As more hydrogen projects are suspended or canceled, the outlook for the sector appears increasingly uncertain.

BERLIN, Nov. 7 (Xinhua) -- Germany's flagship hydrogen strategy, once seen as theengine of its energy transition, is faltering as projects stall, costs climb, and targets slip, raising doubts about the country's clean-energy ambitions.

In a recent report, Germany's Federal Audit Office said the nation's hydrogen strategy is"nowhere near meeting its goals,"adding that the industry is becoming increasingly reliant on government subsidies, a trend that could turn into a long-term burden on public finances.

AMBITIOUS PLAN

Germany launched its National Hydrogen Strategy in 2020, outlining 38 domestic measures to establish a complete hydrogen value chain, backed by 9 billion euros (about 10.37 billion U.S. dollars) in public funding.

The plan originally aimed to install 5 gigawatts (GW) of electrolyser capacity by 2030. A revised version released in 2023 raised that goal to at least 10 GW.

"By 2045, Germany aims to achieve greenhouse gas neutrality," the federal government states on its website.With the National Hydrogen Strategy, the government "aims to drive forward the use of climate-friendly hydrogen technologies and make a contribution at an early stage to the diversification of energy imports and hence to Germany's supply security."

At the core of the plan is the large-scale use of hydrogen, particularly green hydrogen,as a substitute for fossil fuels in heavy industry. Hydrogen is categorized by its production method and associated carbon emissions as green, blue, or gray. Green hydrogen, the cleanest form, is produced using renewable electricity to split water into hydrogen and oxygen, generating no carbon emissions.

According to the German Renewable Energy Federation (BEE),green hydrogen can create new growth opportunities and tens of thousands of jobs, while reducing the country's dependence on energy imports and supporting the decarbonization of high-emission sectors such as chemicals, shipping, and aviation.

DISAPPOINTING REALITY

However, actual progress has been disappointing. According to Germany's Tagesschau news program, only about 1.6 percent of the 2030 target has been reached so far, with roughly 200 megawatts of electrolyzer capacity currently under construction.

As more hydrogen projects are suspended or canceled, the outlook for the sector appears increasingly uncertain. "The targets for the hydrogen ramp-up in 2030 will be missed by a huge margin," said Felix Matthes, acting chair of Germany'sNationalHydrogenCouncil.

Analysts say the stagnation reflects structural weaknesses. As an emerging industry, hydrogen depends on a fully developed industrial ecosystem,from production facilities and distribution networks to end users. Yet the financial and policy foundations for that system remain fragile in Germany.

Matthes said that the cost of green hydrogen is "far higher than initially expected," leaving the industry caught in a "chicken-and-egg" dilemma: at current prices, green hydrogen offers little incentive for large industrial users. Weak demand, in turn, deters producers from building new facilities, keeping output low and prices high,a cycle of stagnation that the sector has struggled to break.

Thefederalauditoffice warned that the hydrogen strategy's underperformance could jeopardize Germany's climate targets and industrial competitiveness, while also threatening fiscal stability.

According to the office, Germany allocated around 4.3 billion euros in 2024 and more than 3 billion euros in 2025for the hydrogen economy, mostly in corporate subsidies. The government has also pledged to continue investing several billion euros annually through 2030.

"The expectation that green hydrogen would soon become price-competitive has not been met," theoffice said in the report. "On the contrary, hydrogen prices are likely to remain high for the foreseeable future, making long-term state subsidies almost unavoidable."

Industry groups reject the auditors' pessimistic view. The BEE said the audit overlooked the strategic necessity of developing green hydrogen and the long-term benefits it promises.The Association of German Engineers likewise argued that it is premature to judge the hydrogen strategy based solely on current costs.

"Hydrogen is a technology for the future, and like any major innovation, it requires patience in its early stages," said Adrian Willig, director of VDI."We shouldn't focus solely on the risks, but instead strike a balance between responsibility and foresight." (1 euro = 1.15 U.S. dollar)