Germany's push to lead in the green hydrogen sector is facing a critical countdown.
In a pristine, quiet manufacturing facility near Hamburg, northern Germany, cutting-edge robots are poised to assemble electrolyser parts with precision and speed. These machines, which split water into oxygen and hydrogen using proton exchange membranes, represent the forefront of green hydrogen technology developed by Quest One.
The robotic arms in this factory outperform human workers in terms of speed and reliability, yet the factory’s full potential remains underused. Demand for electrolysers falls far short of what the plant can produce, leading to an unsettling gap between production capacity and orders.
Quest One’s internal staffing numbers reflect this disparity. The facility is equipped to handle nearly twice the current employee count, but earlier this year, the company had to cut its German workforce by 20%. Nima Pegemanyfar, Quest One’s executive vice president responsible for customer relations, bluntly admits, “It’s not supply that’s the issue — demand is lagging.”
This slow demand is largely due to the high cost of green hydrogen — hydrogen produced by electrolysis powered by renewable energy — which remains more expensive compared to hydrogen derived from fossil fuels. Globally, low-emissions hydrogen, which includes green hydrogen and grey hydrogen (made from natural gas with carbon capture), constitutes less than 1% of total hydrogen production.
Expanding production is key to reducing green hydrogen’s price, but many initiatives remain stuck on a small scale. Quest One aims to bring down the cost to around €4 per kilogram, nearly half of today’s German price, but this ambitious target is a challenge.
The problem runs deeper than just supply and demand figures. There’s also a disconnect between the industrial sectors most urgently needing green hydrogen — such as chemical manufacturing, heavy steel production, and shipping — and those uses that gain more public attention but are less practical or competitive.
Christian Stöcker, a communication professor at Hamburg University of Applied Sciences, criticizes the focus on hydrogen for heating homes and powering vehicles. He explains that compared to existing technologies like heat pumps and electric vehicles, hydrogen would be inefficient and impractical. He also raises concerns about the involvement of fossil fuel companies and car manufacturers in the green hydrogen arena, suggesting they might use it to justify their existing fossil fuel operations.
Quest One itself is under the Volkswagen Group umbrella, which reportedly may sell Everllence, its owned company that includes Quest One, though Volkswagen has neither confirmed nor denied this. A company spokesperson said, “We are currently evaluating strategic options for Everllence.”
Making green hydrogen cost-competitive hinges heavily on government policies, industry leaders say. Without strong regulatory support, the sector risks stalling and wasting the infrastructure already under development.
This infrastructure involves a new hydrogen pipeline network planned to stretch from the Port of Hamburg across northern Germany, linking hydrogen producers to potential industrial users. Underground storage facilities are also in the works, such as salt caverns in Lower Saxony being converted by Storengy Deutschland to hold hydrogen safely deep underground.
Storengy believes that converting surplus renewable electricity into hydrogen for storage is the most effective way to balance energy demand, enabling usage during high-need seasons like winter. However, operating these facilities won’t start until the 2030s at the earliest, given the complexity and costs.
Plans are also underway to establish international hydrogen transport links—from Germany to far-flung suppliers in India, Saudi Arabia, Chile, and Namibia. Hydrogen can be transformed into ammonia for easier shipping, but this process causes efficiency losses, especially when reconverting back to hydrogen at the destination.
There is also a mounting ethical debate surrounding the environmental and cultural impact of developing hydrogen export sites in other countries, potentially widening energy access inequality between supplier nations and European consumers.
Germany’s government maintains that hydrogen is indispensable for meeting climate goals but has toned down its green hydrogen ambitions due to rising costs. Meanwhile, many German green hydrogen companies call for stronger governmental backing to enhance domestic industry and energy security, especially in competition with China, which dominates 60% of the world’s electrolyser manufacturing capacity.
Ivana Jemelkova, CEO of the Hydrogen Council, admits that current green hydrogen demand falls short of the high hopes set five years ago. Over the past year and a half, 52 low-carbon and renewable hydrogen projects have been cancelled. “That’s a lot of setbacks,” she says.
Examples abound: in May 2025, Norway’s Statkraft scrapped new green hydrogen projects amidst market uncertainty, opting to focus on fewer technologies instead.
But Jemelkova remains cautiously optimistic: “While some individual ventures may falter, the overall industry is still expanding. The mania is gone, but this isn’t a sign of failure either.”
For German firms ready to produce, store, and distribute green hydrogen, the pressure to establish a viable market is intense. Waiting indefinitely for external support could jeopardize their future.
Are policymakers prepared to act decisively to revive Germany's green hydrogen ambitions? Or will the country watch as others soar ahead in this transformative energy frontier? What’s your take on the prospects and challenges facing green hydrogen in Germany? Share your thoughts below!
