Germany is one of the most bullish countries on hydrogen.
The home of the Energiewende is committed to reaching net-zero, but is a highly industrialised nation with a very energy-intensive economy. In recent years, it has seen one-third of its energy supply yanked out from under it as a result of Russia’s illegal invasion of Ukraine.
Green hydrogen has become one of the mainstays of German energy policy, not just of efforts to keep the lights on as the country replaces nuclear and coal power with wind and solar, but also of efforts to replace cheap Russian gas in power generation and industry. But can green hydrogen possibly live up to expectations?
Germany published the first draft of its national hydrogen strategy in 2020, with a target of 5 GW of electrolysers operating by 2030. In 2023, however, after Russia’s invasion of Ukraine, this was updated to an even more ambitious 10 GW.
That amount of power and electrolysers would deliver around 3 million tons of clean hydrogen per year by 2030, roughly double current demand. Beyond 2030, the strategy becomes even more ambitious, with the government estimating demand of 14-18 Mt per year in 2045.
It is generally accepted that Germany does not have enough land area to meet those figures domestically, particularly while building enough wind and solar power to meet its renewable power needs directly. So, by 2030, Germany aims to meet 30-50% of hydrogen demand domestically, and then import the remaining 50-70%, with this share increasing even further in subsequent years.
Enter the national hydrogen import strategy, adopted in 2024, and the associated pipeline strategy. The import strategy expects the bulk of imports will be delivered by ship, initially as ammonia and in future through methane, methanol, liquid H2 and liquid organic hydrogen carriers. LNG import terminals are expected to become “hydrogen-ready”, and Germany’s Chancellor Scholz has made frequent visits to meet potential exporters in China, Canada and elsewhere.
All of this new infrastructure will be expensive. According to BNEF, €30-57bn could be needed by 2030 for shipping imports alone. Meanwhile, the pipeline strategy anticipates 1,800 km of hydrogen-ready pipelines by 2028, and then between 7,000 and 8,000 km by 2045, a hugely capital intensive infrastructure buildout.
Germany’s strategy sits at the centre of Europe’s hydrogen strategy, launched in July 2020 by the European Commission, which called for a whopping €460 billion to be spent just on producing and distributing hydrogen by 2030. That figure does not include subsidies to get users to actually adopt the stuff.
The EU’s targets are for 20 million tons of clean hydrogen to be used in 2030, half made in Europe, half imported. On current estimates, they will be lucky to get to 2 million tons. The EU targeted 6 GW of electrolysers operating by 2024, but the actual figure will be lucky to reach 10% of that.
In July this year, the European Court of Auditors released a scathing review of the EU strategy, with lead author Stef Blok saying it needed “a reality check”. Naturally, the EU Commission disagrees, explaining that funding has been slow to arrive but that many projects are now “hitting the ground”. Others might describe it as hitting the fan.
While the EU's plan has increasingly attracted critical scrutiny and even derision, Germany has so far escaped relatively unscathed. But that may be changing.
In February, the government scaled back its support for the construction of new “hydrogen-ready” power plants due to budgetary issues. In May, the German transport ministry disbanded its hydrogen unit following corruption scandals. And in July, industry groups came out to criticise the government's import strategy for falling behind on import pipelines that can bring clean hydrogen to Germany at an affordable price.
So, does Germany’s hydrogen strategy also need a Great Reset? Might it come apart at the seams, or can it be tweaked over time to stay ahead of the emerging understanding about hydrogen’s physics and economics?
This week on Cleaning Up, Michael Liebreich is joined by someone who should have the answers: Eva Schmid, Director of Hydrogen and Synthetic Energy Carriers at DENA, the German Energy Agency, a think tank that works with the German government to deliver its energy strategy.
To listen to the episode, find Cleaning Up on your podcast platform of choice, or watch the video on YouTube here.