Resonant scatterers such as hydrogen adatoms can strongly enhance the low energy density of states in graphene. Here, we study the impact of these impurities on the electronic screening. We find a two-faced behavior: Kubo formula calculations reveal an increased dielectric function $varepsilon$ upon creation of midgap states but no metallic divergence of the static $varepsilon$ at small momentum transfer $qto 0$. This bad metal behavior manifests also in the dynamic polarization function and can be directly measured by means of electron energy loss spectroscopy. A new length scale $l_c$ beyond which screening is suppressed emerges, which we identify with the Anderson localization length.
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