Reiche promises billions for hydrogen expansion

The market for hydrogen is starting up slowly. Economy Minister Reiche now wants to counteract with billions in aid for industry and incentives for climate-friendly steel. Federal Minister of Economic Affairs 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. At its core is a subsidy of at least 1.5 billion euros for industrial companies that convert their production to hydrogen. In addition, the conversion of gas-fired power plants to hydrogen is to be supported and the demand for climate-friendly steel is to be stimulated. The development of the market is delayed compared to previous expectations, said the Ministry. Production costs remain well above those of fossil alternatives. The state wants to compensate for additional costs for companies The additional aid for industry is to be awarded under so-called CO2 differential contracts. Over a period of 15 years, the state thus compensates for additional costs incurred by companies by switching to climate-friendly processes. In the next round of tenders in 2027, a separate funding budget for hydrogen projects with at least 1.5 billion euros is to be reserved for the first time. In case of high demand, the volume could be increased, it said. In addition, the promotion of gas-fired power plants with a total capacity of four gigawatts for later operation with hydrogen is planned. Tenders are planned for an initial of two gigawatts in 2027, which are to run on hydrogen from 2040. A further two gigawatts are to be tendered between 2030 and 2032 and converted from 2043. The State should bridge the economic gap created by conversion costs and higher operating costs compared to natural gas. The details are currently being worked out, the ministry said. Green steel to be favoured In order to stimulate demand, the Ministry wants to create a lead market for climate-friendly steel for the first time. In new tenders for offshore wind farms, the CO2 footprint of the plants should be a criterion. This is expected to encourage the use of steel produced with renewable or low carbon hydrogen. The Federal Government is also aiming for corresponding requirements for the public procurement of steel and cement. At the same time, the ministry is focusing on more favourable production conditions and urges a pragmatic adaptation of the European requirements for the production of renewable hydrogen. In addition, electrolyzers producing hydrogen using electricity should benefit from low grid charges. For already advanced electrolysis projects, which will go into operation by August 2029, the previous exemption from electricity grid charges is to continue. Emphasis on development and infrastructure Another focus is on infrastructure development and imports. According to the ministry, more than 500 kilometres of the hydrogen core network have already gone into operation in 2025, and a further 2,200 kilometres are in the process of being realised. The federal and state governments want to provide a total of 4.2 billion euros for the construction in the coming years. The ministry also 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.