Germany's Hydrogen Bet: €19 Billion in Pipelines, a Steel Industry in Limbo, and the Question Nobody Wants to Answer

In February 2026, GASCADE announced it had converted 400 kilometres of high-pressure natural gas pipeline — running from Lubmin on the Baltic coast to Bobbau in Saxony-Anhalt — into one of Germany's first operational hydrogen transport corridors. The infrastructure is live and available to the market. A few weeks earlier, the federal government disbursed the first €172 million from its Amortisationskonto (AMKG) to hydrogen core network operators, the opening instalment on what will become Europe's largest hydrogen pipeline system.

These are real milestones. They are also, right now, somewhat ahead of the market they were built to serve.

Germany's hydrogen strategy sits at a peculiar inflection point in 2026. On the supply and infrastructure side, the country is executing at a scale no other European nation can match — 9,040 km of approved pipeline, €18.9 billion in planned investment, first pipelines already converted. On the demand side, the picture is murkier. Steel companies that were supposed to be anchor customers are delaying. Electrolyzer manufacturers report surging capacity alongside collapsing orders. And green hydrogen priced at €4–5/kg in government models is being offered to steelmakers at closer to €9–10/kg.

The question nobody in Berlin or Düsseldorf wants to answer plainly: what happens if you build the network and the molecules don't come?

The Core Network: From Approval to First Flows

The Hydrogen-Kernnetz (hydrogen core network), approved by the Federal Network Agency (Bundesnetzagentur) on 22 October 2024, is the single most consequential piece of hydrogen infrastructure anywhere in Europe. At 9,040 km of approved pipeline — roughly 60% converted from existing natural gas lines, 40% new construction — it will connect production sites, import terminals, underground storage caverns, and industrial consumers across all 16 German federal states by its target completion date of 2032.

The numbers are worth pausing on. Feed-in capacity of approximately 100 GW. Feed-out capacity of 87 GW. Some 495 identified connection points linking producers, consumers, and import hubs. Investment of €18.9 billion, financed by the private sector but de-risked through a government-backed tariff cap that prevents early users from bearing the full cost of an under-utilised network. The government expects the AMKG amortisation account to be balanced by 2055 as network utilisation ramps up.

The phased build-out is already underway. In 2025, 507 km of pipeline were converted from natural gas. In 2026, a further 142 km will be completed. GASCADE's 400 km Lubmin-to-Bobbau corridor — part of its "Flow – making hydrogen happen" programme — is the most visible early achievement, creating a north-south hydrogen transport axis that connects Baltic import infrastructure with central German industrial regions. ONTRAS, which is building approximately 600 km of hydrogen transport pipelines in central and eastern Germany, has already connected its first customer: TotalEnergies' Mitteldeutschland refinery.

Gasunie Deutschland is contributing roughly 10% of the core network through its Hyperlink project, connecting import, production, and storage sites in Lower Saxony and Bremen with industrial demand centres. About 70% of Hyperlink involves converting existing gas pipelines. Both Hyperlink 1 and 2 received EU approval under the IPCEI Hy2Infra wave in February 2024, with German federal and state co-funding confirmed in July 2024.

The capacity reservation framework, published in October 2025, allows market participants to make binding reservations for hydrogen transport capacity starting in 2026 — initially within defined regional clusters, with cross-cluster transport enabled later. This is the kind of institutional plumbing that rarely makes headlines but matters enormously. It gives project developers enough certainty to commit to supply agreements, and gives industrial consumers confidence that the molecule they've contracted will actually reach them.

For companies evaluating the German hydrogen market, SourceRegister's [directory of hydrogen companies in Germany](https://sourceregister.eu/de/hydrogen) provides an overview of active players across the value chain — from electrolyzer manufacturers and pipeline operators to project developers and engineering firms.

The Import Equation: Wilhelmshaven, Brunsbüttel, and the Ammonia Bridge

Germany's updated National Hydrogen Strategy is explicit: the country will not produce enough hydrogen domestically. Even with the electrolyzer target doubled to 10 GW by 2030, imports — initially ship-based as ammonia, eventually by pipeline from Europe and North Africa — will need to cover around two-thirds of demand.

The physical infrastructure for seaborne imports is taking shape at Germany's northern ports. At Wilhelmshaven, HES International signed a connection agreement with pipeline operator OGE in December 2025, securing an option to link its tank terminal to the Wilhelmshaven Coastal Line (WKL) — a core pipeline segment running south to the Ruhr industrial district. Construction starts in 2026, with commissioning targeted for the end of 2027. HES is positioning Wilhelmshaven as a multi-molecule import hub handling hydrogen carriers, CO₂ export for CCS, and e-fuels like synthetic sustainable aviation fuel.

At Brunsbüttel in Schleswig-Holstein, the onshore LNG terminal is on track for a 2026 start, with the adjacent ammonia terminal expected to begin operations around the same time. The terminal was designed to be hydrogen-ready from day one, and it plans to import ammonia as early as 2026, with the infrastructure ultimately capable of cracking ammonia back into hydrogen for pipeline injection.

