Ms Klingenberg, how far along the road to climate neutrality has the chemical industry come to date?

Renate Klingenberg We have already covered quite a distance. The chemical industry has cut its greenhouse gas emissions by almost 50 per cent compared to 1990 – while still increasing production volumes. But to become carbon-neutral by 2050, we need enormous quantities of very cheap, green electricity. Companies will switch to running their processes more on electricity instead of oil and gas. Our industry's power needs will grow to 625 terawatt hours by 2050 – that's more than ten times today's requirement.

Gerald Kaendler The electricity grid must, and will, adapt to this situation. Electricity is extremely valuable in macroeconomic terms: electrical processes are highly efficient – and electricity can be generated from renewable sources. Amprion brings this green electricity to its customers and, in doing so, is helping the industry to decarbonise through electrification. There are two key challenges we face here: on the one hand, the feed-in of wind and solar power to the grid fluctuates greatly owing to the capricious nature of the weather; on the other hand, we do not yet have the technology to store massive volumes of electricity.

Klingenberg We therefore expect electricity imports to increase significantly.

Kaendler Yes, we expect that too. That is why we are helping to expand the power grid. There's lots of wind out on the North Sea, and we can come together and collaborate with other countries through the “Eurobar” concept. The other question is this: How do we make the system more flexible? At some point, electricity alone will no longer be enough to meet our needs and give us the necessary flexibility. But if we use it to produce green hydrogen – and we do so when we can no longer absorb it in the system – the world will look very different. Industry and the energy sector should be ready by the mid-2030s to take the next step towards decarbonisation. To do this, we need to look at all energy sources and also take imports into account – because they play a big part as regards flexibility. Then we can build a climate-neutral, secure and efficient energy system in Germany and Europe by 2050.

What hopes does the chemical industry have for hydrogen?

Klingenberg We already use large volumes of hydrogen, mainly as a raw material. Across Germany, we are talking about one million tonnes of it per annum. It is estimated that this will grow to up to ten million tonnes per annum. Green hydrogen – that is, hydrogen produced from green electricity – is a key element in the chemical industry achieving its climate targets. It is a true all-rounder and will play a role as an energy source, in addition to its growing use as a material. As you just alluded to, hydrogen can be stored – and would therefore guarantee an uninterrupted supply of energy. This is essential for companies in the chemical industry.

Kaendler I share that outlook. Nevertheless, I would also advocate greater flexibility. It would make sense to examine the production processes in industry to see where and when more, or less, electricity – or indeed hydrogen – could be used.

Klingenberg Wherever this seems possible, it's being considered. However, we must also always keep an eye on the competitiveness of our products on the international markets. New technologies go hand in hand with additional costs that make our members’ products more expensive. We are talking billions of euros of investments here.

Kaendler Staying competitive is, of course, vital to their survival. But wouldn't it, then, be just as important to change the basic framework of economic activity altogether? When what counts is no longer simply who is the cheapest supplier, but also who produces the most climate-friendly products?

Klingenberg We hope so. But so far, there is a lack of international standards that would provide appropriate incentives. That is why we need compensation mechanisms that recognise that our products add value to sustainability.

Being a pioneer doesn't seem to have just advantages.

Klingenberg Indeed. By international standards, we are somewhat like early birds and are dealing with investments that the market has scarcely rewarded to date.

Kaendler We have also encountered this issue – in the “hybridge” project. Together with the gas grid operator Open Grid Europe, OGE, we have developed the concept of a power-to-gas plant that will use green electricity to produce hydrogen on an industrial scale for the first time. The plants built until now are significantly smaller. The fact is, if we double capacities, costs drop by about 30 per cent. This means that the first enterprise to invest in a large-scale plant will be the biggest loser, because the next plant will be 30 per cent cheaper and so on. This is our early-bird dilemma. But we want to make a virtue out of necessity, because Germany needs to ramp up power-to-gas technology. As a regulated company, we are therefore offering to trial large-scale hydrogen production and then share our experiences with all market players.

It looks like the chemical industry and transmission system operators are facing similar challenges ...

Klingenberg ...And we will only overcome them if we join forces and have the courage to seek and think up new approaches. That is what we find so positive about “hybridge”. All parties contributing to the value creation process are involved and are working together to search for ways to change the parameters of the system. We will not overcome these challenges if we simply keep to the beaten track and pursue only the solutions that are already obvious today. We need competition for new ideas. This applies to technological innovations, and it also applies, for example, to the question of how we satisfy our demand for hydrogen. We won’t be able to avoid importing renewable gases. These could be green or blue hydrogen, but perhaps also ammonia, methanol or green methane, which we convert into hydrogen. We are still right at the very beginning with these issues.

Kaendler The energy transition involves a learning process that never ceases to amaze me. I felt this way, for example, when we were working on the concept for “hybridge”. At the time, we entered into dialogue with new partners, including the chemical and gas industries. We started to think outside the box and beyond the boundaries of the electricity system. Without being able to say today how exactly a climate-neutral energy system will look in 2050. But it's worth working together on precisely this right now.

What steps are needed to create something like a vision, a precise image of the targets, for the energy system in 2050?

Kaendler We can approach this by employing scenarios that play through energy production and consumption depending on the energy sources involved. We can look at where potential producers and consumers are located – and what electricity, gas or hydrogen infrastructures Germany will need in order to be able to connect them. And we can ask ourselves how the whole thing can be run optimally. So also what flexibility there is in electricity and gas applications. We are currently doing all of this with partners in our “Systemvision 2050” project.

Klingenberg I would like to highlight one particular component of your vision: we need something like a hydrogen marketplace in Europe. This doesn’t yet exist. Here, suppliers of electricity, gas and hydrogen will meet with consumers of electricity, gas and hydrogen – and will arrive at market-led prices, including for reciprocal conversion of the energy sources.

Kaendler An interesting component. Until now, the electricity and gas markets have been completely separate. A common marketplace would allow demand-side companies to optimise their energy consumption between electricity and hydrogen. This is basically what we expect from an integrated and cross-sectoral energy system. Such a marketplace could create the necessary flexibility to ensure that there is always enough energy for everyone.

The path to climate neutrality requires us to set a course. Please answer the following question as succinctly as you can: What actions would you like to see from German policymakers?

Klingenberg We would like to be provided with support in the following points: we need an enormous, reliable supply of renewable energy. We need a low electricity price in order to be able to manufacture competitively. And in addition to an openness to new ideas, we need an entrepreneurial compass so that we can properly steer our investments.

Kaendler Amprion is also focusing on more renewable energies, especially in the offshore sector. We need to get electricity to our customers and we need grid expansion. And we need to be open to systemic solutions such as “hybridge”, so that we think beyond electricity and help shape the energy system as a whole.