The much-vaunted market ramp-up of the hydrogen sector has recently been rather sluggish. Anyone researching the causes quickly ends up with the extremely challenging regulatory framework. On the one hand, this is characterised by a large number of incentive mechanisms; on the other hand, however, it also harbours considerable regulatory risks due to high requirements, e.g. for qualification as renewable hydrogen[1].
Despite this, hydrogen remains a key technology in the eyes of the new coalition government. With the special infrastructure fund[2] on the one hand and the prospect of an expanded framework for state aid on the other, there is indeed new impetus that gives hope.
Reason enough to take a look at the political agenda and the corresponding levers in the regulatory framework.
The future of the hydrogen economy is negotiated centrally in the coalition agreement in no less than twenty lines (p. 34), which are a tough sell:
Pragmatism instead of dogmatism
The development of the hydrogen economy should be faster and more flexible. In addition, "all colours" of hydrogen are to be used - in other words, a technology-neutral approach is to be pursued. The previous focus on green hydrogen in particular will thus be abandoned. Moreover, the focus of the future certification system (probably for both green and low-carbon hydrogen) is on making it unbureaucratic.
Broad infrastructure expansion
With additional routes and taking into account hydrogen storage facilities, the hydrogen core network is to be supplemented by a distribution network infrastructure to ensure a connection to the industrial centres in the south and east. In addition, European and German harbours are to be integrated into and connected to the necessary infrastructure for the import of hydrogen.
Stabilise funding instruments
National and European funding programmes are still needed to develop infrastructures and domestic production capacities. The coalition agreement explicitly mentions H2Global, IPCEI projects and specific programmes for SMEs.
Further ideas for additional incentives for the demand for hydrogen can already be found on p. 6 of the coalition agreement. There, climate-neutral lead markets are outlined via the quota regime (e.g. for green steel) or levers under public procurement law.
What does the European Clean Industrial Deal make possible?
If the Commission has its way, Germany (and the other Member States) will in future have an extended framework under state aid law for the promotion of investments in hydrogen ramp-up.
The draft Clean Industrial Deal[3] presented by the Commission in February also explicitly provides for a new aid framework (Clean Industrial State Aid Framework - CISAF[4]). This is intended to complement the existing guidelines for state aid for environmental, climate protection and energy. As the name already suggests, the focus is on industrial policy requirements. In addition, the present draft explicitly recognises the challenge of the cumulation of different state aid vehicles and attempts to resolve this.
In addition, further impetus for the hydrogen industry is expected from Brussels. For instance, the delegated act on low-carbon hydrogen is to be adopted in 2025 to create clarity for investors. This will be accompanied by a study to assess the effectiveness of the current regulatory framework and to identify potential obstacles to the expansion of renewable hydrogen.
In the second quarter of 2025, a hydrogen mechanism is to be introduced via the European Hydrogen Bank (EHB) which will bring together buyers and suppliers and provide financing and risk mitigation instruments. A third bidding round of the EHB with a budget of up to EUR 1 billion is planned for the third quarter of 2025.
Seize opportunities - minimise risks
With the change of government acting as a catalyst, the legal framework for the hydrogen economy, including the funding landscape, is likely to change again over the next few months.
In addition to new funding vehicles, however, adjustments to existing privileges cannot be ruled out.
For instance, in its recently published discussion paper on the further development of the general grid fee system, the Federal Network Agency casts doubt on the appropriateness of the existing 20-year grid fee privilege for electrolysers.[5]
Hence, flexible regulations are needed in the contractual design of projects that safeguard economic interests even against the backdrop of a constantly changing legal situation.
In addition, funding law challenges must be overcome when cumulating privileges. This is because national regulations can also fall under cumulation bans beyond the subsidies approved under state aid law, e.g. as part of the IPCEI waves or the EHB tender processes. Finally, there is also a risk of reclaims if funding recipients violate public procurement law requirements when using the funding. In procurement processes, the framework set by the respective funding provider and the applicable public procurement law should therefore be observed without exception to avoid unpleasant surprises - e.g. in the context of a later audit of the utilisation of funds.
Conclusion
With the special infrastructure fund on the one hand and the short-term expansion of state aid instruments on the other, the chances of a successful market ramp-up in Germany are better than they have been for a long time.
In addition, Katherina Reiche is a proven expert at the head of the BMWE who credibly stands in favour of consolidating the legal framework. The speed at which the requirements for new projects and those already being realised are likely to remain high.
Authors: Sebastian Berg and Max Stanko
Experts involved: Julian Gruß and Johannes Voß-Lünemann
[1] Cf. BDEW, Strombezugskriterien Delegierter Rechtsakt für RFNBO-konformen Wasserstoff, with clear criticism of the current design of the additionality and temporal correlation criteria, available at: Strombezugskriterien Delegierter Rechtsakt für RFNBO-konformen Wasserstoff | BDEW
[2]In this respect, the DVGW is calling for a further 50 billion from the special infrastructure fund to finally boost the market ramp-up, DVGW e.V.: 2025-04-23 - Sondervermoegen.
[3]See also: EU-Kommission stellt den Action Plan for Affordable Energy als Teil des Clean Industrial Deals vor | ADVANT Beiten
[4] See draft version under 45b532ce-53fb-4907-975c-79edaa31a166_en.
[5] BNetzA, Bundesnetzagentur - Presse - Bundesnetzagentur veröffentlicht Diskussionspapier zur Bildung der Stromnetzentgelte.
