Working Paper

Hydrogen for heating? Decarbonization options for households in Germany in 2050

(Deutsche Version hier.)

By 2030, the German government aims to reduce greenhouse gas (GHG) emissions from the buildings sector by two-thirds relative to 1990 levels. The heating sector will be an important part of this goal; in German residences, about 60% of final energy demand goes to space heating, and two-thirds of space heating is met with fossil fuels. There are multiple GHG-reduction options available to the heating sector, and the German government will need to determine which options to promote, especially in light of the fact that 17% of German households spend a high share of their income on energy costs. In this study, we assess several low-GHG or GHG-neutral residential heating pathways in Germany to determine which will be the most cost competitive in 2050: (1) hydrogen boilers, (2) hydrogen fuel cells with an auxiliary hydrogen boiler for cold spells, (3) air-source heat pumps using renewable electricity, and (4) heat pumps with an auxiliary hydrogen boiler for cold spells. In our assessment, we include zero-carbon hydrogen produced from renewable electricity using electrolysis as well as low-GHG hydrogen from steam-methane reforming (SMR) using natural gas combined with carbon capture and storage (CCS), or SMR + CCS. 

This analysis finds that air-source heat pumps are the most cost-effective residential heating technology in 2050 and are at least 40% lower cost than the hydrogen-only technologies. Even if natural gas costs were 50% lower or renewable electricity prices were 50% higher in 2050 compared to the central assumptions, heat pumps would still be more cost-effective than hydrogen boilers or fuel cells. Were electrolysis hydrogen to be imported from other parts of Europe it could be cost competitive with SMR + CCS hydrogen produced in Germany in 2050, although electrolysis hydrogen is not produced at scale today. Compared to all of the low-GHG heating pathways we assess in this study, energy efficiency measures to reduce heat demand would be a more cost-effective strategy for achieving GHG reductions. All pathways using renewable electricity have a near-zero GHG intensity, while SMR + CCS hydrogen could reduce greenhouse gas (GHG) emissions by 69%–93% compared to natural gas if improvements are made in the future to reduce the GHG intensity of this pathway. 



Alternative fuels Strategies