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