What is driving the European hydrogen sector?

Experts Fei Wu, Ksenia Tolstrup, and Marisú Mangino Rivas guide you through the regulatory and investment developments leading up to 2050.

A framework for the nascent sector

So far, a series of regulatory instruments has provided the basis for the nascent EU hydrogen sector. Going forward, the EU sets ambitious targets for 2030 and beyond to drive hydrogen demand and adoption.

Figure 1: Timeline of regulatory instruments for the European hydrogen sector

Targets meet harsh reality

Despite the significant progress made in establishing the regulatory framework and setting future hydrogen targets in the EU, several factors still pose an obstacle to achieving the ambitious goals:

• Renewable H2 still has a (much) higher cost compared to its non-renewable counterparts.
• Economic downturn is putting competitive pressure on the European industry.
• Approved EU regulations still need to be implemented nationally, whereas regulatory uncertainty is hindering investments.
• Lack of infrastructure, particularly in H2 transport and storage facilities, makes ambitious EU targets harder to achieve.

Investments boost domestic hydrogen supply and infrastructure

Up to now, hydrogen investments have mainly focused on short-term production (before 2030) and short-distance transport infrastructure.

In Europe, only 3% of the announced hydrogen production projects are operational or under construction. However, large projects such as the latest European Hydrogen Bank Auctions conducted in May 2025 may provide the basis for this number to increase shortly. With over 50% of winning bids, Spain is positioned as a potential leader in renewable H2 projects.

Table 1: Timeline of investments for the European hydrogen sector

Targets alone are not enough

• The Hydrogen and Decarbonised Gases Package, adopted in 2024, introduced a new regulatory framework dedicated to the hydrogen system.
• Developing dedicated hydrogen infrastructure in the EU is another crucial element to spur demand. Read more about it in our next post!
• There is a large gap to be filled between the current investments in hydrogen pipelines and facilities and the hydrogen targets set for 2030 and 2050. The latest EU Hydrogen Bank Auction is a big leap toward achieving them.
• However, the development of the hydrogen sector has not yet kept pace with the ambitious EU targets.

More about this topic? Learn about our work in MosaHYc, a pioneering cross-border hydrogen project. Or reach out to our experts to find out more.