Reiche promises billions for hydrogen expansion

Federal Minister of Economics Katherina Reiche (CDU) wants to advance the slow development of the hydrogen market in Germany with billions in funding and new incentives. Your ministry presented a package of ten measures in Berlin.

The core is funding of at least 1.5 billion euros for industrial companies that convert their production to hydrogen. In addition, the conversion of gas power plants to hydrogen is to be supported and demand for climate-friendly steel is to be stimulated.

The ministry explained that the development of the market was delayed compared to previous expectations. The production costs would still be significantly higher than those of fossil alternatives.

The state wants to offset additional costs for companies

The additional aid for industry is to be awarded within the framework of so-called CO2 difference contracts. In this way, the state will offset additional costs that companies incur as a result of switching to climate-friendly processes over a period of 15 years.

In the next round of tenders in 2027, a separate funding budget of at least 1.5 billion euros will be reserved for hydrogen projects for the first time. If demand is high, the volume can be increased, it said.

New timetable for power plant conversions

In addition, it is planned to support gas power plants with a total output of four gigawatts for later operation with hydrogen. Tenders are planned for an initial two gigawatts in 2027, which will run on hydrogen from 2040. Another two gigawatts are to be put out to tender between 2030 and 2032 and converted from 2043.

The state should bridge the economic gap that would arise from conversion costs and the higher operating costs compared to natural gas. The details are currently being worked out, according to the ministry.

Green steel should be encouraged

In order to stimulate demand, the ministry wants to create a lead market for climate-friendly steel for the first time. The CO2 footprint of the systems should be a criterion in new tenders for offshore wind farms.

This is intended to encourage the use of steel made with renewable or low-carbon hydrogen. The federal government is also aiming for corresponding requirements for public procurement of steel and cement.

Better production conditions for hydrogen

At the same time, the ministry is relying on more favorable production conditions and is pushing for a pragmatic adjustment of the European requirements for the production of renewable hydrogen. In addition, electrolyzers that produce hydrogen using electricity should benefit from favorable network fees.

For electrolysis projects that are already well advanced and will go into operation by August 2029, the current exemption from electricity grid fees will continue to apply.

Focus on expansion and infrastructure

Another focus is on expanding infrastructure and imports. According to the ministry, more than 500 kilometers of the hydrogen core network will have already gone into operation in 2025, and a further 2,200 kilometers are currently being implemented. The federal and state governments want to provide a total of 4.2 billion euros for the development in the coming years.

At the same time, the ministry relies on imports via pipelines from Europe and by ship from other regions of the world. Low-carbon hydrogen should also be given greater consideration.