German hydrogen strategy needs to be corrected – audit service

Germany’s hydrogen strategy needs to be adjusted in order to achieve its 2030 targets for domestic production of green hydrogen. This was stated by the country’s Federal Audit Office.

As emphasized in a special report by the president of the audit service, Kay Scheller, both supply and demand for hydrogen, especially in the steel sector, remain significantly below expectations, despite large subsidies. Given this dynamic, the development of the main hydrogen network is too ambitious, according to the agency.

“As long as there is no foreseeable future for hydrogen to become price-competitive, permanent government funding threatens to put further pressure on the already shaky federal finances,” he said.

For example, the costs associated with hydrogen imports alone could burden the federal budget by €3 billion to €25 billion by 2030.

The Federal Audit Office has examined the progress and challenges in establishing a hydrogen economy in Germany. The government considers hydrogen to be a key factor in the energy transition and has already allocated more than €7 billion in funding, mainly in the form of subsidies, for 2024 and 2025. Advance commitments worth billions of euros are in place until the end of the decade. The government also provides financial support for the development of network infrastructure. Despite this, the goals of the relevant hydrogen strategy have not yet been achieved.

The Federal Audit Office recommends that the government

• review the hydrogen strategy and its implementation to ensure it is realistic and reassess whether and when green hydrogen can be
• available in sufficient quantities, at a competitive price, and in a climate-neutral and sustainable manner without permanent subsidies
• consider what contribution the hydrogen economy can make to the energy transition as a whole;
• revise the hydrogen strategy so that supply, demand, and infrastructure develop more synchronously and economically;
• after reassessment, develop a plan B in a timely manner, if necessary, to achieve climate neutrality by 2045 even without a permanently subsidized hydrogen economy.

As a reminder, the International Energy Agency (IEA) has lowered its forecast for low-carbon hydrogen production in 2030 by almost a quarter. According to the new review, the expected volumes will be about 37 million tons per year, while last year the forecast was 49 million tons. This adjustment is due to delays in project launches, their cancellation, financial difficulties, and instability in energy policies.