Introduction

A broad majority in the Danish Parliament will put DKK 15,7 billion of taxpayers' money on the line to build a hydrogen pipeline to the border, and they hope that it can open up a new export adventure for green hydrogen to Germany. Strong lobby groups have long pressed for money and guarantees from the treasury. The reason is that there are no market operators who, on pure market terms, would put their hands on the stove in relation to the hydrogen pipeline. The settlement means that Energinet can get a state-guaranteed loan of DKK 7,4 billion to build the first part of the hydrogen pipeline, and on top of that, the state is willing to provide up to DKK 8,3 billion in operating subsidies.

The government, together with the SF, Conservatives, Radical Left, the Red-Green Alliance and the Alternative, have high hopes for the agreement. In a press release, the politicians behind the agreement say that it can get the “snowball rolling for hydrogen” and that hydrogen can “make Europe green and independent of Putin's gas and the Middle East's oil", and that "the hydrogen pipeline to Germany is a key factor for Denmark's ability to produce and deliver green energy to the European community" and more green hydrogen will "strengthen Europe's security of supply and competitiveness."

The objectives of making Europe independent of fossil fuel imports and supplying green energy to our neighboring countries are noble, but there are a number of reasons to raise doubts about whether this export adventure can become a reality and that the hydrogen pipeline can one day be operated without state support.

Green hydrogen is not a clean energy source, but on the contrary a energy carrier and a feedstock, which is expensive and difficult to transport.

The green hydrogen will be produced in electrolysis plants, where water is split into hydrogen, H2, and oxygen. The hydrogen can then be used in the Power-to-X industry to produce the next generation of so-called e-fuels, e-fertilizers, etc. This could theoretically trigger a much greater demand for wind and solar energy.

It is hoped that the more hydrogen production – and the export of hydrogen – is ramped up, the better the overall business case will be for, for example, more offshore wind in the North Sea. Is it a kind of win-win model that can help accelerate the expansion of renewable energy in Denmark? This is what the CIP Foundation, among others, has advocated. In a report, they estimate that Denmark could have the opportunity to export around 8 billion DKK in 2030 and with an increasing potential to around 70-100 billion DKK annually.[1]

Another study by Deloitte, paid for by the gas industry in EVIDA, has estimated that the socio-economic benefit over 40 years will be up to DKK 16 billion, and that each krone invested in the hydrogen infrastructure provides a socio-economic benefit of DKK 1,98. However, their estimates for the costs of the hydrogen pipeline are far below other studies.[2]

Energinet has also made a feasibility study, which estimates that a socio-economic gain of between 30-75 billion DKK can be achieved by 2060 by establishing a hydrogen infrastructure in Jutland compared to a situation without hydrogen infrastructure.[3] However, the report emphasizes that there is considerable uncertainty about the economic estimate.

Energinet finally assesses that "the benefits from establishing hydrogen infrastructure accrue primarily to electricity and hydrogen producers, while national consumers of hydrogen for ammonia production and Danish electricity consumers will have to pay a slightly higher price." In other words, this means that part of the bill ends up with electricity consumers.

Strong industrial interests have long led an intense lobbying campaign to get the state to provide loan guarantees and other state support for the establishment of the hydrogen pipeline. In September 2023, a number of large business players – including Brintbranchen, Dansk Industri, Dansk Erhverv, Green Power Denmark, Copenhagen Infrastructure Partneres, Ørsted, Total Energies and several other developers – came up with a number of joint recommendations, calling for a state loan guarantee, a state deficit guarantee and possible direct state support for a new hydrogen infrastructure. With the latest political settlement, they have largely had their wishes fulfilled.

But in reality, there are a number of fundamental challenges and risks that could cause the chain to derail, and make the hydrogen pipeline to Germany an expensive and risky experiment, where the money could be used much more cost-effectively and with greater climate impact for other purposes. That is why we, the Green Transition Denmark, have prepared this memorandum.

