What’s happened to hydrogen?

26 June 2025

If the world is going to make its industry, energy supply and heavy goods transport more climate friendly, especially on water and in the air, then huge quantities of green hydrogen are going to be needed. But the development of the hydrogen economy is lagging far behind where it was planned and expected to be. What has gone wrong? And what needs to be changed to ensure that hydrogen production picks up speed?

And the Smartquart in the Eifel is by no means the only project to have been shelved or postponed in recent times because “the oil of tomorrow”, as the then Research Minister Anja Karliczek (CDU) called green hydrogen in 2020, has not yet become economically viable: Norwegian energy supplier Statkraft, which is also active in green hydrogen in Germany, announced in May that it would withdraw from the development of new projects. An electrolyser planned in Hanover was cancelled due to increased costs; a hydrogen pipeline between Denmark and Germany planned for 2028 is now not scheduled to go into operation until 2030.

However, there is also progress to report: According to its operator, Europe’s highest capacity hydrogen filling station, at which up to three buses, lorries or fuel cell cars can fill up at the same time, was opened in Düsseldorf in May. The green hydrogen currently still has to be delivered, but the idea is to produce it on site from 2026.

Also in May, an electrolyser with a capacity of ten megawatts (MW), which is primarily intended to supply regional industry with climate-friendly hydrogen, went into test operation in Schwäbisch Gmünd. At the end of March, BASF commissioned a large electrolysis plant for its headquarters in Ludwigshafen. This plant can produce one ton of hydrogen, whose uses include the production of basic chemical materials, per hour and is thus expected to reduce the site’s CO₂ emissions by 72,000 tons per year. A “milestone in the ramping up of the hydrogen economy in Rhineland-Palatinate, Germany and Europe” is how the state’s Prime Minister Alexander Schweitzer described the project, which is being funded by the federal and state governments to the tune of 124 million euros. And the plant, with its capacity of 54 MW, is indeed currently the largest of its kind in Europe. And yet, to achieve the electrolysis capacity of ten gigawatts by 2030 that was targeted by the former “traffic light” coalition, 185 more plants of this size would have to be built within the next few years.

According to a survey by the German Association of Energy and Water Industries (BDEW), 88 percent of the projects announced for 2030 are still in the concept and feasibility study phase. In only twelve percent of cases has the final financing decision been made or is construction already underway. Even so, their number has still tripled compared to 2023. As things stand, however, only a mere one percent of them is actually in operation.

Globally, there is even less progress to report, as a study by the Potsdam Institute for Climate Impact Research (PIK) has determined. According to the study, 97 percent of the projects that are scheduled for completion by 2030 are still in the concept and feasibility study phase. According to the authors of the study, this is due to increased costs, a lack of willingness to pay on the part of potential customers and regulatory uncertainties.

In fact, according to BDEW, at almost seven euros per kilogramme green hydrogen is currently around twice as expensive as natural gas. By 2030, the costs could level off at an average of five euros. However, since it is not yet possible to predict how the prices for renewable electricity and electrolysers will develop, green hydrogen could equally plausibly get cheaper – or more expensive. The result is “palpable uncertainty”, which, according to the industry association, is having a negative impact on the willingness to invest.

“To compensate for additional costs and stimulate demand, it follows that we need targeted subsidies on an appropriate scale and market mechanisms like consistent CO₂ pricing,” says Silvio Konrad, Chief Operating Officer of the Energy & Resources business unit at TÜV NORD. For the researchers at the Potsdam Institute for Climate Impact Research, binding quotas for the use of hydrogen in certain sectors are also an important lever. One example of this is an EU regulation according to which all aviation fuels will have to contain 1.2 percent of hydrogen-based synthetic fuels from 2030, rising to 35 percent by 2050.

Until the price of green hydrogen falls, however, blue hydrogen might also have a part to play as a pragmatic interim solution, according to the industry association BDEW. Like “grey hydrogen”, this is produced with natural gas, but the climate-damaging CO₂ is captured and bound up, for example, in concrete for road construction (CCU – Carbon Capture and Utilisation) or stored permanently in the ground (CCS – Carbon Capture and Storage).

Germany’s “traffic light” coalition government had also previously declared this blue hydrogen to be eligible for funding in principle. The new cabinet has likewise announced in its coalition agreement that it aims to use all colours of hydrogen to accelerate the ramp-up. To this end, it intends to introduce a law on CO₂ storage and facilitate the approval of CCS and CCU plants. “What has been missing so far are regulations governing things like the specific form the promotion of blue hydrogen might take,” says energy expert Silvio Konrad from TÜV NORD. “However, hydrogen importers need their framework conditions for low-carbon hydrogen to be just as clear as domestic manufacturers in Germany.”

However, the use of blue hydrogen is not only controversial among environmental associations. There are fears of a prolongation of dependence on fossil fuels and the tying up of financial resources, which will then be lacking for the ramp-up of green hydrogen. Last but not least, there are doubts about its climate-friendliness, as the production of blue hydrogen does not  capture all the CO₂ and also releases methane, which is particularly harmful to the climate. “A uniform European certification system is therefore needed for all types of hydrogen that will demonstrate the environmental soundness, climate friendliness and social acceptability of its production and transport,” says Mr. Konrad. The experts from TÜV NORD are involved in various committees for the development of such a uniform standard, which will also be a decisive factor for Germany’s coalition government when it comes to the hydrogen ramp-up.

A standard of this kind is important, not least because, even if the ten-gigawatt target is achieved, between 50 and 70 percent of Germany’s hydrogen demand will still have to be covered by imports going forward. To this end, the grand coalition under Angela Merkel and the “traffic light” coalition had forged various energy partnerships with countries with an abundance of wind and sun such as Egypt, Australia, Namibia and Canada. Within Germany, the “traffic light” coalition had previously scheduled a 9,040-kilometer pipeline network to connect the most important ports, electrolysers and customers by 2032.The new coalition under Friedrich Merz has also announced that it will expand this core network for hydrogen to include further routes, especially in the south and east of Germany. “But even though the first construction projects are underway, the planning and approval of the hydrogen core network are progressing slowly overall, delaying a lot of projects,” says Mr. Konrad. The “traffic light” government unveiled a hydrogen acceleration law back in 2024, but the collapse of the coalition meant that this did not make it to a parliamentary vote. “But this acceleration in planning and approval is urgently needed,” warns the expert. “We also need binding expansion targets for both pipelines and electrolysers to create the conditions for a successful commercial ramp-up.”