Implementation of the Federal Government's Hydrogen Strategy
SCALE
- EUR 4.3 billion allocated to the hydrogen ramp-up in 2024, more than EUR 3 billion in 2025
- EUR 2.2 billion for domestic electrolysers (IPCEI Hydrogen), EUR 3.1 billion for imports (H2Global), EUR 5.6 billion for steel decarbonisation
- imported hydrogen projected at EUR 137-318 per MWh in 2030, against EUR 43-67 for natural gas including carbon allowances
- two-thirds of the hydrogen core network planned operational by 2030
- no annual monitoring report issued since the 2020 strategy promised one from 2021
COMPLIANCE
- Energy Industry Act, Section 1 - supply as secure, affordable, environmentally sustainable and climate-neutral as possible
- National Hydrogen Strategy 2020 and its 2023 update, with the July 2024 import strategy
- the NHS 2020 commitment to an annual monitoring report from 2021
- Federal Budget Code, Section 7 - requirements for programme evaluations
ECONOMY
- price competitiveness of green hydrogen
- production and provisioning cost projections for 2030
- the compensation gap against natural gas, carbon costs included
- who ultimately bears the cost of the ramp-up
- the amortisation account behind the core network
EFFICIENCY
- synchronisation of supply, demand and infrastructure
- domestic production and import targets for 2030
- expected industrial and energy-sector demand
- timing and utilisation of the hydrogen core network
- parallel pursuit of hydrogen-ready gas power stations and of CCS/CCU
EFFECTIVENESS
- the annual monitoring of the ramp-up promised in 2020
- mechanisms binding gas power stations to shift to hydrogen
- delivery of a secure, affordable and climate-neutral supply by 2030
- a fallback plan for climate neutrality by 2045
1. The Ministry has never issued the annual hydrogen monitoring report its own 2020 strategy promised
Monitoring Guidance
The National Hydrogen Strategy adopted in 2020 "provided for an annual monitoring report on the ramp-up of the hydrogen economy starting in 2021. So far, no monitoring report has been issued" (1.2, p.11). The Bundesrechnungshof recommends that, "given the climate-related, economic and fiscal significance of the hydrogen economy, the Federal Government should eventually implement the monitoring of the ramp-up of the hydrogen economy as laid out in its national hydrogen strategy 2020... This monitoring must meet the budgetary requirements for programme evaluations as stipulated in Section 7 of the Federal Budget Code" (2.5, p.29).
- Domains: Energy, Energy transformation
- Function: monitoring, Governance
- Quality: Functioning oversight and governance
2. Domestic production and import targets for green hydrogen are both being missed, yet the core network is still built to a synchronised 2030 timetable
Goal-setting Outlook
The Federal Government "is currently failing to meet its targets for domestic production of green hydrogen. It is also unable to cover the expected demand through imports" (Summary, p.5). Despite this, "in light of the expected low supply and demand, the development of the hydrogen core network is not proceeding in a synchronised manner: already in 2030, two-thirds of the network shall be operational, despite a likely low utilisation" (Summary, p.6).
- Domains: Energy, Energy security
- Function: Planning, Strategy
- Quality: Clear objectives and goal-setting
3. Without a binding requirement for gas-fired power stations to switch to hydrogen, a key driver of demand - and of coherent network design - is missing
Guidance Goal-setting
"Without binding provisions stipulating that gas power stations shift to hydrogen, a key driver of demand is missing, which hampers the ramp-up of the hydrogen economy" (Summary, p.6). Consequently, "without binding provisions on the future use of hydrogen, the Federal Network Agency is unable to design the core network in line with demand. This creates the risk of pipelines being underutilized or not used at all" (2.5, p.28).
- Domains: Energy, Energy transformation
- Function: Regulations, Planning
- Quality: Clear objectives and goal-setting
4. Permanent public subsidy for hydrogen is now probable, exposing the federal budget to EUR 3-25 billion a year for imports alone
Finance Outlook
"Expectations that green hydrogen would become price-competitive have not been met. Instead, hydrogen is likely to remain costly in the future. As a result, permanent public subsidies are likely. For instance, the funds required to compensate for the price difference between green hydrogen and natural gas could amount to between EUR 3 billion and EUR 25 billion per year - just for imports" (Summary, p.6). Annual allocations already reached EUR 4.3 billion in 2024 and more than EUR 3 billion in 2025, alongside multi-billion-euro long-term commitments (Summary, p.6).