Hydrogen forecasts are far too unrealistic

RGO has analysed the future hydrogen needs of EU countries, and we assess that the demand for green hydrogen will in all likelihood be much lower than anticipated by the European Commission and other key players. (See page 4) The Commission's expectations for how quickly and to what extent green hydrogen production and distribution can be scaled up are not realistic to achieve.

Green hydrogen is far more expensive to produce, and prices are unlikely to fall as much in the future as supporters hope.

The hydrogen economy and its business case are challenged by the fact that hydrogen has much higher energy losses than direct electrification with green electricity. This could lead to higher costs in the energy system of the future. If you focus too heavily on green hydrogen – at the expense of cheaper green electricity produced with solar and wind energy – it will increase overall energy costs, and thus weaken Europe's competitiveness.

In short: It is doubtful that a robust business case can be created for the export of green hydrogen to Germany. So when the Danish state guarantees loans and possible operating support for the establishment of a hydrogen pipeline to Germany, it does so with a significant risk that the money will not be repaid.

The EU Commission's forecasts still include some hydrogen for the heating sector and road transport. However, this will be far too expensive compared to direct electrification and does not seem realistic. In addition, the demand for hydrogen from a number of heavy industries will not be as large as expected, as more and more are focusing on direct electrification, which is much cheaper. In addition, more than half of the EU countries' hydrogen consumption today is linked to refineries, which will be greatly reduced as fossil fuels are phased out.

In the future, fertilizers, chemicals, ammonia, methanol and e-fuels will be significant consumers of green hydrogen. But there is much to suggest that hydrogen production og The production of e-fuels, e-ammonia, chemicals, etc. will be located in the same places, as it is expensive to transport hydrogen over long distances.

Denmark should also build electrolysis plants to produce green hydrogen and produce e-fuels and e-ammonia, which will increase the demand for green electricity from wind and solar energy in the coming years. However, as this analysis shows, it is highly doubtful that a solid economic business case can be made for exporting green hydrogen via a hydrogen pipeline to Germany.

On the other hand, as the European transmission grid expands, Denmark will be able to send an ever-increasing portion of its green electricity to Germany and other EU countries, where local factories can also benefit from it. This could include the production of hydrogen at local factories where it is to be used.

The decision to provide state aid and loans for the hydrogen pipeline is actually a opportunity costs, as a much greater climate effect could have been achieved for less money if the state had alternatively provided loans and operating support guarantees for, for example, heat pumps, electrification of industry and other energy-saving technologies. It could also have provided extra incentives for battery and heat storage, which are vital for building a more resilient Danish electricity and heat supply in the energy system of the future, which must completely free itself from fossil fuels.

If politicians still want to provide subsidies for the development of green hydrogen, there is much evidence to suggest that it is better to build strong local industrial clusters, where the production of green hydrogen is concentrated in the same place, and where e-ammonia for agriculture or PtX fuels for aircraft and ships are produced. Products from these can be transported cheaply to consumers abroad by ship, train or truck. The hydrogen pipeline to Germany is an uncertain and costly investment in a project where there are hardly enough consumers with purchasing power at the other end.

Overall, a state-subsidized hydrogen pipeline also does not meet the Climate Act's objective of creating a cost-effective green transition, as other investments would have ensured greater climate benefits for less money.

Let's dive deeper into what the biggest challenges are for the ambitious hydrogen pipeline project.

Here are ten key challenges:

1. Electricity is much more efficient than hydrogen

Fundamentally, green hydrogen cannot compete with direct electrification in many of the applications where the EU Commission and others expect increasing consumption. This is due to both a large energy loss in converting electricity to hydrogen and significantly lower efficiency in end-uses compared to technological alternatives powered directly by green electricity. For every kWh of green electricity needed to make hydrogen via electrolysis, in many end-uses at least three times more power can be obtained by using the electricity directly.  

Electric cars typically have an energy efficiency of 75-90 percent, while hydrogen cars are down to 25-33 points Heat pumps powered by green electricity are at least 5,5 times as efficient as if you produce and use green hydrogen in the heat supply. What is the consequence of that? It takes 5,5 times more wind turbines to produce electricity if you choose hydrogen over heat pumps in the heat supply.  

