Hydrogen update Germany - new regulatory and market developments

In the recent months, the regulatory developments for the hydrogen market ramp-up in Germany have been significant. Even though it comes with some delay, this activity is meant to be a clear signal to the economy and the capital markets: Germany is determined to enable as much hydrogen economy as possible as soon as possible and aims to provide the necessary financial support as well as investment-friendly framework conditions.

While the German regulatory push to shape a hydrogen economy is still relatively nascent (the first national hydrogen strategy was published in 2020), the German government has advanced quickly since then. The update of the German hydrogen strategy in 2023 sets ambitious targets for the ramp-up of the hydrogen economy and the government has established a variety of financial support schemes offering billions of Euros in subsidies for investment in the German hydrogen market to attract both national and international investors. Major German companies and other stakeholders have expressed strong support.

Hydrogen is expected to play an essential role in the German energy transition and decarbonisation puzzle. Firstly, hydrogen is indispensable to achieve full decarbonisation of energy consumption. Germany has pledged to achieve net zero greenhouse gas (GHG) emissions by 2045. Hydrogen is foreseen to be the central tool to decarbonise in particular hard-to-abate industries (e.g. steel and chemical), as well as heavy duty and long-range applications in the transport sector. Secondly, hydrogen is projected to play an important role to balance the electricity market after the phase out of fossil fuels in electricity generation by providing flexible supply and demand of electricity.

Concerning the development of a hydrogen infrastructure, Germany is in a sweet spot: Its geographical position in the centre of the European Union makes Germany an important hub for the European hydrogen infrastructure. Additionally, Germany’s large existing natural gas pipeline infrastructure of around 600,000 pipeline kilometres is expected to be very useful as it can generally be converted to hydrogen infrastructure at lower costs than newly built hydrogen pipelines.

In the last months, the German government has taken various steps which aim at boosting the German hydrogen economy. We have summarised the most relevant points for investment in the growing hydrogen economy in Germany.

Read our full analysis of the updates in the PDF.