WG2: Expert Workshop on Contracts for Difference (CfD)–schemes in GER and JPN

On 17 June, an expert exchange of the Japanese-German Energy Partnership took place within the framework of working group 2 on hydrogen, focused on “Contracts for Difference (CfD)–schemes in Germany and Japan. The co-chairs of WG2, Dr. Christine Falken-Großer (BMWK) and Tomo Adachi (METI), presented current developments in hydrogen policy in both countries and discussed different policy approaches and cooperation potentials on hydrogen between Germany and Japan.

The main session focused on “Contracts for Difference (CfD)”-schemes in both countries. METI presented the plans for the new Japanese CfD-scheme introduced by the Hydrogen Society Promotion Act in May 2024. The Japanese government will provide around JPY 3 trillion ($20 billion) as a supporting measure to companies, to promote the supply and utilization of low carbon hydrogen and its derivatives. The aim is to open the first round in the summer of 2024 and give approval to the first project(s) by the end of the year. The subsidies will be allocated based on a comprehensive evaluation of business plans and not by auction. Producers will have to apply together with a suitable offtaker, to gurantee the viablity of projects. BMWK presented an update on Germany’s CCFD-scheme, the"Climate Protection Contracts". The scheme is focused on industry decarbonisation; technology neutral and is based on an auction model. The total funding volume of the first auction round is €4 billion. The tender opened in March 2024 and the results are expected for this summer.

During the subsequent discussion BMWK and METI exchanged on the design and sector participation of the CfD schemes, as well as overall market development of hydrogen and hydrogen derivates. Both sides agreed that sufficient hydrogen demand will be equally important for the nascent global hydrogen market and that Japan and Germany should exchange further on this topic and how to foster the demand side.