Clean Hydrogen Market Ramp-Up: From Hype to Market Maturity
- Bridge the Momentum
- Mar 4
- 3 min read
Updated: Apr 3
Once hailed as the fuel of the future, the development of hydrogen has been a rollercoaster ride. From its use as rocket fuel in the 1960s to a central element of today's climate strategies, its potential has been repeatedly challenged by economic, regulatory and technological hurdles. After years of political efforts, the European hydrogen market is finally taking shape — but is it truly on track for success?
Subsidized Hydrogen Boom: Soaring or Crashing?
At first glance, the market for clean hydrogen appears to be booming: billions in subsidies, ambitious climate targets and technological advances have brought the topic into the focus of politics and business in recent years. But behind the headlines, a complex picture emerges: the ramp-up of a hydrogen economy is not only a technological and regulatory challenge, but above all an economic one. Stable demand, viable infrastructure and reliable framework conditions are crucial.
Despite massive government funding and private investments, market development is stalling - not only in Germany, but worldwide. A lack of purchase contracts, uncertain business models and geopolitical risks are hampering urgently needed investments.
Green Hydrogen: between Pioneering Spirit and Market Stagnation
The EU and Germany developed strategies for a hydrogen economy early on (2020) - after Japan (2017) and South Korea (2019). This triggered a worldwide hype, particularly about green hydrogen, which has, however, subsided significantly in the last two years. Now the still developing market is facing a consolidation phase that will clean up the market.
Programs such as the European Hydrogen Bank and the German H2Global initiative are intended to create investment incentives. Nevertheless, large-scale projects outside of large-scale funded projects (e.g. the EU's IPCEI Hydrogen) remain rare. The reasons for this are the lack of technological maturity of large-scale electrolyzers (100 MW and above), high transport costs and geopolitical uncertainties. Other obstacles are high energy costs, long approval procedures and an unstable political and regulatory situation.
Germany invested early, but is struggling with market fragmentation, growing international competitive pressure and an inadequate industrial policy strategy. One thing is clear: permanent subsidies are not a sustainable solution. The market needs stable framework conditions, efficient infrastructure and long-term demand models.
Politics and Business: What Needs to be done Now
Improve Regulation and Market Mechanism: Subsidies alone are not enough. Long-term purchase guarantees (e.g. carbon contracts for difference) and transparent CO₂ pricing are necessary.
Build Scalable Infrastructure: Decentralized hydrogen projects must be linked to a large-scale distribution infrastructure (e.g. hydrogen backbone). Hydrogen can only be used economically with a stable transport and storage network.
Create Investment Security: Many companies are hesitant to invest because the political framework is uncertain. Long-term strategies are required to ensure planning security.
Take Action Now for a Sucessful Market Ramp-Up of Clean Hydrogen!
Industry cannot wait for the perfect political solution. Companies that act now have the opportunity to position themselves as key players in a growing market. The success factors for a sucessful market ramp-up of clean hydrogen are:
Strategic Partnerships: Cooperation with energy suppliers, technology developers and industry - also internationally - minimizes risks and creates synergies.
Innovative Financing Models: A clever mix of private capital, public funding and strategic alliances is crucial.
Flexibility and Market Adaptation: Successful companies adapt their strategies dynamically.
Conclusion: Hydrogen still Needs Bold Decisions and Pioneers
Despite high levels of funding and ambitious goals, the hydrogen market is not really getting going. Without clear, long-term framework conditions, the boom threatens to become a bad investment.
What counts now: market-oriented funding programs, an integrated value chain and economically viable business models. State institutions must act more pragmatically, companies must act resiliently and strategically.
The hydrogen market will come - but only with a determined, realistic and coordinated approach can Germany take on and expand a leading role. Now is the time for bold decisions and the expansion of strategic partnerships.
In our latest study "Subsidized Hydrogen Boom: Soaring Success or Imminent Collapse?" we analyze the market development of clean hydrogen in recent years - with a particular focus on the progress made so far. We examine the role of individual sub-markets and common business models and derive the next necessary steps for politics and business to build up a sustainable framework for a Hydrogen Economy.
Title:
Subsidized Hydrogen Boom: Soaring Success or Imminent Collapse?
Release Date:
March 2025
Authors:
Dr. Rainer Scholz; Tobias Merten
