Federal Audit Office Warns of Multi-Billion Euro Risks in Germany’s Hydrogen Sector
BERLIN (dpa-AFX) – The Federal Audit Office has raised concerns about multi-billion euro risks for taxpayers due to delays in establishing a hydrogen economy in Germany. According to a special report from the agency, there is a threat of ongoing government subsidies with significant consequences for federal finances. The German government aims to establish a hydrogen economy to meet the legal target of climate neutrality by 2045.
Despite allocating billions in funding, it is failing to meet the objectives of its hydrogen strategy.
” This jeopardizes the achievement of climate neutrality, Germany’s position as an industrial base, and stable federal finances.”
Climate-neutral hydrogen is expected to play a key role in transforming industries such as steel and chemicals, replacing fossil fuels. However, hydrogen remains insufficiently available and comparatively expensive.
Multi-Billion Euro Commitments
To support the ramp-up of the hydrogen sector, the federal budget has allocated a total of EUR4.3 billion for 2024 and more than EUR3 billion for 2025, primarily for subsidies to businesses, according to the Audit Office. The government has also made significant pre-commitments amounting to several billion euros annually until the end of the decade. “Expectations that green hydrogen would become price-competitive have not been fulfilled so far.” Instead, hydrogen is expected to remain costly in the future. “Ongoing government subsidies therefore appear inevitable.”
Plans are underway to build a “core network” for hydrogen in Germany, with a dedicated financing mechanism. The pipelines are intended to be funded privately through user fees. However, since the government anticipates relatively few customers in the initial years, network fees will be capped. This will be managed through a government-backed interim financing arrangement called an “amortization account.” If, at a later stage, more users are connected and revenues from network fees exceed the costs of building and operating the network, the deficit in the account is to be balanced.
However, the Audit Office report states that building the core network is “associated with significant burdens and risks” for the federal budget.
Audit Office Calls for Reality Check
The auditors found that the government is far from achieving its goal of establishing a hydrogen economy by 2030. It is failing to meet domestic production targets for green hydrogen and cannot cover expected demand through imports. The government must conduct a “reality check,” design its measures more purposefully, and subject them to regular monitoring.
The report further notes that in the absence of binding requirements to convert gas-fired power plants to hydrogen, a crucial demand driver for ramping up the hydrogen sector is missing. The government plans to provide subsidies for the construction of new gas-fired plants, but it remains unclear to what extent there will be requirements for later conversion to hydrogen./hoe/DP/nas
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Federal Audit Office Warns of Multi-Billion Euro Risks in Germany’s Hydrogen Sector, source
