Europe’s Green Hydrogen Push in 2026: From Grand Targets to Real Projects

Enerdealers Editorial

Hydrogen is moving from vision to execution in the European Union: by early 2026 the regulatory framework for renewable (“green”) and low‑carbon hydrogen is largely in place, key funding pillars are operational, but real delivered volumes and infrastructure still lag far behind the 2030 targets of 10 million tonnes of domestic renewable hydrogen and 10 million tonnes of imports.

From Hype Cycle to Delivery Challenge

Over the past five years, hydrogen has gone from a niche technology to a central pillar of the EU’s decarbonisation strategy, particularly for hard‑to‑abate industry, heavy transport and long‑duration storage. In 2022, however, hydrogen still represented less than 2% of Europe’s final energy consumption, and roughly 96% of that hydrogen was produced from natural gas with associated CO₂ emissions —highlighting the scale of the transition challenge. The European Commission’s Hydrogen Strategy and the REPowerEU plan significantly raised the stakes by targeting 10 million tonnes of renewable hydrogen production and 10 million tonnes of renewable hydrogen imports by 2030, alongside a broader vision in which hydrogen could supply around 10% of EU energy needs by mid‑century.

As 2026 begins, the “state of the art” of green hydrogen in the EU is best described as regulatory maturity plus rising investment, contrasted with modest physical deployment and unresolved questions around costs, infrastructure, and demand creation. The coming few years will be decisive in determining whether the EU’s suite of delegated acts, funding tools, and industrial alliances can translate into bankable projects, secured offtake and scalable trade flows.

1. Policy Architecture: From Strategy to Law

1.1 The 2020 Hydrogen Strategy and its three phases

The EU Hydrogen Strategy, published in 2020, set the initial political vision and a three‑phase roadmap for scaling renewable hydrogen. It emphasised hydrogen as “essential” to the EU’s 2050 climate neutrality goal, both as an energy carrier and as a key enabler for sector coupling and system integration.

The Strategy defined three broad phases:

• Phase 1 (2020–2024): At least 6 GW of renewable electrolysers and about 1 million tonnes of renewable hydrogen, with on‑site industrial uses and early refuelling infrastructure, supported by scaled‑up manufacturing of electrolysers up to 100 MW.

• Phase 2 (2025–2030): About 40 GW of electrolysers and 10 million tonnes of renewable hydrogen, expansion into steelmaking, heavy transport and storage, and the emergence of a hydrogen infrastructure backbone with hydrogen “valleys” and refuelling networks.

• Phase 3 (2030–2050): Large‑scale deployment across all hard‑to‑decarbonise sectors, potentially using around a quarter of EU renewable electricity output for hydrogen and supplying more than 23% of the 2050 energy mix in some scenarios.

  
  

The Strategy also quantified investment needs up to 2030: tens of billions for electrolysers, several hundred billion for additional renewables, and tens of billions for hydrogen networks and CCS, leading to cumulative investment in renewable hydrogen production of up to €470 billion by mid‑century.

1.2 REPowerEU and the 10+10 Mt target

Russia’s invasion of Ukraine in 2022 led to REPowerEU, which reinforced the hydrogen agenda via a “hydrogen accelerator” and confirmed the dual target of 10 Mt domestic renewable hydrogen and 10 Mt imports by 2030. This elevated hydrogen from a long‑term decarbonisation option to a geopolitical and security‑of‑supply priority, positioning it as a substitute for Russian natural gas in strategic sectors.

1.3 Fit for 55 and the hydrogen policy framework

The Fit for 55 package, tabled in 2021, provided the legislative vehicle for hydrogen integration in climate and energy law, including the revised Renewable Energy Directive (RED III), which now contains binding targets for the uptake of renewable hydrogen in industry and transport by 2030. Guidance on implementing these targets was published in 2024, with a deadline of May 2025 for national implementation, giving developers and offtakers a clearer sense of future demand obligations.

In parallel, the Hydrogen and Decarbonised Gas Market Package—now in force—sets the rules for a future internal hydrogen market, including provisions for dedicated hydrogen infrastructure, regulated third‑party access, and unbundling of hydrogen network operators. This package envisages the creation of an EU‑level network organisation (ENNOH) to coordinate hydrogen transmission system operators and to align hydrogen planning with broader gas and electricity system development.

