IEEFA Report: German Hydrogen Core Network Could Cost Taxpayers €34.7 Billion by 2055 - News and Statistics

May 9, 2026

A fresh analysis from the Institute for Energy Economics and Financial Analysis (IEEFA) cautions that German taxpayers could be responsible for at least EUR34.7 billion ($40.8 billion) in stranded hydrogen network expenses by 2055. The report indicates the actual regulated cost base is nearing EUR50 billion, contrasting sharply with the widely referenced EUR19.8 billion construction estimate.

The funding gap between a swift and a constrained hydrogen adoption scenario reaches EUR45 billion in extra public money—roughly EUR1,000 per German taxpayer—largely due to unpaid pipeline financing costs. The EUR19.8 billion figure commonly associated with Germany’s hydrogen core network only accounts for building expenses. Research by the Fraunhofer Research Institution for Energy Infrastructures and Geotechnologies IEG, conducted for the Federal Network Agency (BNetzA), places the comprehensive regulated cost base—including financing charges, converted existing pipeline assets, and operational costs—close to EUR50 billion. Pipeline operators separately anticipate at least EUR5 billion in extra expenses from purchasing and project adjustments, at a point when about 4% of the pipeline is finished.

BNetzA set a transport tariff ceiling of EUR25 per kilowatt of reserved capacity annually, based on Fraunhofer’s modeling. This ceiling operates through a state-supported credit mechanism called the amortization account, funded upfront by state-owned bank KfW, which covers early revenue gaps. The account must be settled by 2055, with the government legally required to cover at least 76% of any remaining shortfall. In IEEFA’s limited adoption scenario—where pipeline usage tops out at roughly 20% of network capacity by 2037—the amortization account balance hits EUR45.7 billion by 2055, leaving the state liable for at least EUR34.7 billion.

Adjusting tariffs does not work as a practical recovery tool when demand is weak. Fraunhofer identifies charges above EUR35 per kilowatt of reserved capacity annually as economically unfeasible in the worst-case situation, where higher fees reduce demand faster than they boost revenue. Under a limited adoption scenario, clearing the account by 2055 would demand fees exceeding EUR100 per kilowatt, a level IEEFA deems incompatible with market involvement.

IEEFA’s demand evaluation removes sectors where electrification provides a more affordable decarbonization route—heating, transport, and most electricity generation—and makes further adjustments for derivative imports that would avoid pipeline infrastructure entirely. The report states Germany’s 2045 hydrogen demand could be at or below the low end of official scenario projections. The Federal Ministry for Economic Affairs and Energy’s monitoring report lists normative demand scenarios ranging from 163 TWh to 605 TWh by 2045. However, IEEFA’s adjusted estimate sits near the middle of an exploratory range of 71 TWh to 262 TWh and far below the prior government’s system development strategy range of 360 TWh to 500 TWh.

IEEFA highlights early market signals consistent with this more restrained demand outlook. About one-eighth of Germany’s 10 GW 2030 electrolyzer target—roughly 1.2 GW to 1.3 GW—has achieved a final investment decision. Approximately 400 km of the hydrogen backbone, around 4% of the planned network, has been built and pressurized, with no supply under contract and no customers linked up.

The report draws on Germany’s emergency liquefied natural gas (LNG) terminal expansion as a warning example of infrastructure constructed ahead of demand. Those terminals operated at 36.3% capacity in 2025, and analysis referenced by IEEFA estimates total public exposure at EUR17 billion or more. The report notes that the same risk-transfer approach now applies to the hydrogen core network, on a larger fiscal scale and without the rationale of an urgent supply emergency.

IEEFA views blue hydrogen—derived from natural gas with carbon capture and storage—as an escalating risk rather than a remedy. The Hydrogen Acceleration Act, approved by parliament in February 2026, classified blue hydrogen infrastructure as being in the overriding public interest. IEEFA argues that this move adds a second capital-intensive infrastructure system—reforming capacity, carbon capture equipment, and carbon dioxide transport and storage—on top of the hydrogen backbone, while reconnecting production to unstable gas markets.

Carbon capture expenses and performance remain very uncertain, introducing another level of fiscal risk. The report concludes that the bigger long-term threat to public finances is not a hydrogen network that completely collapses, but one that partially succeeds by cementing gas dependence and prompting unlimited demand subsidies throughout the economy. IEEFA suggests phasing pipeline construction to match confirmed industrial demand, releasing a clear amortization account repayment schedule with automatic policy reviews if usage drops below set levels, and giving priority to imports of hydrogen derivatives—ammonia, methanol, and green iron—for hard-to-decarbonize sectors over domestic pipeline infrastructure.

1. INTRODUCTION

Making Data-Driven Decisions to Grow Your Business

REPORT DESCRIPTION
RESEARCH METHODOLOGY AND THE AI PLATFORM
DATA-DRIVEN DECISIONS FOR YOUR BUSINESS
GLOSSARY AND SPECIFIC TERMS

2. EXECUTIVE SUMMARY

A Quick Overview of Market Performance

KEY FINDINGS
MARKET TRENDS This Chapter is Available Only for the Professional EditionPRO

3. MARKET OVERVIEW

Understanding the Current State of The Market and its Prospects

MARKET SIZE: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
CONSUMPTION BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
MARKET FORECAST TO 2035

4. MOST PROMISING PRODUCTS FOR DIVERSIFICATION

Finding New Products to Diversify Your Business

TOP PRODUCTS TO DIVERSIFY YOUR BUSINESS
BEST-SELLING PRODUCTS
MOST CONSUMED PRODUCTS
MOST TRADED PRODUCTS
MOST PROFITABLE PRODUCTS FOR EXPORT

5. MOST PROMISING SUPPLYING COUNTRIES

Choosing the Best Countries to Establish Your Sustainable Supply Chain

TOP COUNTRIES TO SOURCE YOUR PRODUCT
TOP PRODUCING COUNTRIES
TOP EXPORTING COUNTRIES
LOW-COST EXPORTING COUNTRIES

6. MOST PROMISING OVERSEAS MARKETS

Choosing the Best Countries to Boost Your Export

TOP OVERSEAS MARKETS FOR EXPORTING YOUR PRODUCT
TOP CONSUMING MARKETS
UNSATURATED MARKETS
TOP IMPORTING MARKETS
MOST PROFITABLE MARKETS

7. PRODUCTION

The Latest Trends and Insights into The Industry

PRODUCTION VOLUME AND VALUE: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
PRODUCTION BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)

8. IMPORTS

The Largest Import Supplying Countries

IMPORTS: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
IMPORTS BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
IMPORT PRICES BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)

9. EXPORTS

The Largest Destinations for Exports

EXPORTS: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
EXPORTS BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)
EXPORT PRICES BY COUNTRY: HISTORICAL DATA (2012–2025) AND FORECAST (2026–2035)

10. PROFILES OF MAJOR PRODUCERS

The Largest Producers on The Market and Their Profiles

11. COUNTRY PROFILES

The Largest Markets And Their Profiles

This Chapter is Available Only for the Professional Edition
PRO

11.1

United States