Even with the most optimistic projections and expectations for the green H2 learning curve, it will not be able to compete in price (see point 2) with solar and wind energy, batteries or heat pumps in the energy system, let alone be used in heating supply or road transport. In terms of energy economics, there is nothing that makes it rational to focus on green hydrogen rather than direct electrification in the mentioned end uses. 

However, there are end uses where there are hardly any good alternatives to hydrogen, cf. point 10.  

2. Green brint is expensive to produce and transport 

Today, only 1 percent of over 1600 potential green hydrogen projects have progressed from the initial and exploratory phases to a real investment decision. The reason is that the price is too high, and that is why so few companies are ready to purchase green hydrogen. If they are dependent on hydrogen, such as the chemical industry, it will be economically advantageous for them to buy fossil hydrogen for many years to come. Fossil hydrogen is 3-4 times cheaper than green hydrogen, which costs between 5,3-13,5 euros/kg.4  

In December 2024, Bloomberg NEF came up with a new price estimate for the future prices of green hydrogen, where they have taken into account, among other things, that the prices of the electrolysis plants have proven to be several times more expensive than previously assumed. Even in 2050, the price of green hydrogen from Spain – which is considered to be the most optimal place to produce green hydrogen in the EU due to its large solar and wind resources – is expected to be just under 2,8 euros/kg. In the North Sea countries, prices are expected to be somewhat higher.  

A new realism is spreading in the hyped hydrogen market, and the Bloomberg analysis is further evidence. It is also a significant confrontation with the excessive price optimism that both the International Energy Agency (IEA) and the Renewable Energy Agency (IRENA) have previously expressed, and that Danish and European decision-makers have leaned on. IRENA has previously claimed that the price of green hydrogen could be driven down to below 2 euro / kg already in 2030, and down to 1 euro/kg in 2040, but there is no indication that their assumptions about the technology's learning curve and price decline hold. Bloomberg NEF estimates that prices for green hydrogen in the global market in 2050 will be between 1,5-4,8 euros/kg – with only India and China able to deliver the cheapest prices. 

The Energy Expert Michael Barnard However, we still believe that the price of green hydrogen in 2050 could very well be considerably higher, i.e. 5,7-7,6 euros/kg.  

The system costs for hydrogen electrolysis also appear to be significantly higher than previously assumed. Bloomberg has analyzed 52 specific projects, and they estimate that the price in 2050 will be 1113 euros/kW – i.e. more than six times higher than IRENA's estimate. See figure 1. 

The Danish Energy Agency calculates in their technology catalog On the other hand, costs in 2050 could reach around 300-500 euros/kW, but this is two to three times lower than the estimate from Bloomberg NEF. 

The Danish Energy Agency technology catalog for transportation costs also seem to use rather optimistic figures for the cost of transporting hydrogen over longer distances. According to them, the price of transporting one kg of hydrogen over 1000 kilometers can come down to  

0,165 euros, where the International Energy Agency expects a price of 0,59 euros – that is, three and a half times less. 

One of the key obstacles – in terms of scaling up the market for green hydrogen and driving down prices – is that there is currently no market for green hydrogen with clear price signals. In fact, not much hydrogen – not even fossil fuel – is traded on the market. In Europe, three-quarters of the hydrogen is produced by the very companies that use it. See point 7. 

3. Physical challenges

The production of hydrogen requires millions of liters of ultrapure water to split water into hydrogen and oxygen. It requires 9 liter ultrapure water to produce 1 kg of green hydrogen, and overall it amounts to 20-30 liters to make so much ultrapure water. But it is relatively simple to desalinate seawater, so it is not a real obstacle. This may lead to slightly higher energy consumption, but it only constitutes a marginal part of all the energy that an electrolysis plant swallows. The high energy consumption and energy loss are major challenges for green hydrogen. It must be used 49-58kWh electricity to produce 1 kg of green hydrogen – and that comes at a price.

