Provaris Energy Ltd (ASX:PV1, OTC:GBBLF, FRA:WS90) earlier this week discussed how Germany’s implementation of the EU Renewable Energy Directive III (RED III) could accelerate demand for imported green hydrogen and create new commercial opportunities for the company’s Nordic supply strategy.
Managing director and CEO Martin Carolan said Germany’s new legislation effectively mandates increasing levels of renewable hydrogen use within the transport sector, creating what he described as “a real catalyst for the sector”.
Under the framework, Germany’s transport fuel suppliers will face escalating obligations to incorporate renewable fuels, with targets rising to around 250,000 tonnes of hydrogen demand by 2030 and approximately 1.6 million tonnes by 2040.
Carolan said the economics underpinning the legislation could support imported hydrogen supply, noting that non-compliance penalties of around €14 per kilogram of hydrogen equivalent compare with imported supply targets of roughly €7 per kilogram.
He said Provaris Energy was already seeing renewed engagement from German utilities seeking imported hydrogen volumes.
“There’s a clear shortfall of volume and that needs to be met through imports,” Carolan said during the interview.
The company believes it is strategically positioned to support future German demand through compressed gaseous hydrogen imports sourced from Norway and Finland. Carolan said Provaris was evaluating projects capable of supplying between 30,000 and 40,000 tonnes annually from Norway alone.
The company’s shipping model centres on transporting compressed gaseous hydrogen directly into Europe’s developing hydrogen backbone infrastructure. Carolan contrasted this with ammonia-based import models, which require energy-intensive cracking processes to extract hydrogen.
He said ammonia cracking could cost up to US$3 per kilogram while also resulting in material energy losses.
Alongside developments in hydrogen, Provaris Energy continues progressing its CO2 storage and transport initiatives.
Carolan said the company had advanced through stage two of FEED activities for its large-scale CO2 tank program and was working with DNV on marine certification requirements ahead of planned completion milestones around the Nordic Summit in June.
The company is also continuing collaboration with Yinson on integration of the tank technology into a floating storage injection unit.
Looking ahead, Carolan indicated that Germany’s regulatory shift could help stimulate further commercial discussions and increase industry activity around hydrogen imports as Europe works to secure reliable low-carbon fuel supply chains.
Key highlights
- Germany has implemented RED III legislation, creating mandatory green hydrogen demand in the transport sector.
- Hydrogen demand targets are expected to rise to 250,000 tonnes by 2030 and 1.6 million tonnes by 2040.
- Provaris believes imported hydrogen can compete economically against penalties for non-compliance.
- The company is targeting Nordic hydrogen supply opportunities, particularly in Norway and Finland.
- Provaris’ compressed gaseous hydrogen shipping model is positioned as an alternative to ammonia imports.
- Martin Carolan highlighted the high cost and energy losses associated with ammonia cracking.
- Germany’s hydrogen backbone pipeline network is under construction, supporting future import demand.
- Provaris continues discussions with utilities including existing engagement with Uniper.
- The company is advancing hydrogen vessel development and prototype tank fabrication with partners.
- CO2 infrastructure work includes FEED studies, DNV certification activities, and collaboration with Yinson.
- Management expects elevated hydrogen sector activity following Germany’s legislative changes.
Proactive: Germany has taken a major step toward building a regulated green hydrogen market after approving legislation that implements the EU’s Renewable Energy Directive III into national law. To discuss the details of this shift and what it means for Provaris is Managing director and CEO Martin Carolan. Martin, it’s good to see you again.
Martin Carolan: Good to see you. Thank you, Jonathan.
Proactive: Germany has turned green hydrogen demand into a legal obligation through its implementation of RED III. From your perspective, how significant is this shift, particularly for companies developing hydrogen export and logistics solutions?
Martin Carolan: It’s a real catalyst for the sector and absolutely fundamental to the activities that we’re doing in Europe. The outcome of this bill, which was put into law last Friday, catalyses the industry to start looking seriously at moving towards firmer offtake.
It sets a percentage of fuels that should be used within the transport sector. That starts at a nominal amount in 2026 but grows to 250,000 tonnes by 2030 and around 1.6 million tonnes by 2040.