- Domains: Energy, State budget
- Function: Finance, Strategy
- Quality: Sound risk management
5. If the hydrogen ramp-up fails, the core network's financing mechanism could burden the federal budget with tens of billions of euros
Finance Monitoring
Network operators "will initially be reimbursed for part of their network costs via a temporary compensation mechanism (interim financing), funded by a government-backed loan (the so-called amortisation account)" repaid as network use increases; "if the ramp-up of the hydrogen economy fails, the financing mechanism could place an additional burden on the federal budget, potentially amounting to tens of billions of euros" (Summary, p.6-7).
- Domains: Energy, State budget
- Function: Finance, monitoring
- Quality: Sound risk management
6. The Ministry does not consider its own planned adjustments sufficient to make hydrogen competitive, and has not specified how they would work in practice
Guidance Outlook
The Ministry "announced that it would adjust the market framework and its mix of policy instruments. Nevertheless, it considered that even these measures would not be able to offset the price difference between green or blue hydrogen and fossil alternatives" (Summary, p.7). The Bundesrechnungshof notes that "despite the Ministry's comments and the 10-point plan, the details remain largely unclear" and expects the announced measures to be very time-consuming to design and implement (2.5, p.28).
- Domains: Energy, Economic competition
- Function: Strategy, Governance
- Quality: Clear objectives and goal-setting
7. The climate benefit of hydrogen imports is uncertain, and sustainability criteria for suppliers were already relaxed to secure enough bids
Guidance Monitoring
Studies suggest that "importing green hydrogen in particular may involve substantial emissions along the supply chain", and since the Federal Government plans to meet at least half its hydrogen demand through imports, "this poses a significant risk to achieving a climate-neutral energy supply" (Summary, p.7). In the H2Global programme, sustainability criteria "were adjusted during the first tender round, following consultations with the Ministry, in order to attract more bids", primarily affecting biodiversity-protection and renewable-electricity criteria (4.2, p.42).
- Domains: Energy, Climate neutrality
- Function: Regulations, monitoring
- Quality: Reliable, integrated information base
Control focus
| ICS phase | Control function | Cases |
|---|---|---|
| Work processes | Monitoring | 1. The Ministry has never issued the annual hydrogen monitoring report its own 2020 strategy promised<br/>5. If the hydrogen ramp-up fails, the core network's financing mechanism could burden the federal budget with tens of billions of euros<br/>7. The climate benefit of hydrogen imports is uncertain, and sustainability criteria for suppliers were already relaxed to secure enough bids |
| Initial phase | Guidance | 1. The Ministry has never issued the annual hydrogen monitoring report its own 2020 strategy promised<br/>3. Without a binding requirement for gas-fired power stations to switch to hydrogen, a key driver of demand - and of coherent network design - is missing<br/>6. The Ministry does not consider its own planned adjustments sufficient to make hydrogen competitive, and has not specified how they would work in practice<br/>7. The climate benefit of hydrogen imports is uncertain, and sustainability criteria for suppliers were already relaxed to secure enough bids |
| Goal-setting | 2. Domestic production and import targets for green hydrogen are both being missed, yet the core network is still built to a synchronised 2030 timetable<br/>3. Without a binding requirement for gas-fired power stations to switch to hydrogen, a key driver of demand - and of coherent network design - is missing | |
| Uncategorised | Outlook | 2. Domestic production and import targets for green hydrogen are both being missed, yet the core network is still built to a synchronised 2030 timetable<br/>4. Permanent public subsidy for hydrogen is now probable, exposing the federal budget to EUR 3-25 billion a year for imports alone<br/>6. The Ministry does not consider its own planned adjustments sufficient to make hydrogen competitive, and has not specified how they would work in practice |
| Finance | 4. Permanent public subsidy for hydrogen is now probable, exposing the federal budget to EUR 3-25 billion a year for imports alone<br/>5. If the hydrogen ramp-up fails, the core network's financing mechanism could burden the federal budget with tens of billions of euros |