Germany must revise hydrogen strategy in view of slow ramp up – auditors
Clean Energy Wire
Germany is failing on its targets to expand the hydrogen economy, with supply and demand falling well below expectations, the Federal Court of Auditors (Bundesrechnungshof) said. “The ramp-up of the hydrogen economy is not going according to plan,” said the office that scrutinises the government's budget implementation. “It's time for a reality check,” president Kay Scheller argued. “The federal government must act now and fundamentally revise its hydrogen strategy.”
Despite billions in subsidies, the government so far has not achieved the goals set out in its hydrogen strategy – and is unlikely to do so in the near future, the auditors said in a special report assessing progress and challenges in establishing a hydrogen economy in the country. Germany currently is set to miss its 2030 targets for producing so-called green hydrogen with renewable energy, as well as its import targets for the synthetic gas.
“As long as it is not foreseeable that hydrogen will become price-competitive, permanent state subsidies threaten to put further pressure on federal finances, which are already in disarray,” said Scheller.
The auditors recommended a “reality check” of the National Hydrogen Strategy, similar to the economy ministry’s energy transition reality check, which focused on cost-efficiency aspects of the move to a clean energy system. Germany needs to “reassess whether and when green hydrogen can be made available in sufficient quantities, at a competitive price and in a climate-neutral and sustainable manner without permanent subsidies,” they said.
The supply of and demand for the synthetic gas have not increased as planned: for example, green steel industry projects have not materialised as expected, the auditors found. Moreover, leaving the planned fleet of new gas-fired power plants without a requirement to convert to hydrogen (which is still under discussion) would cut an important demand stimulus. They added that the country’s core hydrogen network is therefore oversized and could pose a significant risk to the state budget.
In the fight against climate change, green hydrogen is seen as a crucial tool for reducing emissions in hard-to-abate sectors, such as heavy industry and aviation. However, an early green hydrogen hype in Germany and Europe has run into serious headwinds. Numerous projects have been cancelled, including by German companies. Production is expensive, transport logistics complex, and the market remains trapped in a chicken-and-egg dilemma of demand and supply for the clean fuel.
“The federal government must now tackle these tasks in order to keep its sights set on the goal of climate neutrality by 2045, to maintain Germany's future viability as an industrial location and to avoid overburdening the federal budget,” the auditors concluded.