2. Defining “Clean”: RFNBOs and Low‑Carbon Hydrogen

2.1 Delegated acts on renewable hydrogen (RFNBOs)

A core “state of the art” development is the adoption of two delegated acts on renewable hydrogen in 2023, which operationalise the concept of Renewable Fuels of Non‑Biological Origin (RFNBOs).

These acts address two key issues:

• Criteria for products to qualify as renewable hydrogen or RFNBOs, especially when electrolysers are grid‑connected and the electricity mix is not fully renewable.

• Methodology to calculate lifecycle greenhouse gas emissions for renewable hydrogen and recycled carbon fuels, ensuring they meet defined emission reduction thresholds under the Renewable Energy Directive.

In practice, this means:

• Electrolysers must increasingly be associated with “additional” renewable electricity, not existing capacity needed for other decarbonisation uses.

• Temporal correlation between renewable generation and hydrogen production tightens over time (moving from monthly to hourly matching), and geographic correlation requires production and consumption to be within the same or interconnected bidding zones.

• Developers must track and document electricity sourcing, often via power purchase agreements (PPAs) and guarantees of origin, to prove compliance.

These rules are stringent by global standards, raising production costs but providing high environmental integrity and certainty for compliance schemes in transport and industry.

2.2 Low‑carbon hydrogen methodology

On 8 July 2025, the EU adopted a delegated act setting a comprehensive greenhouse gas methodology for low‑carbon hydrogen and fuels, complementing the RFNBO framework. Under this act, hydrogen and related fuels qualify as low‑carbon only if they achieve at least 70% lifecycle GHG emission savings compared with unabated fossil fuels.

This fills a major regulatory gap: the EU now has legally binding, EU‑wide definitions and measurement methods for both renewable and low‑carbon hydrogen. The combined effect is to give investors and offtakers a common benchmark, reduce green‑washing risks, and align EU domestic rules with the standards likely to be applied to imports.

The European Clean Hydrogen Alliance (ECH2A), launched in 2020, aggregates stakeholders across production, demand, and infrastructure, and has assembled a large project pipeline, including “hydrogen valleys” and flagship industrial hubs.

3. Investment Support and Industrial Alliances

3.1 IPCEIs and the Clean Hydrogen Alliance

The EU has mobilised several funding and coordination mechanisms to de‑risk early investment:

• The European Clean Hydrogen Alliance (ECH2A), launched in 2020, aggregates stakeholders across production, demand, and infrastructure, and has assembled a large project pipeline, including “hydrogen valleys” and flagship industrial hubs.

• A series of Important Projects of Common European Interest (IPCEIs)—Hy2Tech, Hy2Use, Hy2Infra, and Hy2Move—provides state‑aid‑cleared support across the value chain, from electrolyser manufacturing to hydrogen pipelines, storage, terminals, and mobility applications.

• The third IPCEI, Hy2Infra, approved in early 2024, focuses specifically on large‑scale electrolysers, transmission and distribution pipelines, and storage infrastructure, underpinning the future Hydrogen Backbone.

• Hy2Move, approved in May 2024, targets transport‑related hydrogen innovation, linking vehicle technologies with refuelling and supply systems.

These mechanisms leverage national budgets, the Recovery and Resilience Facility, InvestEU, and the Innovation Fund, seeking to crowd in private capital and support technological learning at scale.observatory.clean-hydrogen.europa+1

3.2 European Hydrogen Bank and auctions

Although not detailed extensively in the Strategy texts themselves, the broader policy framework links to the European Hydrogen Bank (EHB), which is structured as a funding window within the Innovation Fund and aims to bridge the cost gap between renewable hydrogen and fossil incumbents.

In practice, this has taken the form of competitive auctions awarding a fixed premium per kilogram of renewable hydrogen produced, for up to ten years, to projects that meet RFNBO criteria and reach operation within a defined timeframe. While auction specifics evolve, the overarching objective is to:

• Reveal real support needs via competitive bidding.

• Prioritise projects that can deliver early volumes at lowest cost.

• Stimulate offtake contracts in refiners, ammonia producers, steelmakers and fuel suppliers, by reducing price uncertainty.

For developers, the European Hydrogen Bank is emerging as a central revenue‑stabilising mechanism, alongside national contracts for difference and targeted state aid schemes.

