Six years after the EU made renewable hydrogen a cornerstone of its climate and industrial strategy, the laws are written and the subsidies are flowing. Production, however, remains a small fraction of what was promised, and Brussels is now reconsidering the targets themselves.
Russia’s full-scale invasion of Ukraine in February 2022 exposed how heavily Europe depended on imported fossil energy. According to Eurostat, more than 60% of the energy the EU used in 2022 came from outside the Union. Direct electrification with wind and solar can replace much of that, but not all of it. Steelmaking, fertiliser and chemicals production, refining and parts of heavy transport need either a chemical feedstock or very high process temperatures. For these sectors, renewable (“green”) hydrogen produced by electrolysis powered by renewable electricity is the EU’s main fossil-free option.
So where does that project stand today?
The short answer: far behind plan
The gap between ambition and reality is large. The EU’s 2020 hydrogen strategy targeted 6 GW of electrolysers by 2024 and 40 GW by 2030. As of the first quarter of 2026, around 648 MW of electrolysis capacity was operating in Europe, and roughly 4 GW had reached a final investment decision. Industry body Hydrogen Europe estimates that Europe could produce about 1.7 million tonnes of hydrogen from electrolysis by 2030, which implies 10–20 GW of operational electrolysers. That compares with the REPowerEU goal of 10 million tonnes of domestic production by 2030.
Momentum does exist. Investment grew 35% over the past year, and more than 4 GW of electrolysis capacity is now under construction, mainly because member states have transposed the RED III transport targets. The overall picture, though, is of a market still struggling to get started.
The targets on paper
The legal framework grew in three steps. The July 2020 hydrogen strategy set the first capacity targets. REPowerEU (May 2022) raised the ambition to 20 million tonnes of renewable hydrogen a year by 2030, half produced in the EU and half imported. The revised Renewable Energy Directive, RED III, adopted in October 2023, turned part of this into binding law. 42% of the hydrogen used in industry must be renewable fuel of non-biological origin (RFNBO) by 2030, rising to 60% by 2035. In transport, RFNBOs must reach at least 1% of energy consumption by 2030, as part of a combined 5.5% sub-target with advanced biofuels.
Implementation is lagging
Binding targets only work once they are written into national law, and that process has been slow. According to BloombergNEF, only 12 of the 27 member states had legislated RFNBO quotas almost a year after the May 2025 deadline, and most national penalties are too low to drive real compliance. In late April 2026, the Commission referred Greece, Malta and Portugal to the EU Court of Justice for failing to transpose RED III, in addition to 26 infringement procedures for incomplete implementation.
Germany is an exception. National legislation adopted in April 2026 sets a transport trajectory rising from 0.1% in 2026 to 10% by 2040, backed by a €14/kg penalty for non-compliance, the strongest in the EU. The industry target is harder to implement. Governments have been reluctant to impose meaningful industrial quotas, mainly because of high energy prices and competitiveness concerns.
The money: plenty of demand for subsidies, fewer projects that get built
The European Hydrogen Bank, funded through the EU Innovation Fund, pays producers a fixed premium per kilogram of hydrogen for ten years. Its first auction, with results in April 2024, awarded €720 million to seven projects in Spain, Portugal, Finland and Norway. The third round, whose results were published in May 2026, awarded €1.09 billion to nine projects, with winning bids between €0.57 and €3.49 per kg. That auction attracted 58 bids from 11 countries and was more than six times oversubscribed against its €1.3 billion budget.
Winning an auction does not guarantee that a plant gets built. Of the 15 winners of the second auction, which concluded in May 2025, only six went on to sign grant contracts. This year’s winners are expected to sign in the fourth quarter of 2026, and must then reach financial close within two and a half years and start operating within five.
Alongside the Hydrogen Bank, the Commission has approved four waves of state aid under the IPCEI framework (Important Projects of Common European Interest):
- Hy2Tech (July 2022, €5.4 billion) for technology and electrolyser manufacturing
Hy2Use (September 2022, €5.2 billion) for industrial applications
Hy2Infra (February 2024, €6.9 billion) for infrastructure
Hy2Move (May 2024, about €1.4 billion) for mobility
The rulebook is being rewritten
Much of the debate in 2026 concerns the EU’s own definition of green hydrogen. The 2023 delegated act requires producers to use electricity from new renewable plants (“additionality”) and eventually to match production to renewable output hour by hour. Industry and several governments argue that these rules make European green hydrogen too expensive. In late March 2026, energy ministry officials from Germany, Spain, the Netherlands, Austria and other countries asked the Commission to finish its review of the rules in 2026 rather than waiting for the review scheduled for 2028. The Commission responded in April by announcing that it would bring the revision forward. Analysts expect the stricter requirements to be delayed until 2032–2033, which could cut the cost of renewable hydrogen by around €2/kg. As of July, industry groups were still urging the Commission to complete the amendment by the end of 2026.
The bigger question is what happens after 2030. The Commission is preparing a new version of the directive, RED IV, due to be adopted by the end of 2026, to align renewable energy policy with the EU’s 2040 climate target. Draft documents reported by Argus in September suggest the Commission’s preferred option is to drop binding national hydrogen targets and replace them with a non-binding EU-wide objective of 8 million tonnes a year by 2040. Low-carbon electrolytic hydrogen from nuclear power would also count toward it. The existing 2030 and 2035 obligations would not be affected by the draft. A revised EU Hydrogen Strategy is also expected this year.
Industry pushes back
That prospect prompted a strong reaction from the industry. On 24 September 2026, 170 companies from across the value chain wrote to the Commission urging it to keep the binding RFNBO targets beyond 2030. They argued that removing them would not simplify anything but would waste six years of work, shake the market, penalise first movers and undermine trust in EU climate policy. Among the signatories was the Paris-based hydrogen mobility company HysetCo. Its chairman, Loïc Voisin, said the sector needs a strong market signal and a stable regulatory framework after 2030. The signatories estimate that meeting the existing RED III targets would unlock a further €50–60 billion in investment.
Imports and infrastructure
Because Europe is unlikely to produce all the hydrogen it needs, the EU has signed a series of partnerships with potential exporters. The EU–Morocco Green Partnership, signed in October 2022, was the first of its kind. Agreements with Egypt and Namibia followed at COP27 in November 2022, and an EU–Norway Green Alliance covering hydrogen was signed in April 2023.
The flagship import route from the north has already collapsed. In September 2024, Equinor halted planning of a €4–6 billion hydrogen pipeline from Norway to Germany, citing a lack of regulatory clarity, customers and supply.
On the network side, the European Hydrogen Backbone initiative of gas transmission operators still envisages about 28,000 km of hydrogen pipelines by 2030 and 53,000 km by 2040. Around 60% of that network would be converted natural gas pipelines. Whether that network gets built depends on demand that has not yet materialised.
What to watch
The coming months will set the direction for the rest of the decade. Three things to watch:
- RED IV: whether the Commission’s proposal keeps binding hydrogen targets after 2030.
The green hydrogen rules: whether the revised definition arrives before year-end.
Hydrogen Bank contracts: how many of this year’s winners actually sign in the fourth quarter.
The EU has built one of the world’s most ambitious frameworks for renewable hydrogen, and the money on offer attracts far more bids than it can fund. Production, however, remains under 1 GW against a 40 GW goal, and the rules that were supposed to create the market are now being revised. The question in Brussels has shifted from how fast Europe can scale green hydrogen to how much of the original plan will survive.