As Germany navigates the energy transition while phasing out coal, the state of Saxony-Anhalt has launched a €87 million green hydrogen subsidy program, designed to catalyze industrial decarbonisation in one of the country’s most coal-reliant regions.
Financed through the EU’s Just Transition Fund (JTF), the initiative aims to repurpose legacy energy assets and support the hydrogen uptake across heavy industry.
The funding is split across two mechanisms: €58 million is dedicated to the “Green Hydrogen: Electrolyzers” program, targeting the deployment of hydrogen production and storage infrastructure. The second pot, worth €29 million, is offered through the “Saxony-Anhalt Future Energies/Green Hydrogen” scheme, supporting broader applications and integration efforts.
Saxony-Anhalt’s decision to target former open-cast coal mine sites and adjacent industrial facilities reflects a strategic attempt to overlay hydrogen infrastructure onto existing energy corridors. This is in line with broader German federal strategies to use hydrogen as a decarbonization lever in hard-to-abate sectors.
The focus on industrial applications is explicit. According to the state government, eligible bidders must demonstrate how the green hydrogen produced will be integrated into energy-intensive sectors, particularly chemical production—an industry with deep roots in the region. Companies operating in this space, such as those within the Leuna chemical park, are already positioned to absorb and utilize hydrogen at scale, provided the supply becomes reliable and cost-competitive.
The timing of Saxony-Anhalt’s funding release is critical. Germany’s national hydrogen strategy continues to face implementation bottlenecks, with industry stakeholders citing high capital costs and insufficient offtake certainty as key barriers to deployment. By frontloading capital via grants—rather than relying solely on Contracts for Difference or carbon price signals—the state aims to close the viability gap for early-stage electrolyzer projects.
In particular, subsidizing electrolyzer capacity could help reduce Germany’s reliance on imported hydrogen by enabling decentralized production closer to end users. This regionalized model offers logistical and economic advantages, especially when integrated with renewable generation assets already connected to former coal regions.
Saxony-Anhalt’s program comes amid growing uncertainty at the federal level. The German government’s revised draft budget for 2025—currently under negotiation—proposes significant cuts to national hydrogen funding, including a potential €2.5 billion reduction in industrial decarbonization contracts. In this context, EU Just Transition funds represent a critical buffer for coal regions like Saxony-Anhalt to sustain hydrogen development momentum.
While the EU’s JTF was designed to mitigate the social and economic impacts of coal phase-out, Saxony-Anhalt’s allocation toward hydrogen suggests a proactive industrial strategy. Rather than simply subsidizing economic transition, the state is seeking to anchor future growth in green technologies aligned with global climate commitments and EU energy security goals.
The tender model signals that funding will not be awarded indiscriminately. Applicants will need to demonstrate technical feasibility, co-financing structures, and alignment with climate and industrial goals. The focus on integrated value chains—from production to storage and end use—mirrors best practices emerging across Europe for hydrogen project evaluation.
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