy Sources Act) reform by 2022 at the latest to get us on the necessary expansion path.

Electricity and hydrogen are seen as the big alternatives. What is your stance?

In economic terms, the cheapest climate-neutral energy source is electricity, which is why it must be expanded the most quickly. Climate-neutral hydrogen will also be a pillar of the energy transition. However, hydrogen will not be cheap in the long term either – because of the conversion losses, the investment costs, and the transport costs for imports. The motto should be: as much electrification as possible, as much hydrogen as necessary.

What makes sense where?

In the case of passenger cars, we should have the courage to make a clear decision and say: The race has been run, in favor of e-drive propulsion. It makes no sense here to spend money on experiments. The same applies to decentralized building heating: We should not evaporate scarce capital in areas where hydrogen clearly has no future. In other sectors, however, such as trucks, the best solution has not yet been determined. That’s where we need to organize a research process. And then there is a third sector where hydrogen is indispensable. This applies, for example, to the iron and steel sector or the chemical industry.

Isn’t openness to technology better than being tied down?

The often-criticized lack of technology openness is partly a myth. Take the purchase premiums for cars: in Germany, you get the same subsidy for electric vehicles as for fuel cell cars, and both are treated equally in the European fleet limits. The distortion is actually the other way around: in the current EEG amendment, electricity for the production of hydrogen is largely exempted from the levy. That is also correct. But why doesn’t that apply to the electricity used to charge electric cars or for powering heat pumps? This is a bias in favor of hydrogen – even if interested circles claim otherwise.

Do you see niches for other solutions – synthetic fuels, for example?

Yes, in air travel and parts of shipping where there is no alternative. There will always be other small niches. But this is not a path that should be pushed on a large scale. The conversion technologies are too inefficient for that and also too costly in the longer term.

Critics say: We should be climate neutral well before 2050. What would that change?

You can set very ambitious targets in terms of standards. But at the end of the day, they also have to fit in with the investment cycles – we’re talking about 12 years for cars, 20 years for steel mills, 30 years for buildings and at least 50 years for infrastructure. That’s hard to reconcile with climate neutrality in 2035. I know that these are painful discussions – but we must not kid ourselves either. We have lost a decade in climate policy – you can’t just make up for that.

What does a realistic path look like?

We must try to move forward as quickly as possible. One obvious example is the charging infrastructure for e-cars. At least in major cities like Berlin, we are well positioned for today – but there is a lack of charging stations for strong growth. These need to be built quickly. In the case of heating networks, too, the maxim can only be: Expansion, expansion, expansion. At the same time, we need to organize the ramp-up of hydrogen in industry. If a blast furnace in a steel mill is refurbished at great expense, it can’t be corrected after a few years. Or it will be very expensive. In addition, we must promote the exit of CO₂-intensive capital stocks from the market. And we must not forget the social issue.

Felix Matthes calls for faster expansion of the charging infrastructure: “In major cities like Berlin, we’re still in a decent position today – but there’s a lack of charging station infrastructure for a strong growth scenario.”

What do you mean exactly?

We come from a system with medium investment costs and high operating costs. Be it cars, power plants or steel mills. In the future, initial costs will dominate – whether for electric cars, wind turbines or a CO₂-free steel mill. Over its lifetime, new technology is usually cost-saving. But how do you deal with people who don’t have the initial investment funds needed to save money over time? This is a problem that has not been dealt with much so far.

What can a solution look like when buying a car?

In the case of cars, low-cost leasing and rental models can make a contribution. At least in the lower and medium price ranges. Another option: to pay back while charging. This could mean, for example, that I pay back a manageable installment of my car loan every time I charge. At the same time, I could benefit from the fact that electricity is cheaper than gasoline is today. Such models for stretching the cost of capital will be a big topic.

The person:
Dr. Felix Matthes (58) is the Research Coordinator for Energy and Climate Policy and Energy and Climate Protection at the Ökoinstitut. His research includes decarbonization strategies, coal phase-out, emissions trading and electricity market regulation. Matthes was a member of the German government’s Coal Commission and is currently a member of the National Hydrogen Council. He lives in Berlin.

Fuel consumption

e-Golf: Power consumption (NEDC) combined 13.8 – 12.9 kWh/100 km; CO₂ emissions, combined 0 g/km; efficiency class A+

Inter/view

In the “Inter/view” format, we talk to independent minds from science, business and politics about the mobility of the future. In an open dialog, we discuss where the difficulties lie, what solutions we can look forward to, and how transportation can be organized in a climate-neutral way.

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