Perhaps the most intriguing import project is at Lubmin on the Baltic, where Deutsche ReGas and Norway's Höegh LNG have signed a letter of intent to build what they claim would be the world's first floating ammonia cracker terminal. Ammonia arrives by ship, is cracked on a floating barge into hydrogen and nitrogen, and the hydrogen is fed directly into the core network via GASCADE's converted pipeline. Capacity: up to 30,000 tonnes of hydrogen per year. Target commissioning: end of 2026.

The H2Global import mechanism — Germany's double-auction system for bridging the price gap between global green hydrogen production costs and domestic willingness to pay — delivered its first concrete result in July 2024. Fertiglobe, a UAE-based firm, won the contract to supply at least 259,000 tonnes of green ammonia produced in Egypt, delivered to Germany between 2027 and 2033. The production cost came in at €811 per tonne of ammonia, equivalent to less than €4.50/kg of hydrogen — significantly below the €9–10/kg being quoted in domestic procurement tenders. A second H2Global round worth €3.5 billion is in preparation.

These import projects are essential because they decouple hydrogen availability from the pace of domestic renewable electricity build-out. Germany cannot simultaneously electrify heating, transport, and industry while generating enough surplus renewable power for 10 GW of electrolyzers. Imports resolve the arithmetic. Whether they resolve it fast enough is another matter.

Steel: The Make-or-Break Demand Signal

If the hydrogen core network is the supply-side centrepiece of Germany's strategy, the steel industry is the demand-side one. Steel production accounts for roughly 6% of Germany's total CO₂ emissions. Replacing coal-fired blast furnaces with hydrogen-fed direct reduction iron (DRI) plants paired with electric arc furnaces is the most proven pathway to deep decarbonisation — and the most hydrogen-intensive.

Two companies anchor this transition. Salzgitter AG, through its SALCOS (Salzgitter Low CO₂ Steelmaking) programme, received approximately €1 billion in combined federal and state funding. Stage 1 — a 100 MW electrolyzer, a DRI plant built by Tenova, and an electric arc furnace — is under construction, with production expected to begin in 2027 and a 30% CO₂ reduction target. Salzgitter has already signed offtake contracts with BMW, home appliance makers, and re-rollers for the low-emission steel output.

But Salzgitter's supervisory board decided in September 2025 to postpone stages 2 and 3 of SALCOS by approximately three years. Investment decisions that were planned for 2026 won't now be considered until 2028–2029. The reason, per the company: slower-than-expected hydrogen market development and regulatory changes that politicians promised but haven't delivered. The goal of 95% emissions reduction by 2033 is effectively shelved.

Thyssenkrupp Steel, Germany's largest producer, is building a 2.5 million tonne/year DRI plant in Duisburg — a €1.8 billion project, partially subsidised by North Rhine-Westphalia, that could eliminate 3.5 million tonnes of annual CO₂ emissions. But in March 2025, the company put its green hydrogen procurement tender on indefinite hold. The offered prices, it said, were "significantly higher than assumed." Platts assessed the cost of German green hydrogen production at €9.35/kg in March 2025. Thyssenkrupp's DRI plant will initially run on natural gas — which avoids 50% of blast furnace emissions — with hydrogen switching planned for when supply economics improve.

ArcelorMittal, meanwhile, cancelled its DRI project in Germany entirely in mid-2025, citing unfavourable market fundamentals, after having previously been awarded IPCEI funding for a Hamburg-based project.

The pattern across European green steel is clear: stage 1 investments proceed because governments have committed the subsidy; stages 2 and beyond get delayed because the hydrogen price gap hasn't closed. Companies will build the DRI plants, but they'll run them on natural gas until hydrogen drops below €5–6/kg at the point of delivery. That reality has consequences for everyone in the [hydrogen supply chain in Germany](https://sourceregister.eu/de/hydrogen), from electrolyzer vendors to pipeline operators sizing their capacity needs.

Electrolyzer Manufacturers: Building for a Market That Isn't Buying Yet

Nowhere is the gap between hydrogen ambition and hydrogen reality more visible than in the financial results of Germany's two major electrolyzer manufacturers.

Thyssenkrupp nucera, the Dortmund-based subsidiary and market leader in alkaline water electrolysis, reported €845 million in revenue for fiscal year 2024/25 and returned to a marginal profit of €2 million EBIT after years of losses. But the forward guidance was stark. Green hydrogen segment orders collapsed to just €26 million in 2024/25, down from €356 million the prior year — a 93% decline. Total order backlog fell from €1.1 billion to €600 million. For fiscal 2025/26, management guided green hydrogen segment revenues of €150–220 million, down from €459 million. CEO Werner Ponikwar acknowledged that "the situation on the green hydrogen market became even more difficult" and that "restraint in final investment decisions continues."