The traditionally used electrolysis technologies have relatively high energy losses when converting electricity to hydrogen. Alkaline electrolysis plants have an energy loss between 18 and 38 percent and for Proton Exchange Membrane plants the loss is between 18 and 33 percent. Solid Oxide plants have higher electrical efficiency, but they require high temperatures of around 700 degrees C.o which will also require energy input.

However, there is a real thermodynamic challenge in scaling up hydrogen production and transporting it over long distances. Hydrogen is the world's smallest molecule, and although its calorific value is three times higher than that of fossil gas per kg, hydrogen's energy content per unit volume is three times less than that of natural gas at atmospheric pressure. So to get the same amount of energy out of it, you have to transport and store three times as much hydrogen as if it were natural gas.

At the same time, it takes a lot of extra energy to compress it. You could also put it another way: It takes three times as much energy to transport hydrogen as gas. And over a 30-year period, according to energy expert Paul Martin from Spitfire Research, you will lose at least 10 times As much energy can be saved by transporting hydrogen over long distances as by sending green electricity through high-voltage lines. All other things being equal, this will affect the price.

A number of studies – including the aforementioned reports from the CIP Foundation and Energinet, as well as International Energy Agency – however, assumes that it is cheaper to transport hydrogen via pipes over long distances than to send electricity through the transmission grid.

Opinions are divided on this. Energy expert Michael Liebreich is highly skeptical of the analyses that claim that it is cheaper to transport hydrogen via pipelines over long distances. According to him, it would be approximately three times as expensive Sending hydrogen via pipelines is like sending electricity via transmission lines.

A number of the more optimistic analyses do not take into account the extra expenses to produce and distribute 3-5 times more renewable energy to make hydrogen rather than using electricity directly in a number of key applications.

An independent research study has examined which forms of energy transmission are best and cheapest over which distances and different sizes of projects. The study compares the transport of electricity in high-voltage direct current (HVDC) cables, compressed hydrogen in pipelines, liquid hydrogen in ships, and hydrogen converted to ammonia. The researchers conclude that electricity transmission via “dedicated HVDC is currently the most economically attractive option for medium-distance transmission” – i.e. “from 200-2000 km depending on the electrolysis capacity”.[5]

When they conduct a sensitivity analysis for the discount rate, the costs of HVDC vs. hydrogen pipelines, and locally installed liquid hydrogen storage, they conclude that “HVDC will become the preferred technology to support energy transmission for green hydrogen production over a wide range of distances and volume sizes.”

A key argument for scaling up the production of green hydrogen is that it can replace fossil-produced hydrogen. And that is an important task. But even fossil hydrogen is almost always produced locally – and usually by the companies that need it themselves. It is therefore an open question whether a business case can be created for transporting green hydrogen over long distances, when it is already 3-4 times more expensive than fossil-produced hydrogen? The next challenge is whether demand will also be high enough to create the large production capacity that can make the operation of a hydrogen pipeline profitable?

4. Growth forecasts don't hold up at all

The official hydrogen forecasts appear to be greatly inflated. The Danish Energy Agency's expectations for future hydrogen demand are hardly realistic. In Climate projection 2024 has a projection been made based on the European-iske system operators TYNDP 2022-figures for hydrogen demand in a scenario called Distributed Energy. See figure 2. Based on this, it is concluded that Denmark will need to use up to 2050 TWh electricity per year to produce green hydrogen via electrolysis – that will lead to more than quadrupling Denmark's current electricity consumption of 36 TWhBut the TYNDP22 numbers are apparently far too high.

The TYNDP scenario Distributed Energy expects that EU countries will use around half of the estimated hydrogen in 2040-2050 for heating buildings and in the heavy road transport, even in some passenger cars and for the production of electricity. In the scenario Global Ambition It's even more. A full 11 percent of all passenger cars and 28 percent of trucks will be powered by hydrogen by 2050, if the TYNDP Distributed Energy scenario is to be believed. But that's very, very unlikely.

