📝 SummarXiv

Abstract

Greenhouse gas emissions from the steel, fertiliser and plastic industries can be mitigated by producing their precursors with green hydrogen. In Germany, green production may be economically unviable due to high energy costs. This study quantifies the 'renewables pull' of cheaper production abroad and high-lights trade-offs between cost savings and import dependence. Using a detailed European energy system model coupled to global supply curves for hydrogen and industry precursors (hot briquetted iron, ammonia and methanol), we assess five scenarios with increasing degrees of freedom with respect to imports. We find that precursor import is preferred over hydrogen import because there are significant savings in hydrogen infrastructure. Cost savings in the German industry sector from shifting precursor production to European partners compared to domestic production are at 4.1 bnEUR/a or 11.2 %. This strategy captures 47.7 % of the cost savings achievable by precursor import from non-European countries, which lowers industry costs by 8.6 bnEUR/a (23.3 %). Moving energy-intensive precursor production abroad allows Germany to save costs while still retaining a substantial share of subsequent value-creating industry. However, cost savings must be weighed against the risks of import dependence, which can be mitigated by sourcing exclusively from regional partners.