Germany has long aimed to establish itself as a leader in the clean hydrogen economy, viewing hydrogen as essential for decarbonizing its industrial sectors, power generation, and transportation.
The country has made notable advancements in 2024, including the launch of innovative support schemes backed by substantial funding and the approval for a nationwide hydrogen network. However, challenges have emerged, including delays that threaten the realization of ambitious targets set for the decade.
According to the International Energy Agency (IEA), Germany accounts for half of the 6 million tons per year of global clean hydrogen consumption that could be stimulated by demand-side policies announced to date. The German government has introduced significant funding initiatives to support both large industrial players and small and medium-sized enterprises in their transition to cleaner hydrogen alternatives.
The introduction of the carbon contracts-for-difference (CCfD) scheme aims to provide financial support for projects that reduce carbon emissions through cleaner energy sources, including renewable hydrogen. The first round of this scheme concluded in October 2024, with 15 successful projects selected from 17 bidders, sharing a funding pool of up to €2.8 billion. Among these projects, five will utilize hydrogen produced from renewable sources, potentially consuming around 100,000 tons of hydrogen over a 15-year period.
Germany’s strategy also includes plans for hydrogen-fired power generation, which was finalized in July 2024 after extensive consultations. The strategy anticipates that at least 12.5 GW of hydrogen-ready power generation capacity will be established, with tenders for new gas-fired plants expected to be held between 2025 and 2027.
Despite these initiatives, uncertainties remain regarding the implementation of the revised Renewable Energy Directive (RED III), which mandates that at least 42% of industrial hydrogen used must come from renewable sources by 2030. Member states have until May 2025 to transpose these regulations into national law, and as of early November 2024, Germany had not clarified its approach.
The National Hydrogen Council has cautioned against imposing specific obligations on individual companies or sectors due to concerns about potential burdens and competition for limited renewable hydrogen supplies. This highlights the ongoing challenges Germany faces as it strives to meet its clean hydrogen ambitions while navigating political changes and regulatory uncertainties.
