Reuters reports that the German government has agreed plans to subsidise the development and operation of four natural gas fired power plants that will be able to convert to firing hydrogen, with around €16 billion expected to be outlaid for a total power generation capacity of 10 GW.

The announcement solidifies the country’s strategy to shift to hydrogen for part of its energy demand, although the subsidised plants are not expected to fully switch until 2035-2040, with plans to be submitted by 2032. German industry had been impatient for subsidies to be announced so that they could plan around them, and have welcomed the announcement while suggesting that the planned capacity is too low. A tender process for the subsidies will be announced soon; RWE is one energy company that has said it will submit a bid, while Uniper is also expected to participate in the process.

Two additional announcements have also been made regarding the power sector in Germany. One is that a new design for the power market is to be agreed by around the middle of the year, and be operational by 2028, with a mechanism to reward capacity (presumably to help ensure grid stability). The other is that subsidies will be available to power plants running entirely on hydrogen with a capacity of up to 500 MW “for energy research purposes”, according to Reuters. Germany plans to end the unabated combustion of coal by 2038.

Meanwhile, the head of the Bundesverband der Deutschen Industrie (the Federation of German Industry), Siegfried Russwurm, has spoken out about the difficulties Germany industry is facing at the moment, saying that the country’s climate policies are “more dogmatic than any other country I know”. He went on to say that “Nobody can say with any certainty today what our energy supply will look like in seven years’ time, and that’s why no one can say how high energy prices will be in Germany then. For companies that have to make investment decisions, that is absolutely toxic.”

Mr Russwurm said that business supported the green transition, but that “We’re pursuing a goal of 100 per cent [net greenhouse gas reductions by 2045] when it’s obvious the last 10 per cent is going to be incredibly expensive”. The German economy contracted by 0.3% last year, and the federal government is reportedly hamstrung by disagreement between the finance and economic ministries.

In further German news, the federal government is preparing to nationalise Rosneft’s assets within the country. The assets were first placed in a trusteeship in September 2022 following the Russian invasion of Ukraine.