London, December 02, 2025
Germany is on track to miss its 2030 green hydrogen production and import targets amid mounting project cancellations, financing woes, and an enduring global hydrogen industry crisis, posing significant challenges to its climate and industrial policies.
Missed Targets Threaten Germany’s Green Hydrogen Ambitions
Germany’s plans to scale up green hydrogen production using renewable energy and synthetic gas imports by 2030 are faltering. Despite allocating over €7 billion in subsidies for 2024 and 2025, both supply and demand remain substantially below projections. The Federal Court of Auditors has criticized the “ramp-up of the hydrogen economy” as off track, calling for a comprehensive reassessment of the National Hydrogen Strategy.
The anticipated hydrogen demand from green steel projects has not materialized, creating a supply-demand imbalance. Consequently, the planned core hydrogen infrastructure risks becoming oversized, potentially burdening the state budget with inefficient spending.
Project Cancellations and Industrial Setbacks Weigh Heavily
Several high-profile green hydrogen initiatives face cancellation or delay. Federal subsidies of €1.3 billion backing projects—such as green hydrogen plants in Essen and green steel facilities in Bremen—were scrapped. The Salcos Green Steel Project, critical to Germany’s hydrogen demand, has been deferred by three years due to worsening economic conditions and regulatory uncertainties.
The steel industry is experiencing a severe contraction with production down 12.1% and external sales falling 11% in the first half of 2025 compared to 2024. This industrial decline significantly diminishes the projected hydrogen market, undermining infrastructure investments tied to these sectors.
A Global Hydrogen Industry in Crisis
Germany’s challenges reflect wider distress throughout the international hydrogen sector. Major companies like Plug Power face liquidity crises, while Cummins plans to divest its hydrogen division. Green Hydrogen Systems and McPhy have declared bankruptcy. Hydrogen prices have plummeted, and customers exhibit reluctance to enter long-term, capital-intensive agreements essential for sustained industry growth.
The core business model—dependent on centralized mega-facilities with decade-plus offtake contracts—proves difficult for hydrogen users, who must also cover costly transportation and storage. Customers remain cautiously interested but unwilling to commit billions in investments under current conditions.
Structural and Timing Constraints Exacerbate Challenges
Germany confronts several systemic barriers. Scaling green hydrogen production depends on abundant renewable energy, yet regulatory constraints slow renewable deployment. Competing electrification demands further strain available renewable capacity. The National Hydrogen Strategy’s reliance on bilateral import agreements for 70% of future hydrogen supplies has yet to yield expected results.
Sustaining green hydrogen without permanent subsidies appears unfeasible, risking further fiscal stress on federal finances. This situation compels Germany to reevaluate if and when green hydrogen can be offered at scale, competitively priced, and climate neutrally without relentless government support.
Government Response and the Climate Imperative
In response to the sector’s difficulties, Chancellor Friedrich Merz’s administration introduced a Hydrogen Acceleration Act in October 2025 to expedite infrastructure development and reduce bureaucratic bottlenecks. While these reforms aim to accelerate progress, they do not resolve the fundamental economic and technological challenges threatening viability within the critical 2030 timeframe.
The urgency to grow green hydrogen capacity aligns with global climate imperatives, as the carbon budget to limit warming to 1.5°C nears exhaustion. Delays in hydrogen infrastructure jeopardize decarbonization in hard-to-abate industries such as steel and chemicals. Germany’s faltering commitment risks undermining global confidence in strict green hydrogen standards, potentially discouraging international investment.
Germany stands at a pivotal crossroads in its green hydrogen journey, grappling with economic realities, systemic obstacles, and climate urgency that will shape the future of its energy transition and industrial competitiveness.