Industry participants will either choose to pay the penalty or use low-carbon fuels such as hydrogen to eradicate that emissions profile. The penalty is around €14 per kilogram of H2 equivalent versus a domestic supply price of around €10 and a floor of around €7.
We’ve been looking at imported volumes around €7 as a target for some time, and that puts us in a great position now. We’ve highlighted in our quarterly that we’ve seen re-engagement from utilities in Germany which are now actively looking for imported volumes.
There’s a clear shortfall of volume and that needs to be met through imports. That’s where we’re strategically positioned through supply from the Nordics.
Proactive: BloombergNEF estimates Germany could require around 100,000 tonnes per annum of imported green hydrogen from 2030 due to limited domestic supply and high production costs. How well positioned is Provaris to help bridge that supply gap?
Martin Carolan: I think we are absolutely well positioned. One hundred thousand tonnes is a lot of volume in today’s terms, but relatively small in the long-term picture.
We’ve been looking at project supply from Norway in the order of 30,000 to 40,000 tonnes, so we are absolutely relevant. We bring gaseous RFNBO-compliant hydrogen short distance at what should be one of the lowest production costs in Europe.
Norway is a key market for that. We’ve also been looking at Finland as another opportunity with shorter shipping distances and similar economics.
We provide a simple and elegant solution in gaseous form, which is what moves through the H2 backbone system now under construction. The users of this product are tapping into that backbone and that’s exactly what we deliver.
The alternative pathway is ammonia, but the industry will not see cracking at scale by 2030 to support that imported volume. It has to come from imports, and we’re positioned to fulfil that.
Proactive: Can you explain how Provaris’ compressed hydrogen shipping model compares economically and operationally with other models?
Martin Carolan: The main alternative model involves importing ammonia. Ammonia is NH3, not hydrogen, and it needs to go through a cracking process to extract the hydrogen.
That’s an expensive and energy-intensive process. It’s suggested to cost up to US$3 per kilogram to extract, and you lose around 30% of the volume.
While ammonia remains part of Germany’s long-term strategy, we provide gaseous-compatible hydrogen that connects directly to the pipeline network. From a simplicity and efficiency perspective, we are positioned to fulfil the 2030 timeframe, subject to continued progress with our partners.
Proactive: Germany is also pushing ahead with penalties for non-compliance. Are you already seeing increased engagement from European utilities and fuel suppliers?
Martin Carolan: Yes. We still have an existing term sheet with Uniper which satisfies 100% of the volume of the Norwegian hydrogen project.
We’ve also seen engagement from two other utilities. There’s now a clear market directive to engage.
There will still be challenges around securing long-term offtake agreements of 10 to 15 years or more, but the opportunity now is to engage. If you have a penalty of €14 and you can import at €7 while meeting regulatory requirements, it appears very compelling.
Proactive: Can you also talk us through the quarterly highlights and what investors can expect over the next quarter?
Martin Carolan: We continue to focus on two streams: hydrogen and CO2.
On hydrogen, we continue supply chain development with different partners. We have the shipping partnership with K Line, where we continue refining vessel requirements and the commercial model. Fabrication also continues on the H2 prototype tank.
On the CO2 side, we’ve been in a very intensive delivery phase. We are through stage two of the FEED process on the large-scale CO2 tank partnership, with that program due for completion before the Nordic Summit at the end of June.
That work includes structural modelling and meeting marine certification regulations. We’ve also been meeting with DNV regarding GASA certification for the tank.
In parallel, we continue working with Yinson on the integration of the tank into its floating storage injection unit.
Coming out of June, we expect the culmination of the FEED study and ideally tank approvals. Then we expect integration into Yinson’s technical readiness program for the balance of 2026.
We also expect elevated activity around the hydrogen development following the developments we’ve discussed today.
Proactive: It seems like a lot has come together at the right time.
Martin Carolan: This announcement was probably a year overdue. There has been negativity around hydrogen demand and where it would come from.
Now, one sector — transport — is mandated by law. Other industries may follow. The numbers have become more realistic and we are in the framework to deliver into that.
Proactive: Very encouraging. Martin, good luck with everything and we’ll speak again soon.
Martin Carolan: Thanks, John.
