Amid the global fervor for hydrogen as the fuel of the future, Germany finds itself at a crossroads as the federal government grapples with a budget crisis, leaving the fate of several hydrogen projects hanging in the balance.
The financial strain is particularly felt in central Germany, where at least three significant projects face uncertainty due to the budgetary constraints.
The budget crisis is reverberating across central Germany, affecting three critical hydrogen projects, including two focused on network infrastructure. The ventures, known by the whimsical names “Doing Hydrogen” and “Green Octopus Central Germany,” are integral parts of the planned East German hydrogen network. These initiatives, led by network operator Ontras, a subsidiary of the VNG Group based in Leipzig, involve the conversion of gas networks for hydrogen transport and the establishment of hydrogen pipelines stretching from Lower Saxony to Leipzig.
Compounding the issue is the fact that the affected Ontras projects received early measures approval from the federal government in December 2022 as “Important Projects of Common European Interest” (IPCEI). However, final approval notices are pending, a critical step for securing funding. Ontras spokesman Ralf Borschinsky emphasized the importance of these final approvals, as without them, the mammoth projects would face financial uncertainty, considering the advance payments already made.
IPCEI funding is pivotal for the success of hydrogen initiatives, including the establishment of a hydrogen core network. The uncertainty in funding has raised concerns about the broader hydrogen ramp-up and the development of essential infrastructure.
The impacted projects play a vital role in the transport and use of green hydrogen, a key component of Germany’s strategy to reduce reliance on fossil fuels. The plan envisions a shift towards electricity production primarily from solar and wind turbines, coupled with the extensive use of green hydrogen. The pipeline infrastructure, particularly from the Baltic Sea to Saxony, is deemed crucial for achieving these ambitious goals.
Green hydrogen, produced from renewable sources like wind and solar energy, forms the cornerstone of Germany’s vision. The affected projects were set to receive substantial funding, with the state government of Saxony-Anhalt committing 58 million euros, expecting an additional 130 million euros from the federal government. The federal government, in its broader plan, allocated 3.8 billion euros for hydrogen projects in Germany in 2024, with a total investment of 18.6 billion euros from 2024 to 2027.
However, the recent Federal Constitutional Court’s decision on the unconstitutionality of the supplementary budget for 2021, citing violations of the debt brake, has thrown a wrench into the financing plans. With 60 billion euros of planned expenditure from the Climate and Transformation Fund (KTF) left uncovered, the budget crisis has created uncertainty around the financing of crucial projects.
The ramifications of the budget crisis extend beyond hydrogen projects, impacting various sectors earmarked for climate and transformation initiatives. As Germany navigates the financial challenges, stakeholders in the hydrogen sector express hope that politicians will uphold their commitments and secure funding for pivotal projects.
As the Bundestag discusses a draft supplementary budget for 2023 in the coming days, the future of Germany’s hydrogen projects hangs in the balance. The outcome will not only shape the country’s energy landscape but will also influence its position in the global race toward a sustainable hydrogen-powered future.
