2 March 2023 – The latest Chinese economic data are surprisingly good. This is causing demand and prices to rise. Especially for raw materials for steel and the corresponding demand, the market is very optimistic. Hydrogen in the EU only for industry? Why is the German Federal Ministry of Economics still planning to do so? EU Parliament against the use of hydrogen for end consumers. Industry should have preference.
Good economic data from China
According to recent data from the World Trade Organisation (WTO), the assumed decline in trade from the end of 2022 seems to have only a short life expectancy. According to the WTO, this is particularly evident from the fact that the handling of containers in Chinese ports has already increased significantly.
NBS Purchasing Managers’ Index at highest level in a decade
Economic activity in China’s manufacturing sector rose surprisingly strongly in February. This was indicated by the corresponding official NBS Purchasing Managers’ Index, which rose by 2.5 points to 52.6 – the highest level in more than a decade.
Export orders increase significantly
The significant increase in the export order component is particularly encouraging, as is the further rise in employment compared to the previous month. This is also due to the surveyed companies’ assessment of their future business prospects, which improved again: After 55.6 points in January, 57.5 points in February marked the highest value in twelve months.
Economic outlook: Sustained recovery of demand in China
Overall, the strong signals from the manufacturing sector represent an important element for broader Chinese household income growth and a sustained recovery in aggregate demand. After all, the sector contributes about a quarter of China’s GDP. Good signs for the Chinese economic outlook.
China shows strong recovery
The good economic data from China also contributed to rising commodity prices yesterday. Copper, iron ore and zinc in particular rose. But also coking coal and other raw materials for steel production continued to rise, as increased demand is expected from the Chinese steel industry.
Hydrogen only for the EU industry?
The lively discussion in Germany about the Federal Ministry of Economics and Climate Protection’s planned ban on new gas and oil-fired heating systems from 2024 and the proposal by Federal Economics Minister Robert Habeck to switch heating in Germany to hydrogen could meet with significant resistance from the EU.
EU Parliament does not want to use hydrogen for heating
According to a recently published Report on the proposal for a regulation of the European Parliament and of the Council on the internal markets for renewable and natural gases and for hydrogen by the European Parliament, hydrogen is not to be used as an energy source for private heating. Germany and the EU seem to be heading for a new dispute.
“However, all efforts should be made to avoid the use of hydrogen for applications with regard to which more energy-efficient alternatives exist, such as the heating of buildings, and the production of hot water for sanitary use and of low-grade heat for industrial processes.”
European Parliament
Prioritised use in industry called for
It is possible that the hydrogen approach, in which the EU parliamentarians explicitly call for prioritised use in industry, has not yet reached the German Climate Protection Ministry. For, as the EU Parliament also clearly points out, the infrastructure for the use of hydrogen simply does not exist and, as we reported, poses considerable problems if no remedy is found. The most important point is that the existing natural gas pipelines are completely unsuitable for the transport of hydrogen – not only over long distances, but also locally to the end customer and his gas heating system.
It also affects the operation of gas infrastructure, end-user applications
“The blending of hydrogen into the natural gas system should be a last resort solution, as it is less efficient compared to the use of hydrogen in its pure form and diminishes the value of hydrogen. It also affects the operation of gas infrastructure, end-user applications, and the interoperability of cross-border systems. Member States should therefore prioritise the production and use of renewable and low-carbon hydrogen in their pure form in the hard-to-decarbonise sectors, such as in industry and transport applications.”
European Parliament
Hydrogen will fix everything?
But this is not the first time in recent years that hydrogen has been presented as the great saviour for industry and for the citizen. And also gladly used by the Federal Minister of Economics to placate angry refinery workers in East Germany with the prospect of switching to green hydrogen production. In a region that is already considered far too dry.
And even if the oil refinery were converted and the lignite mining stopped, and thus enough water might be available for the production of hydrogen, the problem of storage and distribution would again arise.
Criticism of hydrogen is growing
Criticism of hydrogen, even if it is produced green, is growing. The areas of application are dwindling and increasingly focussing on industry. Despite all the assurances, the placebo in the green European energy transformation does not seem to be catching on with the end consumer. This begs the question why the EU and Robert Habeck are making such a fuss about hydrogen as a miracle cure.
Thorsten Gerber, CEO of the Gerber Group, said today: “I don’t want to imagine that he is so stupid. Is he possibly trying to distract from something else?”
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