In a special report, the Federal Audit Office examined the implementation of the national hydrogen strategy – with sobering results. Although the federal government attributes a key role to hydrogen in the energy transition, the ramp-up remains far behind expectations. “Despite billions in subsidies, the federal government is failing to meet its ambitious targets for ramping up the hydrogen economy. Supply and demand remain well below expectations. This jeopardizes the achievement of climate neutrality by 2045 and the future viability of Germany as an industrial location,” said President Kay Scheller at the presentation of the report.
Germany aims to become climate neutral by 2045. Green hydrogen is to replace fossil fuels in industry and energy supply and secure hydrogen-compatible gas-fired power plants. However, the Federal Audit Office criticizes that despite more than 7 billion euros in subsidies for 2024 and 2025 and further commitments until the end of the decade, progress has been slow. It also states that the development of the infrastructure is associated with considerable financial risks for the federal government.
“It's time for a reality check. The responsible Ministry of Economic Affairs has itself recognized that it needs to adjust its approach. Now it must also act consistently,” Scheller warned.
Lack of momentum in supply, demand, and price trends
According to the German Federal Audit Office, the supply of green hydrogen in Germany is not developing as planned. The federal government will miss its production targets by 2030, and imports will also be unable to meet the expected demand. At the same time, demand – for example in the steel industry – is falling short of expectations. Since hydrogen-compatible gas-fired power plants are not yet mandatory, there is also a lack of important impetus for the market to ramp up.
In view of these developments, the planned expansion of the hydrogen core network is too ambitious. In addition, green hydrogen continues to be significantly more expensive than fossil fuels. To compensate for the price difference, imports alone could incur costs of between €3 billion and €25 billion by 2030. The financing mechanism for the core network – a state-guaranteed loan for network operators – also carries the risk of burdening the federal budget with tens of billions of euros if too few users connect to the network.
The report also warns of ecological risks: importing green hydrogen could result in significant upstream emissions, and relaxed sustainability requirements in international tenders could jeopardize environmental compatibility.
Recommendation: Revise strategy and develop a Plan B
The Federal Audit Office recommends that the federal government fundamentally revise its hydrogen strategy. In doing so, it should examine whether and when green hydrogen can be available at competitive prices and under sustainable conditions without permanent subsidies. Supply, demand, and infrastructure must be better coordinated in the future. In addition, a “Plan B” should be developed to achieve climate neutrality by 2045, even without a permanently subsidized hydrogen economy if necessary.
Scheller summarizes: “The federal government must act now and fundamentally revise its hydrogen strategy. Only in this way can it achieve the goal of climate neutrality by 2045, secure the future viability of Germany as an industrial location, and protect the already overstretched federal budget from further burdens.”
