Hydrogen is no longer regarded solely as an energy carrier of the future: it is progressively becoming an operational and regulated component of the energy system, supported by both public and private investment.
In recent years, Europe has taken a decisive step towards building a hydrogen economy. What still appeared to be a largely experimental sector until 2020 has become one of the pillars of Europe’s industrial and climate strategy.
Hydrogen is no longer regarded solely as an energy carrier of the future: it is progressively becoming an operational and regulated component of the energy system, supported by both public and private investment.
From the development of one of the most advanced regulatory frameworks at international level to major funding programmes and the emergence of industrial-scale facilities, the 2024–2026 period represents a phase of acceleration that is set to reshape part of Europe’s energy system.
The European Hydrogen Strategy, adopted in 2020, outlined a development pathway divided into several phases.
The first phase, covering the period from 2020 to 2024, envisaged the installation of at least 6 GW of electrolysers and the production of one million tonnes of renewable hydrogen per year.
The second phase, from 2025 to 2030, aims to expand production capacity, establish a fully functioning European market and develop the first dedicated infrastructure.
These targets are complemented by the REPowerEU plan, which aims to produce 10 million tonnes of renewable hydrogen within the European Union and import a further 10 million tonnes by 2030.
Hydrogen’s strategic importance is underlined by a significant figure: in 2022, it accounted for less than 2% of European energy consumption, while approximately 96% of production still came from fossil fuels.
To decarbonise heavy industry, the chemical sector and forms of transport that are more difficult to electrify, Europe is therefore working to consolidate:
Europe has launched a coordinated, multi-level funding effort involving EU institutions, Member States and private investors.
Fifteen Member States have included hydrogen-related projects in their National Recovery and Resilience Plans, with approximately €9.3 billion already allocated.
At the same time, the European Clean Hydrogen Alliance has identified more than 750 initiatives within the European project pipeline.
According to leading industry analyses, more than €17 billion may already have been committed within the European Union. This positions Europe among the world’s most active regions in terms of current and planned investment across the hydrogen supply chain.
One of the most relevant instruments is the European Hydrogen Bank, which was established to support renewable hydrogen production through competitive auctions.
The mechanism aims to bridge the gap between current production costs and the prices the market is willing to pay. The first auctions recorded competitive premiums, providing an initial indication of the supply chain’s progressive development.
Between 2026 and 2030, numerous large-scale facilities and the first hydrogen valleys are expected to become operational. These are geographical areas where hydrogen production, distribution and use are integrated within a single ecosystem.
Projects with a capacity of more than 100 MW are concentrated mainly in:
Green hydrogen is produced through water electrolysis powered by renewable energy, often supplied by large wind and solar installations.
Blue hydrogen is produced through methane reforming using SMR or ATR technologies, combined with carbon capture and storage systems. This solution is mainly regarded as a transitional technology for existing industrial facilities.
The main areas of application include:
The 2024–2026 period is characterised by the development of a regulated hydrogen market, an essential step in attracting capital and reducing industrial risk.
The main regulatory developments include:
The package approved in 2024 introduces a harmonised framework for networks, infrastructure access, market functioning and certification systems.
The delegated acts adopted between 2023 and 2025 define the criteria for renewable hydrogen production and the methodologies used to calculate emissions associated with low-carbon hydrogen.
Member State strategies are progressively converging towards common standards, incentive mechanisms and infrastructure coordinated at European level.
The European Union now has one of the most comprehensive regulatory frameworks at international level. This may represent a competitive advantage during the industrial growth phase, provided that the rules are accompanied by reasonable permitting timelines and effective demand.
According to the European Union Agency for the Cooperation of Energy Regulators, the European hydrogen market is still at an early stage, but is beginning to show signs of development.
Production through electrolysis is increasing, while the first market mechanisms and price-setting tools are beginning to emerge.
European Hydrogen Bank auctions may contribute to price discovery, making costs and prices across the new supply chain more transparent.
Several challenges nevertheless remain:
Europe could consume approximately five million tonnes of clean hydrogen per year by 2030. Reaching this level will also depend on the implementation of instruments such as the RED III Directive, the European Emissions Trading System and the Carbon Border Adjustment Mechanism.
These measures will help determine whether hydrogen can become competitive in the most energy-intensive industrial sectors.
Green hydrogen is produced through water electrolysis, a process that separates hydrogen from oxygen using electricity.
When the electricity used comes entirely from renewable sources, the process makes it possible to produce hydrogen with very low operational emissions.
The main technologies currently available are:
Green hydrogen can:
Production costs remain high, but they may decrease as installed capacity expands, economies of scale are achieved and technologies continue to develop.
Blue hydrogen is produced through methane reforming combined with carbon capture and storage technologies.
It may represent a transitional solution for replacing some of the grey hydrogen currently used in existing industrial facilities, particularly in areas where green hydrogen production is not yet sufficiently developed.
It is not, however, a completely emissions-free solution. Its climate impact depends on the efficiency of carbon capture systems and on the management of methane emissions across the entire supply chain.
Considering only known projects with a capacity of more than 100 MW, European hydrogen production could increase significantly by 2030.
The estimates cited indicate a possible increase from approximately 38,000 tonnes per year in 2026 to more than two million tonnes in 2030.
This remains a partial assessment, as it takes into account only a proportion of the more than 750 initiatives identified within the European project pipeline.
Actual growth will depend on whether announced projects are able to reach final investment decisions, secure the necessary permits and obtain long-term offtake agreements.
Hydrogen is playing an increasingly important role in the European Union’s industrial and climate strategy.
A structured regulatory framework, rising investment, the development of new industrial projects and the construction of the first dedicated infrastructure are creating the conditions for the emergence of a European market.
The path ahead nevertheless remains complex. Hydrogen’s competitiveness will depend on lower production costs, the availability of renewable energy, growth in industrial demand and the development of the necessary infrastructure.
Rather than being a fully established technology, hydrogen currently represents a strategic supply chain that is still under construction and is expected to play an important role in Europe’s industrial competitiveness and energy security over the coming decades.
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