The Federal Ministry for Economic Affairs and Energy (BMWE) has presented a policy paper with ten measures to advance the development of the hydrogen market. According to the ministry, the ramp-up faces major challenges. Production costs remain significantly above the willingness to pay of many potential application sectors. The measures are distributed across four areas: competitiveness, infrastructure, demand, as well as governance and technological leadership.
CCfD Window with 1.5 Billion Euros for Hydrogen
To stimulate demand, the BMWE is launching a new hydrogen window in the program for climate protection contracts (Carbon Contracts for Difference, CCfD). Budget funds of at least 1.5 billion euros are earmarked for this, targeting industrial first movers. In total, up to 8.7 billion euros are planned for the CCfD, which are also open to hydrogen projects. In addition, the ministry wants to promote the technical conversion of a total of four gigawatts of power plant capacity to hydrogen. According to the BMWE, the legal basis for this is currently being developed.
For the first time, a lead market for low-emission steel is also to be created. According to the Offshore Wind Energy Act (WindSeeG), offshore wind turbines must in future use steel produced with renewable or low-carbon hydrogen.
Infrastructure, Imports, and European Rules
In building infrastructure, the BMWE relies on the hydrogen core network, import corridors, and hydrogen storage. Distribution networks should be able to be transformed through the implementation of the EU gas-hydrogen internal market package. To increase competitiveness, the ministry announces a pragmatic adjustment of European requirements for renewable hydrogen, reliable electricity grid charges, and cost-effective imports from diversified supplier countries. In addition, the National Hydrogen Council will be brought closer to the federal government according to the paper. As part of the High-Tech Agenda Germany, the BMWE is creating a roadmap for hydrogen technologies.
BDEW: Impulses Are Too Cautious
The Federal Association of Energy and Water Industries (BDEW) welcomes the initiative but considers the levers insufficient. "It is therefore right that the ministry wants to reduce costs and advance the market," explains Kerstin Andreae, Chair of the BDEW Executive Board. "However, the proposed levers remain too cautious so far."
Andreae describes the own hydrogen window in the CCfD as sensible but points to a hydrogen difference contract (Carbon Contract for Difference, CfD) demanded by the BDEW. This could advance the market ramp-up more effectively "because it is less complex and combines production, procurement, and trade." In the Climate and Transformation Fund, a separate budget title for long-term contracts is needed from 2027. The BDEW positively evaluates the possibility of implementing two projects with 250 megawatts of electrolysis capacity each on the North Sea area SEN-1. However, the plan remains vague regarding infrastructure. The association also calls for a hydrogen alliance at the level of EU member states.
BEE: Focus on Green Hydrogen
The Federal Association of Renewable Energy (BEE) also sees a step in the right direction but misses new approaches. "The announced measures for the hydrogen ramp-up are a step in the right direction. However, the policy paper contains only a few truly new approaches," comments BEE Managing Director Christine Falken-Großer. The association welcomes the commitment of federal funds for the core network and the hydrogen-oriented CCfD funding framework. The focus of the funding instruments should clearly be on renewable hydrogen, as Germany's industrial policy strengths primarily lie in electrolysis.
Falken-Großer calls for rapid implementation: "We need reliable investment conditions, the removal of regulatory barriers, and targeted incentives for electrolyzers and the use of biogenic potentials. Domestic green hydrogen strengthens our energy sovereignty, is flexibly deployable, creates value and jobs, and must therefore have priority in the market ramp-up."
