Germany wants to establish a hydrogen economy in order to achieve the legal goal of climate neutrality by 2045. Despite billions in subsidies, Germany has so far failed to meet the targets of the H2 strategy. According to the German Federal Audit Office, this jeopardises the achievement of climate neutrality, Germany as an industrial location and stable federal finances.

If you analyse the intended H2 ramp-up in our neighbouring country, it quickly becomes clear that the same hurdles are already being faced in Austria or will be in the future.

H2 is set to play a key role in the energy transition - not only in Germany, but in the entire EU. However, there is currently a lack of supply, demand and infrastructure. In addition, H2 is significantly more expensive than previously utilised energy sources and also than the figures published during the initial H2 euphoria. In Germany, the ramp-up of the H2 economy is being subsidised with several billion euros per year - in line with a planned economy approach - but the goal of establishing an H2 economy by 2030 is still a long way off.

According to the report by the German Federal Audit Office, the following main shortcomings still exist (at present):

• A secure supply of hydrogen requires a sufficient supply. In Germany, this is to be provided by domestic production and at least half by imports. In Germany, neither the domestic production targets for green H2 nor the expected demand will be covered by imports - according to forecasts based on the measures taken to date, namely the promotion of demand. Neither the industrial nor the energy sector will significantly increase demand by 2030. For example, a lack of binding requirements for the conversion of gas-fired power plants to H2 will lead to low demand stimuli for the ramp-up of the H2 economy. In view of the foreseeably low supply and demand, the H2 core network is not being built in sync with these: two thirds of the planned H2 core network is to be ready by 2030 - with foreseeably low capacity utilisation
• At present, green H2 is not a competitive energy source due to its high price, meaning that private sector players lack the incentive to invest in the H2 economy. In order for the ramp-up of the H2 industry to succeed, Germany has provided approx. 4.3 billion euros in 2024 and > 3 billion euros in 2025 - in particular for subsidies to companies. In addition, Germany has made significant upfront commitments of several billion euros per year until the end of the decade - nevertheless, expectations that green H2 will become price-competitive have not yet been fulfilled - on the contrary, H2 will remain expensive in the future, so permanent state subsidies are foreseeable. In order to equalise the cost difference between H2 and natural gas, the funds required in Germany in 2030 for imports alone could amount to 3 to 25 billion euros. This very large spread can be seen as an indicator of high production and transport cost risks.
• As the number of grid users will initially be low, grid operators will be reimbursed part of their grid costs via a so-called amortisation account from a government-backed loan (interim financing). As the number of grid users increases, and consequently revenues, the loan is to be repaid. A non-synchronised development of the core grid with the consumption requirements - for example with H2-ready gas-fired power plants - see above - drives up the grid costs and the costs of interim financing unnecessarily. Consequently, synchronised federal support for the supply, demand and storage of H2 is required. If the ramp-up of the H2 economy fails, the chosen financing mechanism could place an additional burden in the tens of billions on Germany's federal budget.

As Austria lags far behind Germany in terms of the ramp-up of the H2 economy, it is important to learn from Germany's hurdles/failures to date and create the appropriate framework conditions. This is also against the background that Austria could become an important H2 transit country - keyword European Hydrogen Backbone. The H2 ramp-up in Austria will require high investments in the upgrading/rededication of existing natural gas pipelines, very expensive H2 compressor stations and H2 hydrogen storage facilities. This is by no means a sure-fire success.