Roughly 96% is produced from natural gas. This implies that even fully decarbonising existing hydrogen demand is a major task, before considering new applications in steel, transport or power balancing.

4. Physical Reality: Where the EU Stands in 2025–26

4.1 Current use and production mix

Despite the ambitious strategy, the current hydrogen landscape remains dominated by fossil‑based production. In 2022, hydrogen accounted for less than 2% of EU energy consumption, used mainly in chemical sectors such as fertilisers and plastics, with roughly 96% produced from natural gas. This implies that even fully decarbonising existing hydrogen demand is a major task, before considering new applications in steel, transport or power balancing.

Commercial‑scale green hydrogen plants exist, but aggregate capacity is still far below the 6 GW and 1 Mt targets for 2024, let alone the 40 GW and 10 Mt vision for 2030. The near‑term pipeline is growing, but many projects remain at feasibility or early development stages, conditional on support awards, grid access, and offtake agreements.

4.2 Infrastructure: from concept to early rollout

On infrastructure, the EU is transitioning from conceptual “Hydrogen Backbone” maps to concrete projects backed by IPCEIs and national plans. Hy2Infra supports initial transmission and storage assets, while the Gas Market Package anticipates dedicated hydrogen networks and the eventual establishment of ENNOH as the EU‑level network of hydrogen transmission operators.observatory.

In practice, progress is uneven: some member states, especially in Northwest and Southern Europe, have advanced plans to repurpose gas pipelines and develop import/export terminals, while others are still in preparatory phases. The Hydrogen Strategy emphasised that making hydrogen infrastructure part of Ten‑Year Network Development Plans (TYNDPs), and aligning TEN‑E and TEN‑T planning, is key to avoiding stranded assets and ensuring cross‑border flows.

4.3 Industrial and transport pilots

Industrial deployment is concentrated in a series of flagship “hydrogen valleys” and cluster projects, often supported by the Clean Hydrogen Alliance and IPCEIs. These initiatives target:

• Replacement of grey hydrogen in refineries and ammonia plants.

• Early green steel projects using hydrogen‑based direct reduced iron (DRI).

• Heavy‑duty transport corridors relying on hydrogen refuelling infrastructure.

In transport, the policy framework includes binding 2030 targets for the share of renewable fuels in aviation and maritime sectors, as well as renewable hydrogen uptake, which should progressively create a compliance‑driven demand pull for hydrogen‑derived e‑fuels.

The core cost of green hydrogen lies in electricity and capital‑intensive infrastructure, not just in electrolyser units.

5. Economics and Bankability: Cost Gap and Risk Allocation

5.1 Capital needs and cost components

The Strategy estimated that electrolysers alone could require €24–42 billion in investment by 2030, while additional renewable generation dedicated to hydrogen might need €220–340 billion, plus around €65 billion for hydrogen distribution networks. These figures underscore that the core cost of green hydrogen lies in electricity and capital‑intensive infrastructure, not just in electrolyser units.

Key cost drivers include:

• Levelised cost of renewable power (LCOE), influenced by resource quality, grid connection, and congestion.

• Electrolyser capex and efficiency, with scale and industrial learning expected to reduce unit costs.

• Utilisation rates, which are constrained by “additionality” and temporal matching rules under the RFNBO acts.

• Transport and storage costs, including conversion to ammonia or other carriers when moving hydrogen over long distances.

5.2 Impact of stringent RFNBO rules

The RFNBO rules force project developers to carefully design sourcing strategies: co‑locating electrolysers with dedicated renewables, using long‑term PPAs with new plants, and managing hourly correlation between production and consumption. This often leads to lower load factors than a purely market‑driven dispatch, pushing up the levelised cost of hydrogen but ensuring strong climate performance.

For industrial offtakers, the benefit of this stringency is that RFNBO‑certified hydrogen can reliably count towards regulatory obligations under the Renewable Energy Directive and sector‑specific mandates, reducing legal and reputational risk. Yet the cost differential versus fossil alternatives means that continued public support and carbon pricing will be decisive for demand growth.

5.3 Auctions, CCfDs, and offtake structures

To overcome the cost gap, the EU and member states are converging on a mix of instruments:

• Competitive auctions (European Hydrogen Bank, national schemes) offering fixed premia per unit of hydrogen, aligning support with actual production.

