Several manufacturers are opting for hydrogen combustion engines instead of fuel cell drives. What is hardly known to the public: in Germany a different taxation applies to these. If the problem is not solved quickly at the political level, a technical workaround will be needed to ensure legally compliant refueling of H2 combustion engines.
By Sybille Riepe
Hydrogen mobility is facing a new hurdle: at the filling station, tax law in Germany differentiates between fuel cell vehicles and hydrogen combustion engine vehicles. This regulation could slow down the development of hydrogen combustion engine technology if no solution is found in tax law.
Pitfall of the German Energy Tax Act
The unequal treatment arises implicitly. The German Energy Tax Act does not explicitly mention hydrogen as an energy carrier. Therefore, the similarity principle applies: hydrogen used in combustion engines is taxed like natural gas. The tax rate is currently 0.90 euro per kilogram and will rise to about 1.25 euro in 2027. An administrative regulation from the German Federal Ministry of Finance, however, exempts hydrogen used in fuel cells from the energy tax. So the rule is: no tax for fuel cell vehicles, but hydrogen combustion engine vehicles have to pay.
Refueling ban for H2 combustion engines
This different taxation presents operators of hydrogen filling stations with a technical challenge: they have to distinguish between vehicle types in order to invoice the hydrogen correctly. However, this information is not requested during refueling. This leads to complicated procedures and individual arrangements with the main customs offices, resulting in a patchwork across Germany: while some filling stations exclude hydrogen combustion engine vehicles in their general terms and conditions, others allow them, and still others require official approval for every refueling.
Communication interface as a quick solution
To provide a remedy as quickly as possible, the International Organization for Standardization (ISO), with support from the Clean Energy Partnership (CEP), is working on technical solutions – including a communication interface (“Advanced Communication”) that enables automated data transfer between vehicle and filling station, including information on vehicle type and drive system. This will make hydrogen for fuel cells and combustion engines technically distinguishable, provide legal certainty for filling station operators, and allow the first hydrogen combustion engines to be refueled easily, even at public hydrogen filling stations.
We urgently need a solution that puts all hydrogen drive concepts on an equal footing and gives filling station operators legal certainty.”
A political solution is needed
Regardless of a technical solution: the unequal tax treatment of hydrogen vehicles with combustion engines and fuel cells needs to be reviewed. Both technologies use climate-friendly hydrogen and contribute to the decarbonization of transport. Given the urgency to reduce CO2 emissions, such differentiation is neither appropriate nor expedient. The decisive factor is the emissions advantage – and this applies to both concepts if green hydrogen is used. A uniform tax regulation would foster innovation, secure investments, and accelerate the market ramp-up of climate-friendly mobility. Florian Brandau, board member of the CEP, therefore calls for: “We urgently need a solution that puts all hydrogen drive concepts on an equal footing and gives filling station operators legal certainty.”
Future perspectives and need for action
The resolution of the tax law conflict is crucial for the future of hydrogen mobility. Legislators, industry, and research must work together to develop practical solutions that meet the requirements of tax law and the needs of the market. Different law, similar problem: the definition of the supplier of hydrogen currently depends on the legal framework (for example, Energy Tax Act, BImSchV/RED III) and the specific application. This leads to legal uncertainty and practical hurdles in the market. CEP therefore calls in its statement on the draft of the Second Act to Further Develop the Greenhouse Gas Reduction Quota for a harmonization of this definition. The dilemma at the hydrogen filling station shows that the regulatory framework must keep pace with technology. Efficiency debates aside: parallel developments must not be slowed down by bureaucracy. Only if legal barriers are removed can hydrogen realize its potential as the key to a sustainable transformation of transport.
Hydrogen combustion engines: manufacturers and applications
H2 combustion engines are mainly used in agricultural and construction machinery, in logistics transport, and in motorsport. They complement fuel cells and expand the possibilities of hydrogen mobility. Some manufacturers and suppliers are already relying on this technology – here is a selection:
Heavy-duty transport
• Deutz is producing the TCG 7.8 H2 engine, a six-cylinder hydrogen combustion engine with 220 kW power and 1,000 Nm torque, already in series production.
• MAN is testing H2 trucks based on the TGX model.
• Volvo Trucks is developing trucks with combustion engines; on-road tests are to start from 2026, with commercial market launch towards the end of the decade.
• Komatsu is testing a co-development with Keyou: a 92-ton dump truck (model HD785) with a hydrogen combustion engine as a proof of concept, with refueling system and components.
• Keyou has delivered the first 18-ton hydrogen combustion engine truck to EP-Trans, based on an Actros chassis with a converted Deutz 7.8-liter cylinder. Keyou also plans to deliver 40-ton vehicles with H2 combustion engines from 2026.
• Cummins has presented an H2 combustion engine in Europe and also showcased the H2-ICE engines (X10, X15H) and related technologies at the IAA.
• Ashok Leyland is cooperating with Reliance to develop H2 engines for trucks in the 19–35 ton segment.
Construction machinery and agriculture
• JCB produces H2 excavators and telehandlers for construction and agriculture; field tests and near-series prototypes are ongoing.
• CNH Industrial is developing H2 tractors under the New Holland and CASE brands.
