Germany risks overbuilding its hydrogen network and wasting tens of billions of euros by relying on overoptimistic hydrogen demand projections, according to new research from the Institute for Energy Economics and Financial Analysis (‘IEEFA’).
IEEFA said Germany’s hydrogen demand is likely to fall short of official projections, risking costly overbuilding of infrastructure and leaving taxpayers exposed to additional public funding requirements.
The organisation added that failure to meet optimistic hydrogen demand projections could require around €45 billion in additional public funding, or roughly €1000 per German taxpayer.
IEEFA expects Germany’s 2045 hydrogen demand to be at or below the lower end of official scenario ranges.
“This matters because Germany is financing its hydrogen network on the assumption that demand will grow quickly enough for users to repay the costs over time. If that demand fails to materialise, taxpayers will be on the hook,” said Alasdair Docherty, IEEFA sustainable finance analyst and co-author of the report.
IEEFA estimates that a limited-demand scenario could leave German taxpayers liable for at least €34.7 billion in pipeline costs by 2055.
The organisation warned that weak hydrogen demand would also increase spending on hydrogen-ready power plants and prolong reliance on liquefied natural gas terminals.
Germany’s Hydrogen Acceleration Act, passed by parliament in February 2026, designates blue hydrogen produced from natural gas with carbon capture and storage as being in the “overriding public interest”.
“A pivot to blue hydrogen would add a network of costly carbon dioxide pipelines and re-entrench Germany’s dependence on volatile global gas markets, threatening long-term energy security and industrial competitiveness,” said Docherty.
“Blue hydrogen is an expensive way to sacrifice energy independence.”
IEEFA recommended that Germany align hydrogen infrastructure development with confirmed demand and supply commitments.
“It is better to recognise infrastructure risk early than to justify an oversized network by artificially propping up demand at indefinite taxpayer expense,” said Docherty.