• Carbon Contracts for Difference (CCfDs), mentioned as a pilot in the Hydrogen Strategy, which compensate industrial users for the difference between actual CO₂ prices and the level needed to make low‑carbon products competitive.

• State‑aid‑approved direct grants and soft loans for capital‑intensive infrastructure under IPCEIs and cohesion funds.

Bankable offtake contracts are evolving accordingly, often blending long‑term take‑or‑pay clauses, indexed price formulas linked to power or fuel benchmarks, and pass‑through of support premia.

By 2026, several EU member states are expected to have transposed and detailed RED III hydrogen‑related targets and associated support measures, giving clearer long‑term visibility for industrial decarbonisation pathways.

6. Outlook 2026: Key Themes and Expectations

6.1 2026 as a “maturation” rather than volume year

Given typical project lead times and the time needed to implement RFNBO and low‑carbon methodologies, 2026 is set to be a year of project maturation and final investment decisions rather than a year of large new volumes entering the market. Many projects backed by early auctions, IPCEIs, or national tenders will still be under development, with commissioning dates closer to the late 2020s.

Developers in 2026 will focus on:

• Finalising permitting and grid connections under the new gas and hydrogen market rules.

• Refining their compliance strategies with RFNBO and low‑carbon methodologies, including data systems for emissions accounting.

• Negotiating or revising long‑term offtake agreements that reflect support schemes and emerging price benchmarks.

6.2 Demand creation in industry and transport

On the demand side, immediate growth will be driven by “greening” existing hydrogen uses (ammonia, refineries) and by early green steel and e‑fuel plants responding to sectoral mandates. Fuel suppliers subject to advanced biofuel and RFNBO quotas for aviation and maritime fuels will increasingly look at synthetic kerosene and e‑methanol, tying in upstream renewable hydrogen supply.

By 2026, several EU member states are expected to have transposed and detailed RED III hydrogen‑related targets and associated support measures, giving clearer long‑term visibility for industrial decarbonisation pathways. This should gradually translate into more predictable demand curves and facilitate financing for large‑scale hydrogen projects.

6.3 Infrastructure build‑out and ENNOH

In infrastructure, 2026 should see the formal establishment of ENNOH, the European network of hydrogen transmission operators, providing a platform to coordinate planning and operations of hydrogen pipelines at EU level. This will be crucial for:

• Integrating repurposed gas pipelines and new dedicated hydrogen lines into a coherent cross‑border network.

• Aligning hydrogen pipeline development with electricity grid expansion and renewable generation clusters.

• Enabling future import corridors from neighbouring regions envisaged under REPowerEU and the Hydrogen Strategy.

  
  

Initial hydrogen storage and terminal projects supported by Hy2Infra and other funding programmes will also move forward, shaping the physical foundations of a future traded hydrogen market.

6.4 International dimension and imports

The Hydrogen Strategy explicitly envisaged international trade in hydrogen, especially with Eastern and Southern neighbours and African partners, while REPowerEU’s 10 Mt import target underscores the importance of external supply. By 2026, several partnership frameworks and pilot import projects are likely to be under way, using ammonia and other carriers as primary vectors.

The EU’s detailed RFNBO and low‑carbon methodologies will, in practice, become de facto standards for exporters who want access to the EU market, potentially influencing global certification schemes and bilateral agreements. This gives the EU significant normative power, but also requires careful diplomacy to reconcile its stringent climate criteria with partners’ technological and resource realities.

Policymakers in 2026 will need to balance ambition and realism. On one hand, maintaining the 10+10 Mt target and detailed methodological rules signals commitment; on the other, policymakers will increasingly be judged on deployment metrics and cost impacts.

7. Strategic Implications for Stakeholders

7.1 For project developers

Developers looking to reach FID around 2026–27 will operate in a more predictable yet demanding environment. Critical success factors include:observatory.

• Locating projects in regions with high‑quality wind or solar resources and robust grid connections, to achieve competitive power costs while complying with additionality rules.

• Structuring power procurement and electrolyser operation to maximise utilisation within RFNBO constraints, using advanced forecasting and optimisation tools.

• Securing participation in EU or national auction schemes early, to lock in premium support and derisk revenue.

• Building consortia that cover the full value chain—from renewables to electrolysers, logistics, and offtake—to manage risk and interface complexity.

