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Germany is seeking to boost momentum behind using hydrogen as an alternative to natural gas, part of a broader effort to quicken the pace of emissions cuts.

The government is preparing an incentive program for early December that will help develop a local market for the technology, according to Stefan Rolle, an adviser in Germany’s Economy & Energy Ministry. The so-called hydrogen strategy will focus on the industrial, transport and heating sectors.

“The strategy will involve money and incentives to promote different technologies to produce hydrogen,” Rolle said in an interview in Paris. “In many sectors, hydrogen can play an important role. We will concentrate the strategy in sectors where hydrogen can be used most efficiently.”

From government officials to utilities and power grid operators, hydrogen is being touted as a cleaner way to break Germany’s dependence on coal. The technology is now seen as an important option to fill the energy gap left from the impending closure of nuclear stations and the phaseout of coal-fired power.

Germany’s strategy will include both green and blue hydrogen, Rolle said.

So-called blue hydrogen is produced by breaking down the natural gas molecule, a relatively cheap option but still not a carbon-free one, since the process emits carbon dioxide. Green hydrogen is made by converting wind or solar electricity into hydrogen through electrolysis -- a zero-emission but expensive process that consumes a lot of energy.

“Germany’s government should announce a target for hydrogen production or for the share of hydrogen in the energy mix, with a deadline to accomplish it,” said Timm Kehler, chairman at the gas industry lobby group Zukunft Erdgas.

Discussions for the strategy started this week in Berlin, aiming to bolster Germany’s hydrogen production through the development of new electrolysis capacity and deepening partnerships with other countries.

“We need a good policy for hydrogen,” said Gregor Pett, vice president market solutions at Uniper. “How much renewables would be needed in Germany to replace only 10% of gas? You would have to double the offshore wind capacity, and it is getting hard to get more projects done. So let’s not close our eyes for the need of gases.”

Some 95% of the hydrogen produced in the U.S. is made from gas, principally through steam-methane reforming, according to the U.S. Energy Department’s Office of Energy Efficiency and Renewable Energy.

Chancellor Angela Merkel pledged to cut in half carbon dioxide emissions by 2030 compared with 1990 levels. That ambition was endorsed in the Paris Agreement on climate change in 2015, though progress toward that goal has slipped since then.

To contact the reporter on this story: Vanessa Dezem in Frankfurt at vdezem@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Stephen Voss

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