The electric alternatives in the form of heat pumps are much cheaper for space heating and low-temperature heating in industry. Anyone who follows the ongoing battery revolution will know that heavy road transport will also run on electricity in the future. There is also no economic argument for green hydrogen being used to produce electricity at power plants.

There will still be demand for non-energy use in industry for the production of chemicals and ammonia for fertilizer, but it is unlikely to more than double from 2030 to 2040. In addition, there will be increased demand for hydrogen for e-fuels for shipping and aviation.

TYNDP-2024 estimates that EU countries will need approximately 2040 TWh of electricity to produce hydrogen for e-fuels for maritime and aviation in 750. But even if this is included, the total demand for electricity for hydrogen production is unlikely to exceed 1000 TWh in 2040.

When the battery revolution probably succeeds in electrifying more aircraft on short and medium-haul routes, as well as part of coastal maritime transport, the demand for these hydrogen-based e-fuels is unlikely to increase as much as expected, and may even begin to decline. Developments in recent years indicate that direct electrification is often cheaper where it is physically possible.

Similarly, industry is also likely to demand less hydrogen than these TYNDP scenarios assume. Research studies show that up to 99 percent of process energy in European industry can be electrified.[6]

For several years, it has been assumed that heavy and energy-intensive industries could not be electrified and that there would therefore be a demand from them for green hydrogen. However, through technological innovation, we are seeing more and more high-temperature companies transitioning to electric solutions in recent years.

In the autumn, steel giant Arcelor-Mittal dropped a project with green hydrogen for steel production – via the so-called DRI process. And in January 2025, the German steel industry asked for postponed their deadlines for using larger amounts of green hydrogen.

Why? Because the price is too high, and it could threaten competitiveness if you bet too hard on green hydrogen. Steel based on electric melting of scrap iron and steel has long been a significant part of the EU's steel consumptionAs electricity production shifts to solar, wind and non-energy, this steel will become almost CO2-free.

However, hydrogen is far more expensive than fossil gas or methane gas for the last few percent of new steel that is still produced in traditional blast furnaces.

The research house Rystad estimates that the CO2 quota price should be increased to 500 euros per ton of CO2 to make green steel competitive with steel produced using fossil fuels. At present, the quota price is approx. € 80/t CO2. At the same time, we can see that more and more steel companies are starting to invest in electric arc furnaces. In 2023, the entire 43 points of the investments for it.

More and more of the heavy industries, even with high temperatures up to 1500-2000 degrees Celsius, will be electrified in the coming years because it is technically possible. For many applications it will also be economically attractive because there is so much big gains from higher energy efficiencyIn short: The heavy industries that are betting on green hydrogen risk losing out in the competition with the new innovative companies that are going all-in on electrification.

5. EU goals need a reality check 

It is unlikely that EU countries will demand 10 million tonnes of green hydrogen in 2030 and at the same time import 10 million tonnes of hydrogen from other countries, as stated in the RePowerEU plan. This plan was adopted during the 2022 energy crisis, which was triggered by Russia's war in Ukraine. But no action was taken impact assessment by the Commission before the target was set.

In the summer of 2024, the European audit report called these targets “overly optimistic” and pointed out that the target was set without “robust analysis.” The Court of Auditors has called for a thorough reality check.[7]

To produce 10 million tonnes of green hydrogen by 2030, as stated in the RePower EU plan, a total electrolysis capacity of 100 GW in 2030. But by the end of 2023 there were only 216 MW electrolysis capacity for green hydrogen in EU countries – i.e. not much more than two per thousand of what is the target in just five years.

Since the price of electrolysis plants is the step since 2022, and several planned projects have been canceled. Very few have reached a final investment decision. So there is no indication that the goal is achievable. Far from it.

A number of independent analyses have shown that the European Commission's target is far too high. Both the think tank Agora[8]and Transport & Environment, as well as energy expert Michael Liebreich have assessed that the EU targets are completely unrealistic. See Figure 3.

As the figure illustrates, Agora estimates that EU countries will only need less than a fifth of the amount of hydrogen that the European Commission's RePowerEU plan calls for by 2030.

