The German government intends to exempt green hydrogen producers from its electricity levy, aiming to encourage the emerging technology for low-carbon fuels, Reuters reported Dec. 2.

According to government sources, the Cabinet decided to withdraw the charge following an economy ministry initiative. The levy is part of Germany's reformed Renewable Energy Sources Act, or EEG.

Germany plans to close the cost gap between green hydrogen and conventional hydrogen within 10 to 15 years with the help of a €9 billion national strategy passed earlier this year to decarbonize energy and meet long-term climate targets.

"This move responds to the continuing high cost of hydrogen production and the public pressure to further expand the promotion of hydrogen production and hydrogen technology in Germany," Sönke Gödeke, energy law expert at law firm Pinsent Masons, said in a Dec. 1 statement.

"Apparently other hydrogen colors such as blue hydrogen will also be privileged in the EEG levy, albeit to a lesser extent," he added.

Reuters further noted that between 230 and 290 projects would apply for the waivers up to 2030, based on government estimates.

The German government also plans to observe the impacts of the measure in 2022 and consider further activities to increase green electricity.