Challenges and Developments in Germany's Green Hydrogen Industry
Quest One's plant near Hamburg employs robotic arms to assemble PEM electrolysers, but demand remains below capacity, leading to layoffs of 20% of its German workforce earlier this year. Despite ambitions, green hydrogen production remains costly, with low-emissions hydrogen—both green and blue—accounting for under 1% of global hydrogen output. Quest One targets a price of €4 per kilogram for green hydrogen, roughly half the current cost in Germany.
Industry experts note a mismatch between demand patterns and sectors in need; chemicals, steel, and shipping have significant hydrogen requirements, whereas usage like heating buildings or light road transport are less efficient applications. Meanwhile, critics point to concerns about Quest One's connections to fossil fuel firms and automakers. Quest One is part of Volkswagen through Everllence, a subsidiary reportedly under consideration for sale as Volkswagen reviews its strategic options.
Germany's hydrogen infrastructure plans include pipelines originating from the Port of Hamburg and salt cavern storage in Lower Saxony managed by Storengy Deutschland; however, these facilities are unlikely to become operational before the 2030s. Additionally, hydrogen might be transported internationally as ammonia via cross-border networks to countries such as India, Saudi Arabia, Chile, and Namibia, although transport efficiency losses are a challenge.
While Germany continues to regard hydrogen as essential for its climate targets, it is easing ambitions specifically for green hydrogen. The industry is calling for greater government support in order to effectively compete with China, where firms hold about 60% of global electrolyser capacity. Market uncertainties have slowed progress, exemplified by the cancellation of 52 low-carbon or renewable hydrogen projects within 18 months and Statkraft's pause on new green hydrogen ventures as of May 2025.