It is hardly desirable either. To produce 10 million tonnes of green hydrogen in 2030, at least 500 TWh of electricity is required, or more than the total electricity consumption of France or Germany. It is also more than the electricity produced by all wind turbines in the EU27 in 2023.

In other words: If you choose a growth-oriented hydrogen economy, as the Commission proposes, it requires enormous amounts of clean renewable energy, which could have been used to phase out fossil fuels with a greater climate impact.

In other words, the risk is that the day when Denmark's and the rest of the EU's energy consumption becomes fossil-free is postponed. From a climate perspective, it makes more sense to limit total hydrogen consumption to those purposes where there are no other possible solutions to eliminate fossil fuels. By providing state support for hydrogen, Denmark risks distorting the market in favor of hydrogen rather than direct electrification.

6. Some hydrogen becomes redundant  

There is much evidence to suggest that we may not need to use so much hydrogen in the future. Why is that? Let's take a look at the numbers. Globally, up to 120 million tons of hydrogen per year, of which 2/3 is pure hydrogen and one third is mixed with other gases.[9] Virtually all of the world's hydrogen (over 99 percent) is produced from fossil fuels. Approximately 42 percent of the world's hydrogen is currently used in refineries to remove sulfur from gasoline and diesel (which reduces acid rain) and to upgrade heavy oil fractions to lighter fractions with greater sales value. Approximately 37 percent is used to make fertilizer, and the rest is used to produce methanol, chemicals, plastics, and in other industrial processes (e.g., steel production).[10]

As fossil fuels are displaced and an emission-free energy system without fossil energy is built, up to 42 percent of the global hydrogen consumption used in oil refineries will in principle become redundant.

What about the EU, where hydrogen accounts for approximately 2 percent of the union's total energy consumption? In the EU, in 2023, hydrogen was used 7,2 million tons of hydrogen, and 99,7 percent of it is produced with fossil energy. A full 4,2 million tons were used in refineries – i.e. 58 percent of total hydrogen consumption.[11] And 26 percent of the hydrogen in EU countries goes to produce ammonia, most of which is used for fertilizer. And the rest is used to produce chemicals, plastics and other purposes.

In the transition to a fossil-free energy system with electric mobility, refinery consumption will fall rapidly. Conversely, increasing production of e-fuels and e-ammonia with green hydrogen may be able to support some of the demand.

7. Hydrogen is produced locally today

Most of the world's hydrogen is not exported at all, so the dream of a new hydrogen export adventure is based more on a political vision than the current reality. VEarth's hydrogen production er highly localized Today. Only 8 percent of hydrogen is sent via pipeswires, and this usually happens in geographically limited areas because it is expensive, difficult and risky to transport hydrogen over long distances.

Today, 77 percent of all hydrogen in Europe is produced by the same companies that will use it. This is stated in the latest status report from ACER (November 2024), who also points out that trade in hydrogen today “is limited”. In reality, most of the hydrogen-production located in the Member States, where industrial demand is greatest (i.e. from petrochemical companies). The world currently has approximately 5000 km of hydrogen pipelines (and 60% of them are in the USA), most of which are operated in highly demarcated industrial areas. In comparison, there are over 3 million kilometers of natural gas pipelines in the world, which also reflects the fact that it is physically much easier to transport natural gas over long distances.[12]

It is not easy to transport hydrogen through long pipelines, and for safety reasons, the hydrogen must be compressed and often mixed with a larger proportion of gas to be sent through existing natural gas pipes. And these must be reinforced to prevent leakage.

The Commission has opened up the possibility of mixing green hydrogen with other forms of low-carbon hydrogen, including blue hydrogen, and sending it via upgraded gas pipelines. The hope is that the hydrogen market can be scaled up more quickly, but the problem is that this risks extending the lifespan of fossil gas far into the future.

