How Germany Can Pivot on Hydrogen Without Losing Ground

Step Two: Fix the Import Strategy

Germany's original hydrogen strategy envisioned significant domestic production. While this made sense from an energy sovereignty perspective, the reality is that Germany will never be the cheapest place to produce green hydrogen. The country's renewable energy resources — while substantial — are modest compared to the solar potential of North Africa, the wind resources of Patagonia, or the combined solar and wind capacity of Australia.

A realistic hydrogen strategy must accept that Germany will be primarily an importer of hydrogen, much as it has historically been an importer of natural gas and oil. The key is to diversify supply sources and build the infrastructure needed to receive and distribute imported hydrogen.

Several important steps are already underway:

• The H2Global initiative uses an auction mechanism to bridge the price gap between what exporters need to charge and what German buyers are willing to pay, with the government funding the difference
• Pipeline connections to the Netherlands, Denmark, and Norway are being planned or constructed, providing access to hydrogen produced from North Sea wind power
• Port infrastructure in Hamburg, Wilhelmshaven, and Brunsbüttel is being upgraded to handle hydrogen and ammonia imports from overseas suppliers
• Bilateral agreements with countries including Morocco, Namibia, Chile, and the United Arab Emirates have been signed to secure future hydrogen supply

Step Three: Accelerate the Backbone Infrastructure

None of Germany's hydrogen ambitions — whether for steel, chemicals, or energy storage — will be realized without a functioning hydrogen transport network. The planned hydrogen backbone, which would connect major industrial centres, import terminals, and storage facilities through approximately 9,700 kilometres of pipelines, is the single most critical piece of infrastructure in Germany's hydrogen strategy.

Delays in this network are arguably the biggest risk to the entire strategy. Without pipelines, producers cannot reach customers, and customers cannot commit to hydrogen-based processes. The government needs to treat hydrogen pipeline construction with the same urgency it has applied to LNG terminal construction — a process that was dramatically accelerated during the 2022 energy crisis and demonstrated that Germany can build energy infrastructure quickly when political will exists.

Regulatory Streamlining

Concrete measures to accelerate infrastructure include shortening permitting timelines from years to months, allowing construction to begin before all regulatory approvals are finalized (with appropriate safeguards), and providing financial guarantees that reduce investment risk for pipeline operators during the early years when utilization will be low.

Step Four: Maintain Investor Confidence

Perhaps the most important element of Germany's hydrogen realignment is managing perceptions. The global competition for hydrogen investment is intense, with countries from the United States to Saudi Arabia to Australia competing for the same pool of capital. If Germany's realignment is framed as a retreat, investors will take their money elsewhere.

The government should be explicit that it is not reducing overall hydrogen investment but rather concentrating it where it will have the greatest impact. It should point to the concrete projects underway — hydrogen-ready steel plants, electrolyzer manufacturing facilities, pipeline construction — as evidence of continued commitment. And it should set clear, measurable milestones that hold the government accountable for delivering on its revised strategy.

The Opportunity in Realignment

Done well, Germany's hydrogen realignment could actually strengthen the country's position in the global hydrogen economy. By focusing resources on the applications where hydrogen is most needed and most valuable, Germany can become the world's leading market for industrial hydrogen — a market that will be worth hundreds of billions of euros annually by mid-century.

The alternative — continuing to spread hydrogen investments across too many applications, including those where it is not competitive — risks diluting efforts and achieving mediocre results across the board. In the energy transition, as in business, focus is a competitive advantage.

Germany has the industrial base, the engineering talent, and the financial resources to be a hydrogen leader. The question is whether it has the strategic discipline to concentrate those assets where they matter most. The next 12 months will tell.

This article is based on reporting by CleanTechnica. Read the original article.