The Hydrogen Market Ramp-Up in Germany Has (For Now) Failed

A Strategic Lesson in Perspective Blindness

It’s hydrogen hour in Germany and Europe. But instead of momentum, we face a standstill.

Germany wanted to lead – with green hydrogen as the key to decarbonising industry, energy, and mobility. Billions flowed into funding programmes and private investments, accompanied by hundreds of pilot projects and strategic papers at all political and economic levels.

But the expected ramp-up never materialised. Instead of real market development, we saw institutionally orchestrated stagnation – and now even a reversal.

Developments such as the cancellation of hydrogen plans at ArcelorMittal, the sluggish implementation of key IPCEI projects, and the lack of strategic continuation of regional lighthouse projects – such as the world’s first commercial deployment of hydrogen trains in northern Germany – clearly show: the problems were structural. Not only political, but also the result of short-sighted funding logic, lack of market integration, and insufficient strategic coordination.

Political logic was shaped by election cycles: rather than long-term strategies, four-year planning horizons prevailed, where visibility and announcements often mattered more than implementation and systemic impact. Many projects stalled in the planning phase due to missing frameworks and strategic coherence.

It is now clear that the hydrogen ramp-up was never going to happen on its own – it is a complex, strategically managed transformation. And – it must be said – the first attempt failed. Not due to bad intentions, but due to a lack of systemic foresight and strategic coherence.

What Remains: New Opportunities – and Geopolitical Necessities

Despite structural failures and missed opportunities, hydrogen remains a relevant technology path. The foundations haven’t disappeared – they were simply never orchestrated effectively.

Many actors worked with commitment, initiated pilot projects, and provided important impulses – but often without strategic alignment. The second attempt must close this gap: with more system, more honesty, and more leadership.

Hydrogen must not only be seen as a tool for industry or climate policy, but also as a geopolitical lever – to diversify energy partnerships, position Europe in the global race for green molecules, and strengthen resilience between the US, China, and those regions often generalised as the "Global South" – a term that needs more nuance.

The Symptoms of Failure

• Public Discourse and Political Polarisation as Distortion Drivers

  Debates were dominated by interest groups. Green hydrogen was politically prioritised – but without corresponding production and import strategies. Blue hydrogen was largely ignored – not for technical reasons, but due to regulatory hurdles, symbolic politics, and lobbying pressure. Add to this a political polarisation that made constructive debate increasingly difficult.

  
  

• Efficiency Focus Instead of Innovation Readiness

  Germany’s deeply ingrained focus on energy efficiency left little room for technology ramp-up. As we described in our book "From Market Leader to Bystander", this perspective blindness is a structural trait of Germany’s innovation culture: new technologies were judged against existing standards, not future potential.

  
  

• Sectoral Interests Instead of National Strategy

  Producers, utilities, developers, associations – all followed their own roadmaps. The result: no national strategy, just sectoral patchworks. Export and import infrastructures competed rather than complemented. Strategic prioritisation and coordination were largely absent.

  
  

• Subsidy-Driven Projects Without Market Logic

  Many projects were born not out of economic or systemic necessity, but because they matched the criteria of funding programmes. Market logic followed subsidy rules – not vice versa.

  
  

• Lack of Systemic Thinking

  The hydrogen economy wasn’t built as a system. Infrastructure, storage, transport and application developed in isolation – without orchestration of technological maturity across the value chain. The result: systemic bottlenecks, despite available technologies.

  
  

• A Narrow Mobility Strategy

  The political framing of battery vs. hydrogen created false choices. The reality is: the market needs both – depending on application. Germany, as an automotive leader, could have anticipated this diversity.

  
  

From Efficiency Obsession to Strategic Dead-End

What reads like a retrospective is in fact a diagnosis of the present: the patterns that stalled the first ramp-up still persist – and continue to block a strategic restart.

What’s missing is a higher-level strategic view: a clear target picture, a realistic technology path, a reliable assessment of barriers, and the ability to coordinate maturity levels across sectors.

Instead of building forward-looking transformation paths, we’re still debating bureaucratic burden, tax relief, or marginal efficiency gains. All necessary – but insufficient, if the underlying assumptions about technology and value creation remain unchanged.

Meanwhile, the world is changing: AI, digital platforms, new global supply chain architectures. While these dynamics reshape entire industries, Germany still optimises what it already knows – and underestimates what it has yet to learn.

Technological pathways are being politically fixed, alternatives are being sidelined, and complex dependencies are being oversimplified. Hydrogen becomes a projection surface for symbolic policy, sectoral interests, and short-cycle funding logic – instead of what it could be: a strategic pillar of transformation.

What We Must Learn

• Market development needs more than subsidies

  
  

• Technology neutrality is a prerequisite – not a talking point

  
  

• System architecture must precede project architecture

  
  

• Perspective diversity is not a risk – it’s protection

Hydrogen remains a relevant decarbonization path. But without strategic honesty, it won't become a viable one.