There are many who are currently making promises to start hydrogen production and create a transmission network for transporting hydrogen. But the problem is that since there is no real market with a clear price formation, it is also difficult to get private investors who want to put their hands on the stove. Of 107 announced projects For hydrogen transmission in the EU and Norway, only two have reached the Final Investment Decision (FID). See figure 4 The rest is still more hot air than clear business.

Furthermore, some analyses overlook the fact that a large part of the hydrogen demand goes to products that can be produced more cheaply locally in places with cheap renewable energy, which can then be transported to end users. For example, German consumption of fertilizer or ammonia for fertilizer production can easily be produced in Denmark and then sent to Germany cheaper than by transporting the hydrogen there. The same applies to methanol, where Danish production is already established.

8. Danish hydrogen can have difficulty compete

If a hydrogen pipeline to Germany is nevertheless established with state support, its profitability will depend on there being a high demand from Germany. There is no guarantee of that. As long as CO2 taxes are not raised significantly for fossil fuels, or the EU makes stricter displacement requirements that force companies to replace fossil hydrogen with green hydrogen, the hopeful business adventure is unlikely to take off.

As mentioned in point four, the demand for hydrogen will probably be much lower than previously assumed. In Germany, for example, refineries account for approximately half of the current hydrogen demand, but the refineries' needs will decrease in line with falling oil consumption.

The German government's hydrogen strategy has also given a prominent role to the import of "blue hydrogen", which is fossil hydrogen with CO2 capture. However, since blue hydrogen is approximately half as expensive as green hydrogen, there is a significant risk that the competitive German industry will choose blue over green hydrogen to a greater extent.

But there is also the challenge that Denmark may not be able to compete with other nations at all – in the market for green hydrogen. 40-60 percent of the price of green hydrogen is determined by electricity prices, and here Denmark may have difficulty competing, as it currently stands. See figure 5.

Two key questions should be asked before committing state funds to operating support for the hydrogen pipeline: a) Why should Danish taxpayers help stimulate hydrogen consumption in Germany with state support – when much indicates that hydrogen consumption will be much lower than previously expected? b) Why will Germans buy hydrogen from Denmark in the future if they can have their needs covered more cheaply by importing hydrogen-containing products such as ammonia, fertilizer and methanol from other countries with cheap renewable energy? Importing hydrogen-containing products will save on transport costs and energy losses by importing hydrogen from abroad, which, all other things being equal, provides a better business case for the chemical and fertilizer factories in Germany that use hydrogen as a feedstock.

A wild card in the game is also whether countries such as Spain and France, for example, succeed in extracting the so-called white hydrogen, which is a clean and climate-friendly hydrogen that is found in natural deposits in the underground. It is known that white hydrogen is found near the Pyrenees and in the Lorraine region, but there is considerable uncertainty about the size of the deposits. Mali is still the only place where white hydrogen is actively extracted, but it is still in small quantities. The hydrogen is still quite difficult and expensive to extract, and it is unknown whether it is an industry that can be scaled. But according to the Spanish company Helios, which wants to extract white hydrogen in the Pyrenees, prices could perhaps be brought down to 0,75 euros/kg, and it will be much cheaper than the manufacturing cost of green hydrogen.

9. Green hydrogen is not as clean and climate-neutral as you think 

If you imagine that green hydrogen in the EU will be a completely climate-neutral energy carrier in the future, you are mistaken. While hydrogen produced with fossil gas often emits 12-13 kg CO2e per kg H2, a research study shows that green hydrogen emits approximately 2,9 kg CO2e per kg H2. This is the average of the most optimistic cases. On top of that, around 1,5 kg CO2 must be added, which is emitted if the green hydrogen is to be sent 1000 km in pipes.[13]

Green hydrogen is defined as sustainable in the EU taxonomy if it leads to approximately 70 percent lower CO2 emissions than fossil alternatives. The hydrogen industry was happy about that. But if we are to comply with the UN's Paris climate agreement, where Denmark has promised to become a zero-emission country by 2050 at the latest, we cannot be satisfied with approximately 70 percent reduction in greenhouse gases. Then we must invest in targeted energy technology solutions that can ensure zero emissions in the future.

