German hydrogen market ramp-up plagued by uncertainties, cooperation with France promising – industry
Lagging buildout of electrolysers for green hydrogen production, as well as large uncertainties over the fuel’s price in the future, regulation and available infrastructure represent a “significant investment hurdle” for hydrogen projects, said the Energy Transition Progress Monitor 2025 by consultancy EY and the energy industry association BDEW.
The volume of hydrogen made using renewable electricity is stagnating in Germany, and falling production from fossil gas puts an additional risk on the country’s plan to build up a sizeable hydrogen market. Falling conventional production is primarily due to the ailing basic industries that consume or produce hydrogen, including refineries, ammonia production, methanol production and chlorine production, the report said.
Currently, hydrogen production from fossil sources like gas dominates German production, with green hydrogen generated through electrolysis accounting for a mere 0.5 percent in 2023. Of the 10 gigawatts (GW) of electrolyser capacity for hydrogen production planned to be in place by 2030, only 1.6 GW have been secured so far, the industry group added.
While the energy transition had made important progress in 2024 especially on renewables expansion and emissions reduction, the journey to climate neutrality remained “a mammoth task” and there was a lot of pressure on the new government to be successful, said BDEW. Key tasks were speeding up planning and permit procedures for renewables and expanding these in line with grid development, and coming up with a new power market design which incentivises flexible demand and production.
Germany is nearly on track to achieve its 2030 emission reduction targets, with rapid progress in the expansion of renewables making up for the lagging transport and heating sectors. The new government is set to continue with the country's landmark energy transition, but is unlikely to increase the level of ambition compared to the outgoing one.
"Time to rethink key industries" in Franco-German relations
In a joint press release, BDEW and more than a dozen other industry associations said that the “restart” of Franco-German relations also on energy represented an opportunity for a European hydrogen alliance. “Seventy-five years after the Schuman Declaration establishing the European Coal and Steel Community, it is now time to rethink our key industries and energy supply,” they said.
The rules for green and low-carbon hydrogen production required an overhaul, the cross-border hydrogen grid had to be built out faster, and the EU needed uniform certification standards for the origin and quality of hydrogen. "A close partnership in hydrogen policy can give decisive impetus to the European debate," said the statement that included signatures by BDEW, chemical industry association VCI, car industry association VDA, local utility association VKU, and lobby group Hydrogen Europe.
The European Union’s two largest economic and industrial leaders, Germany and France, have spearheaded efforts to put the EU ahead in the global scramble for green industry leadership and decarbonisation technologies. Despite differences in how they produce energy, Berlin and Paris have closed ranks in response to competition from the US and China. Yet, in spite of an impressive set of goals to broaden industry cooperation, Franco-German efforts to revive European industry are being held back by unresolved energy policy differences.
