Germany Energy Industry: LNG and Hydrogen
Market Overview & Challenges
Die Energiewende, Germany’s energy transition to move towards green energy, has been a driving source of German energy policy, including the phasing out of nuclear energy and continued investments into solar, wind and biofuels.
In 2023, Germany sourced 56 percent of its electrical power from renewable sources. It was the first year in which renewable electricity was consumed more than conventional, fossil fuel-based electricity on a monthly basis. However, Germany still remains largely dependent on fossil fuel energy sources. Foreign suppliers make up 95 percent of German natural gas consumption.
In 2020, 55 percent of Germany’s natural gas came from Russia. 40 percent of Germany’s remaining natural gas consumption was imported from Denmark, Norway, Belgium, and the Netherlands. In 2022, Germany’s new foreign relations and energy security policy following the Russian re-invasion in Ukraine, die Zeitenwende, reinvigorated their advances towards a more diversified energy supply. Under the policy, Germany ceased all imports of Russian natural gas. In 2023, 7.1 billion cubic feet of United States LNG were exported to EU countries per day, estimated to be valued over 14.6 billion USD. The exports accounted for 48 percent for EU-wide imports.
• Natural gas makes up the second largest form of energy consumed by Germany (Energy Institute – Statistical Review of World Energy, 2024). It totals to 26.4 percent of energy consumption, at approximately 756.6 Terawatt-Hours, and is significant in industrial production and heating.
Opportunities and Challenge—LNG and Hydrogen
Germany is actively scouting for partner companies and investors to diversify its supply chain, invest in new energy projects, and help it to transition towards greener energy. The German Federal Government is, however, hesitant on developing overreliance on new LNG exporters. Still, the Federal Ministry for Economic Affairs and Climate Action considers natural gas to be an important energy source. Thus, Germany has been chartering new, floating LNG terminals to take in imports.
• To continue attracting United States energy in the market, the German government has been signing long term contracts, ranging from 15 to 20 years, with American natural gas companies.
• With large scale maritime delivery, the following LNG sectors are expected to attract more investors: bunker supply, LNG depot, storage, off grid, and LNG fuels.
• The Federal Government chartered the Hanseatic Energy Hub—a terminal for LNG in Stade—which is set to go into operation in 2026. A prominent United States investment company holds significant shares in the project.
It is important to note that the Ministry does not include natural gas as a potential long-term energy source, but rather, a medium-term solution. Likewise, concerns over the various costs associated with imports of LNG fuels—including steep infrastructural development and transportation costs, as well as environmental implications—are repeatedly raised.
The German government had discussed hydrogen energy projects before Russia’s re-invasion, but these projects were not intended to materialize for another 10 to 20 years. After the re-invasion, hydrogen was thrusted to the forefront of Germany’s clean energy transition agenda. The acceleration made Germany the global vanguard of the green hydrogen market, but also highlighted the industry’s prematurity.
Hydrogen-sourced energy in Germany is a new concept, and thus lacks critical infrastructure, as well as regulatory and safety standards for production methods. The German government is interested in developing facilities for clean hydrogen and importing large quantities of intermediate goods. In 2024, the Federal Ministry for Economic Affairs and Climate Action secured an initial supply contract for green ammonia from a company based in the United Arab Emirates. The largest issue, however, are steep costs associated with clean hydrogen—there is a danger that without the government’s subsidies, the hydrogen industry is too costly. In any case, Germany will be unable to cover the expected increase in demand for hydrogen energy in hard-to-abate industrial sectors domestically and is looking to import up to 70 percent of its demand from abroad.
In 2020, Germany announced investments of 9.8 billion USD in hydrogen energy, including conducting research and development, and building hydrogen plant facilities. Germany has earmarked 17 billion USD in subsidies to accelerate the transition of gas power plants to hydrogen processors.
• Germany sees its existing underground caverns as potential energy storage solutions. The German National Hydrogen Council expects a considerable increase for storage demand from 2030 to 2050.
• In May 2024, the German cabinet agreed on the new “Hydrogen Acceleration Law,” which plans to fast-track permits for hydrogen projects, including production, storage, infrastructure, and transport.
Relevant Trade Shows
Hydrogen Technology Expo: October 23 – 24, 2024 at Hamburg, Germany
E-World of Energy & Water: February 11 – 13, 2025 at Essen, Germany
The Smarter E-Europe: May 6 – 9, 2025 at Munich, Germany
Contact:
Office.berlin@trade.gov
Trade.gov/germany