With hydrogen there is also a real risk of leakage, which should not be underestimated. Hydrogen is the world's smallest molecule, easily leaking out of all kinds of materials. If a leak occurs – and this cannot be avoided with a gas of this nature – then the hydrogen will rise into the atmosphere and troposphere, where it combines with free radicals, extending the lifespan of the other greenhouse gases.

There is still scientific disagreement about the level of warming and calculation methods, because hydrogen has a very large immediate effect, but a relatively short lifetime in the atmosphere. A study published in Nature estimates the warming to be more than 11 times more harmful to the climate than CO2 over 100 years.[14] Other studies have shown that hydrogen leaks over 20 years can be between 19-38 times more harmful than CO2.[15]

Hydrogen is also flammable and explosive and safety considerations must be taken into account in both production, distribution and use. It is crucial that strict safety requirements are set by the authorities. When extra money has to be invested in ongoing security of pipes and production facilities, costs are raised, which can weaken the overall business case.

Safety risks and leakage can be minimized by limiting the use of hydrogen to large-scale facilities such as the production of e-ammonia and e-kerosene, as well as by limiting the transportation of hydrogen over long distances.

10. We will need hydrogen – in moderation 

The above nine challenges and stumbling blocks are not This is the same as saying that green hydrogen should not be produced in Denmark. As the Green Transition Denmark also showed in a report on how Denmark can build up towards 2040, it should be there. a fossil-free energy system.  

In the future, we will produce e-fertilizer for agriculture as well as e-fuels for the ships and planes on long distances that bunker energy in Denmark. According to calculations prepared by Ea Energianalyse, Denmark will need to produce around 101 PJ of green hydrogen in 2040 if these needs are to be met. 

Production should take place in highly localized industrial clusters, where local production of both renewable energy and e-fuels can be scaled up into strong industrial clusters. With large amounts of wind energy in the North Sea – supplemented by wind and solar energy on land – Denmark can build strong industrial clusters, where electrolysis plants produce e-ammonia and e-fuels using green electricity. 

Saving on the export of hydrogen over long distances can not only save costs, but also ensure the establishment of thousands of jobs in cities like Esbjerg, Åbenrå and other places where the new localized PtX industry is being built. 

Summary 

Instead of investing tax dollars in promoting hydrogen exports, the Danish Green Transition Denmark believes that it would be more beneficial to promote the development of local industrial clusters in Denmark. The state should not fix the business case for offshore wind by providing state operating subsidies and loans totaling DKK 15,7 billion to build a new hydrogen infrastructure. Market participants should take matters into their own hands regarding a hydrogen pipeline to Germany. 

It is possible to stimulate demand for more green electricity in the coming years if politicians focus more purposefully on promoting the electrification of Danish society. Electricity accounts for less than 1/5 of total energy consumption in Denmark, and electrification has stalled, making it more difficult to create a solid business case for a faster expansion of solar and wind energy.  

But there are a number of concrete political initiatives that could kick-start the expansion, ensuring at least a quadrupling of solar and wind energy on land by 2030:  

Green Transition Denmark recommends that the state reduce artificial support for two of the combustion technologies that have gained unfair competitive advantages compared to solar and wind energy: Among other things, all guarantees of origin for state-subsidized biomass combustion should be canceled and state support for biomass plants should be removed, as well as state support for the country's biogas plants should be reduced.  

At the same time, the phasing out of all fossil-fuel cars and the electrification of the heating sector and industry can be accelerated, which will create much greater demand for green electricity in the coming years. There is a stronger climate potential per invested krone and greater green effects if the primary focus is on electrification and energy efficiency rather than providing state support for combustion technologies and uncertain hydrogen exports. 

This note was written by Director Bjarke Møller with contributions from Senior Consultant Erik Tang and Climate and Energy Advisor Britt Dam.

The note was published in March 2025.

Cover photo by Wolfgang Weiser, Unsplash.

Green Transition Denmark receives funding from the European Climate Foundation for the work of electrifying heavy industries, including the steel and cement industries.