© BMWK

Germany has taken a big step in its plan to build a national hydrogen pipeline. The government has sent €172 million to pipeline companies to help start construction. This is part of a €24 billion loan program to support the new Hydrogen Core Network (HCN)—a 9,040-kilometer system of pipelines that will carry hydrogen across the country and to neighboring nations.

Most of the network (about 60%) will use old natural gas pipes, while the rest will be newly built. The goal is to have a fully working system by 2032, supplying hydrogen to industries like steel, chemicals, and heavy transport.

“With the amortisation account, we have developed an innovative financing concept that encourages private-sector investment and enables the long-term full financing of the hydrogen core network through network fees,” said Economy and Climate Minister Robert Habeck.

Hydrogen Sources: A Practical Approach

Germany wants to use green hydrogen—made with renewable energy—but there won’t be enough at first. Finance Minister Dr. Jörg Kukies says Germany must be “practical” and use other types of hydrogen too, such as blue hydrogen (made from natural gas with carbon capture) and possibly grey hydrogen (made from natural gas without carbon capture).

This idea has sparked debate. Some say using fossil-based hydrogen could slow down climate progress. Others argue that getting the network running is more important in the short term, as it will help create demand and make clean hydrogen cheaper in the future.

Government Helps Reduce Risk for Investors

The new pipelines will be built and run by private companies, which will eventually make money from businesses that pay to use them. But in the early years, there won’t be enough customers to cover the costs. To keep the project moving, the government will cap network fees and fill the financial gap with payments from a special account.

Companies can borrow from this fund and will pay the money back once hydrogen transport starts generating income. The government is backing 76% of the financial risk, with pipeline operators responsible for the remaining 24%.