7.2 For industrial offtakers

Refiners, fertiliser producers, steelmakers and fuel suppliers face a dual challenge: regulatory pressure to decarbonise and uncertainty about the timing and cost of hydrogen supplies. Key priorities will be:

• Mapping out when and where RFNBO‑compliant hydrogen will be available and at what approximate cost, compared with alternative decarbonisation options such as electrification or bio‑based fuels.

• Engaging early with project developers, possibly via joint ventures or long‑term purchase agreements that allow co‑design of infrastructure and risk‑sharing.

• Using emerging EU instruments such as CCfDs and state‑aid schemes to bridge the cost gap and protect competitiveness in global markets.

7.3 For policymakers and regulators

Policymakers in 2026 will need to balance ambition and realism. On one hand, maintaining the 10+10 Mt target and detailed methodological rules signals commitment; on the other, policymakers will increasingly be judged on deployment metrics and cost impacts.

Areas requiring careful management include:

• Streamlining permitting and grid connection processes to match the scale of planned hydrogen and renewable projects.

• Ensuring coherence between hydrogen rules and broader electricity market reforms, especially regarding congestion, curtailment and flexibility markets.

• Updating targets and support schemes as cost curves and technology performance evolve, while maintaining investor confidence.

The next few years will reveal whether Europe’s green hydrogen vision becomes a globally competitive industrial reality—or remains a set of ambitious targets chasing elusive molecules.observatory.

Conclusion: A High‑Integrity, High‑Ambition Path—If Delivery Follows

By early 2026, the EU has assembled one of the world’s most comprehensive policy and regulatory frameworks for green and low‑carbon hydrogen, anchored in the 2020 Hydrogen Strategy, reinforced by REPowerEU, and implemented through RED III, the Hydrogen and Decarbonised Gas Market Package, RFNBO and low‑carbon delegated acts, and a growing ecosystem of IPCEIs, alliances and auctions. Hydrogen is no longer a conceptual “option” but a regulated, targeted pillar of EU climate, industrial and energy security policy, with binding uptake targets in industry and transport and an explicit vision of 10+10 Mt by 2030 and around 10% of energy demand by 2050.

Yet the physical reality still reflects an early‑stage market: fossil‑based hydrogen overwhelmingly dominates current use, dedicated green hydrogen capacity is small relative to ambitions, and infrastructure is only beginning to materialise. In this context, 2026 will be a pivotal year for turning frameworks into final investment decisions, signed offtake contracts, and construction starts across Europe’s hydrogen valleys and backbone corridors.

For Enerdealers’ readership —traders, project developers, industrial buyers and policymakers— the key message is that the EU is opting for a high‑integrity, rules‑driven hydrogen model that will likely keep costs elevated in the near term but aims to drive down prices through scale, innovation and cheap renewables over the coming decade.

Success will hinge on how quickly bottlenecks in permitting, grid integration, and cross‑border coordination can be resolved, and on whether auction schemes and carbon pricing can generate sufficient demand pull to justify the billions in planned investment. The next few years will reveal whether Europe’s green hydrogen vision becomes a globally competitive industrial reality—or remains a set of ambitious targets chasing elusive molecules.observatory.

Sources

• European Commission, “EU strategy on hydrogen” (COM(2020) 301 final).[observatory.clean-hydrogen.europa]​

• Clean Hydrogen Observatory, “EU Hydrogen Strategy under the EU Green Deal.”[observatory.clean-hydrogen.europa]​

• European Commission, “Hydrogen – Energy – European Commission” policy page.[energy.ec.europa]​

• European Commission, “REPowerEU plan” (COM(2022) 230 final) and accompanying Staff Working Document on investment needs and the hydrogen accelerator.[energy.ec.europa]​

• European Commission, “Hydrogen and decarbonised gas market package” and related factsheets.[energy.ec.europa]​

• Delegated acts on renewable fuels of non‑biological origin (RFNBOs), 2023.[energy.ec.europa]​

• Delegated act specifying a methodology for assessing greenhouse gas emission savings from low‑carbon fuels (C/2025/4674), 8 July 2025.[energy.ec.europa]​

• European Clean Hydrogen Alliance publications and project pipeline.observatory.clean-hydrogen.europa+1

• IPCEI Hy2Tech, Hy2Use, Hy2Infra, Hy2Move – European Commission State‑aid decisions and related communications.[energy.ec.europa]​