Germany’s hydrogen rollout is facing significant delays and risks, according to a special report by the Federal Audit Office (Bundesrechnungshof). The report warns of serious financial and strategic threats to the country’s energy transition, industrial competitiveness, and public finances.

Despite multi-billion-euro subsidies, the implementation of the National Hydrogen Strategy is falling behind schedule, with both supply and demand for green hydrogen well below expectations. The Audit Office cautions that this shortfall could jeopardize Germany’s 2045 climate-neutrality target and the future viability of its industrial base.

“It is time for a reality check. The Ministry for Economic Affairs must adjust its approach and act decisively,” said Kay Scheller, President of the Federal Audit Office.

Delays, cost pressure, and financial exposure

The report finds that Germany will not meet its domestic green hydrogen production goals by 2030, nor will expected imports cover the projected demand. Industrial uptake—particularly in the steel sector—is lagging, and the planned hydrogen core network (Wasserstoff-Kernnetz) appears “over-ambitious” given current market conditions.

The watchdog also highlights major fiscal risks: bridging the price gap between hydrogen and natural gas could cost the federal budget between €3 billion and €25 billion in 2030 alone. Moreover, the financing model for the hydrogen core network could expose public finances to double-digit billion-euro losses if hydrogen demand fails to materialize as anticipated.

On the environmental side, the Audit Office questions the true climate neutrality of imported hydrogen, citing potential upstream emissions and weakened sustainability criteria in recent international tenders.

Renewable energy sector defends hydrogen as key to Germany’s future

The German Renewable Energy Federation (Bundesverband Erneuerbare Energie, BEE) responded with concern but firm criticism, calling the Audit Office’s analysis “short-sighted and incomplete.”

“Green hydrogen is not a risk—it is an investment in the future: in climate protection, economic strength, and energy security,” said BEE President Ursula Heinen-Esser.

According to the BEE, building a domestic green hydrogen economy offers strong benefits for the German economy—creating growth opportunities, tens of thousands of jobs across the value chain, and reducing import dependency. Hydrogen also provides much-needed flexibility to integrate renewable power and improve system efficiency, particularly as the number of negative electricity price hours continues to rise.

“We have a chicken-and-egg problem,” Heinen-Esser explained. “Hydrogen is expensive because too little is produced, and too little is produced because it’s expensive. But politics is not powerless here—the government can and must shape the market.”

The BEE calls for stable lead markets, hydrogen-ready power plant auctions, and mandatory ‘green steel’ quotas in public procurement to stimulate demand and accelerate scale-up.

The Federal Audit Office urges the government to conduct a “reality check” of its strategy—reassessing whether and when green hydrogen can become available at competitive prices, in sufficient quantities, and with verified sustainability.

Meanwhile, the BEE argues that today’s investments are not losses but future returns, stressing that the long-term economic, energy, and climate benefits will outweigh the initial costs.