The company is leaning on its chlor-alkali business — a legacy electrolysis technology used in chemical manufacturing — to maintain stability while it waits for hydrogen project FIDs to resume. In June 2025, thyssenkrupp nucera acquired key technology assets from Green Hydrogen Systems to strengthen its pressurised alkaline electrolysis capabilities. The company reports more than 3 GW of hydrogen projects underway globally, but the booking cadence has slowed dramatically.

Siemens Energy, the other German electrolyzer heavyweight, introduced a next-generation PEM electrolyzer platform in July 2025 with improved energy conversion efficiency. Its joint venture with Air Liquide operates an electrolyzer stack factory in Berlin with capacity scaling toward 3 GW annually. But Siemens Energy's broader financial recovery — after the Siemens Gamesa wind turbine crisis that required €7.5 billion in state guarantees — has absorbed management attention.

The global electrolyzer market is still projected to grow from $2.08 billion in 2025 to $14.48 billion by 2031. The long-term demand is not in question. What's in question is whether European projects can compete for capital with Asian deployments, where costs are significantly lower.

For the German electrolyzer supply chain, this creates an uncomfortable interregnum: manufacturing capacity has been built, technology has been de-risked, but order books are thinning because downstream customers — steelmakers, chemical companies, refinery operators — are waiting for cheaper hydrogen or clearer regulation before committing.

The Policy Architecture: What's Working and What Isn't

Germany's hydrogen policy stack is, on paper, the most comprehensive in Europe. The National Hydrogen Strategy, updated in 2023, targets 10 GW of domestic electrolyzer capacity by 2030, a nationwide pipeline network by 2032, import terminals at multiple North Sea and Baltic ports, and Carbon Contracts for Difference (CCfDs) to bridge the cost gap for industrial hydrogen adopters. IPCEI funding — nine of the eleven Hy2Infra pipeline projects approved by the EU Commission in February 2024 were led by German companies — provides capital for the infrastructure build-out.

Some of this is working. The core network approval and the AMKG financing mechanism are genuine innovations. The capacity reservation system gives market participants planning security. The H2Global first auction produced competitive pricing for imported green ammonia.

What isn't working is the connection between infrastructure investment and demand activation. The tariff cap prevents early network users from bearing disproportionate grid fees. But the analogous problem on the demand side remains unsolved: who pays the premium for green hydrogen when natural gas-based DRI is cheaper and carbon pricing under the EU ETS and CBAM hasn't yet created a sufficient cost penalty for the conventional route?

CBAM enters its definitive phase in 2026, with full carbon pricing on steel imports starting in 2027. This should make green steel more competitive — but steelmakers are sceptical that enforcement will be rigorous enough to prevent circumvention. Thyssenkrupp Steel's DRI plant in Duisburg was pushed back 12 months because the power grid reinforcement needed to run it won't be completed on time. Ambition outpacing the physical capacity to deliver electrons: a recurring theme in the German energy transition.

Where Germany Stands, Plainly

Germany has done something no other country has managed: approved, funded, and started building a nationwide hydrogen pipeline network that can connect importers, producers, storage, and consumers at continental scale. The first 400 km are operational. The financing mechanism is innovative. The regulatory framework for network access is in place.

But infrastructure is a necessary condition, not a sufficient one. Only 4% of global hydrogen projects have reached final investment decision, according to Hydrogen Europe's Q1 2025 quarterly report. Germany's steelmakers — the industrial anchor tenants the whole strategy was designed around — are running their new DRI plants on natural gas and deferring the hydrogen switch. The country's leading electrolyzer manufacturer saw green hydrogen orders drop 93% in a single year.

None of this means the strategy is wrong. The core network will be needed, and by the time CBAM is fully phased in and carbon prices reach levels that genuinely penalise blast furnace steelmaking, companies connected to the hydrogen grid will have a structural advantage over those that aren't. The import infrastructure at Wilhelmshaven, Brunsbüttel, and Lubmin will matter enormously once global green hydrogen production scales — which it will, given the deployment trajectories in the Middle East, North Africa, and Australia.

The risk is timing. Germany is spending billions now on infrastructure that won't see meaningful utilisation until the late 2020s. If the hydrogen market ramp-up is delayed further — by slow permitting, insufficient renewable build-out, continued high prices, or weakened CBAM enforcement — the carrying costs become a political liability. The government assumes the AMKG will balance by 2055. That's a 30-year bet on a market that, in 2026, barely exists.

For procurement managers, sustainability officers, and business development teams in the hydrogen and hard-to-abate industrial sectors, Germany remains the most important market in Europe. The infrastructure is being built. The regulatory framework favours early movers. The [hydrogen companies operating in Germany](https://sourceregister.eu/de/hydrogen) span the full value chain from production through transport to end use. The opportunity is real — but it's on a longer timeline than anyone expected, and the companies that thrive will be those that can survive the gap between today's costs and tomorrow's market.