Hydrogen is crucial for the EU’s sustainable prosperity—but vision alone won’t get us there
The EU is in pursuit of ‘sustainable prosperity’ – an elusive future state in which European industry retains a significant share of the global economy, provides quality jobs to the local population, and does not exacerbate global warming. Clean hydrogen, as a zero-carbon energy carrier, is an indispensable enabler of such a future. But the gap between aspiration and achievement in the EU’s clean hydrogen strategy is undeniable. As the European Commission delivers its flagship Clean Industrial Deal, it must shift from lofty goals to practical, grounded policies: prioritising technological inclusivity, high-impact end uses, and centralised production-consumption hubs.
Hydrogen holds immense potential to decarbonise hard-to-electrify sectors such as chemicals and steel production, shipping, and aviation, forming an essential part of a broader strategy to achieve climate neutrality by 2050. Yet, the numbers tell a sobering story. Five years from the publication of the EU Hydrogen Strategy, electrolytic hydrogen—produced via renewable energy—accounts for less than 0.4% of Europe’s total hydrogen supply. Ambitious targets to produce 10 million tonnes of renewable hydrogen domestically and to import 10 million more by 2030 seem increasingly unattainable. Projects are routinely delayed or cancelled due to average costs of €7 per kilogram for clean hydrogen, far above the €3.5 per kilogram price of conventional unabated hydrogen. Imports, once seen as a cornerstone of the RePowerEU Plan, face similar hurdles due to high costs, energy inefficiencies, and embedded emissions.
Clean hydrogen is too valuable a commodity to constrain its supply by confining it to a single production pathway. Europe’s overwhelming focus on renewables-based hydrogen—often referred to as ‘green hydrogen’—limits scalability and affordability. Clean hydrogen, defined by its low lifecycle emissions, can also be produced through pathways such as carbon capture-enabled reforming processes, methane pyrolysis, and nuclear energy-powered electrolysis. When governed by robust emissions standards, these methods can achieve comparable climate benefits.
Expanding the production portfolio is not just about feasibility; it is about pragmatism. Renewable hydrogen alone cannot meet Europe’s climate goals within the required time frame or at a competitive cost. By opening the door to multiple clean hydrogen technologies, policymakers can accelerate deployment, foster innovation, and reduce dependency on imports.
Equally important is using hydrogen where it is needed most. Not all applications of hydrogen deliver the same climate impact. And given the limited quantities anticipated in the near term, its use should be prioritised in sectors where it has the greatest potential to cut emissions. Since hydrogen is already a critical industrial feedstock—and existing EU production emits around 50 million tons of CO₂ per year—clean hydrogen should be prioritised for these processes to maximise emissions reductions. Industries like chemicals and steel production, shipping, and aviation stand to benefit significantly from hydrogen’s properties, making them ideal candidates for investment and support. Conversely, using hydrogen in sectors like residential heating or passenger vehicles lacks clear justification, potentially wasting the true decarbonisation potential of this scarce resource. Policymakers should guide these sectors toward alternatives such as direct electrification, which are more efficient and cost-effective, and incentivise project developers to focus on the ‘no regrets’ sectors that need clean hydrogen the most.
Infrastructure is another critical piece of the puzzle. Hydrogen’s physical properties—low energy density, instability, and propensity to leak—make its transportation and storage complex and expensive. Localised production near consumption sites is the most viable solution. Where long-distance transport is necessary, it must be carefully managed to minimise costs and energy losses, with priority given to sectors like fertilisers that can directly substitute existing inputs. The EU needs a coordinated plan to ensure that hydrogen moves efficiently from production to end-use applications, supporting regional supply chains and reducing reliance on long-distance imports.
The cost of clean hydrogen also remains a significant barrier that must be addressed. Recent reports show that the average cost of electrolytic hydrogen is nearly double that of unabated hydrogen, with some projects reporting costs as high as €17 per kilogram. While the EU Hydrogen Bank is one step in the right direction, it is insufficient to close the funding gap. Additional measures, including subsidies, targeted project funding, and public-private partnerships, will be essential to success. Policymakers must also support offtake agreements for priority sectors to stabilise the market and ensure long-term sustainability.
The EU has an opportunity to lead, but only if it acts decisively. The new Clean Industrial Deal agenda provides a crucial moment to revise the EU Hydrogen Strategy. Policymakers should adopt a pragmatic roadmap that aligns Member State plans with realistic targets, measurable milestones, and a clear focus on emissions reductions. This roadmap must prioritise high-impact sectors, broaden production pathways, and establish the financial and regulatory frameworks needed to make clean hydrogen a viable and cost-competitive climate solution for those sectors that need it most.
The time for impractical ambition is over – we need realism to make meaningful progress on clean hydrogen in Europe. Hydrogen can drive Europe’s sustainable prosperity ambitions, but only if policymakers embrace a grounded, sector-specific approach. A revised strategy that translates vision into action is not just an opportunity—it is an imperative. Europe’s future depends on it.
