Germany plans to ring-fence at least €1.5bn ($1.7bn) for hydrogen projects in its €8.7bn ($9.8bn) 2027 carbon contracts for difference (CCfD) auction, under a package of 10 measures aimed at accelerating its hydrogen market.
The Federal Ministry for Economic Affairs and Energy (BMWE) announced the measures on Monday (19 October), launching the preparatory process for the next funding round, with the competitive auction scheduled to begin in May 2027.
Under the revised approach, separate budgets will be established for hydrogen, carbon capture, utilisation and storage, and industrial process heat, with the latter focused on high-temperature applications.
The ministry said the technology-specific allocations are intended to better account for differing emissions abatement costs and funding requirements.
For hydrogen, at least €1.5bn is envisaged, provided sufficient interest is demonstrated during the preparatory stage. Hydrogen projects will also be able to bid for the wider CCfD programme.
The dedicated funding window is intended to bridge the gap between hydrogen production costs and industrial buyers’ willingness to pay.
Germany’s CCfD programme supports energy-intensive manufacturers switching to lower-emissions production technologies by compensating for additional costs compared with conventional production processes.
Contracts can provide support for over 15 years, accounting for changes in carbon and energy prices.
The final technology-specific budgets will be determined using feedback and demand identified during the preparatory stage, and funding rules may change ahead of the auction.
The 2027 budget also remains subject to approval and EU state-aid clearance.
The funding push comes amid uncertainty over the future of EU hydrogen demand mandates, with Germany advocating greater flexibility in how member states meet renewable hydrogen targets.
A BMWE policy paper from June, revealed by Contexte, proposed retaining binding targets while simplifying RED III’s sector-specific requirements. A subsequent European Commission draft leaked in September raised the prospect of replacing post-2030 mandates with a non-binding EU-wide hydrogen consumption target.
The proposals have raised concerns among hydrogen developers and industry groups over investment certainty, adding to the challenges facing Germany’s efforts to stimulate industrial hydrogen demand.
