Green Hydrogen in the European Union: State of the Art, Evolution and Consumption (2020–2025)

Enerdealers Editorial

In the last five years, green hydrogen has moved from a niche idea to a cornerstone of the European Union’s vision for decarbonisation. Although still in its early stages, this energy carrier — produced through electrolysis powered by renewable electricity — is shaping up as a critical tool for reducing carbon emissions in hard-to-abate sectors such as heavy industry, long-distance transport and chemical manufacturing.

From ambitious EU strategy documents to large-scale investment projects, the evolution of green hydrogen between 2020 and 2025 reflects both the promise and complexity of building a truly renewable hydrogen economy. This article traces the journey of green hydrogen in the EU over this period, examining production, consumption, policy frameworks and national footprints, and explores what lies beyond 2025.

What Is Green Hydrogen — And Why It Matters

Hydrogen itself is a versatile energy carrier and feedstock used widely in industry — for example in refining, fertilizers and basic chemicals. However, most hydrogen currently produced in the EU is derived from natural gas through steam methane reforming, which emits significant carbon dioxide, even if combined with carbon capture and storage. In contrast, green hydrogen comes exclusively from renewable electricity driving water electrolysis, meaning its lifecycle emissions are minimal.

Despite representing a tiny fraction of the overall energy mix — hydrogen accounted for less than 2% of the EU’s energy consumption in 2022 — scaling up renewably produced hydrogen is central to EU targets for decarbonising sectors that are difficult to electrify directly.

Early Years: Strategy and Emerging Projects (2020)

The EU Hydrogen Strategy, adopted as part of the 2020 Fit for 55 package, set a long-term vision for renewable hydrogen. It outlined a phased approach, where the initial phase (2020–2024) would focus on laying the groundwork: installing a minimum of 6 GW of electrolysis capacity and producing up to 1 million tonnes of renewable hydrogen within the EU.

In 2020, hydrogen consumption in the EU was already significant in absolute terms — around 8.2 million tonnes — but 96% of this was fossil-derived. Renewable hydrogen accounted for only a tiny fraction of total demand, largely due to the early stage of electrolysis deployment and limited distribution infrastructure.

This initial phase was about building momentum: policymakers aimed to create markets, support infrastructure and encourage investment in electrolyser manufacturing.

The Push for Electrolysers and First Commercial Plants (2021–2023)

Between 2021 and 2023, the European market began to take shape. Several key developments defined this stage:

Electrolysis Capacity Growth

Although actual electrolyser installations were limited in 2020, by late 2023 Europe saw plans for over 1.3 GW of electrolysers expected online by the end of the year — a clear increase compared with earlier years.  Yet at this stage, green hydrogen production still represented a small slice of overall hydrogen output, with fossil-based production dominating the market.

Commercial Production Begins

Green hydrogen projects moved from announcements to reality. In Finland, for example, the country’s first commercial green hydrogen plant started operations in early 2025, with a modest initial 20 MW capacity powered by wind energy — a milestone for both Finland and the broader European market.

Nevertheless, even as projects emerged, many planned facilities remained in concept or feasibility phases, reflecting the early-stage nature of the industry. According to a 2025 report, 98% of renewable hydrogen projects in Europe had not yet advanced beyond early stages, exposing the challenges of financing, permitting and industrialisation.

Uses and Consumption Patterns

Across 2020–2025, most hydrogen in the EU continued to be consumed in established industrial processes — refining, ammonia and methanol production — with renewable hydrogen making inroads especially in:

• Industry: electrification of feedstocks and processes.

• Mobility: heavy-duty transport, buses and hydrogen fuel cell vehicles.

• Energy Storage: seasonal storage using hydrogen where electricity storage is limited.

However, despite renewed interest, green hydrogen’s share in total hydrogen consumption remained limited by 2025 due to ongoing reliance on gas-based hydrogen and the relatively slow build-out of renewable electricity and electrolysis infrastructure.

National Dynamics: Who Leads and Who Follows

The evolution of green hydrogen has not been uniform across the EU. Certain Member States — thanks to favourable renewable resources, industrial structures and policy frameworks — have taken the lead.

Germany

As Europe’s largest economy, Germany has been a frontrunner. Historically, it aimed to install 10 GW of electrolysis capacity by 2030, roughly double earlier goals, although the country still expects a significant share of hydrogen demand to be met through imports.

Spain

Spain has emerged as another central player. With abundant solar and wind resources and extensive project pipelines, Spain is projected to account for up to 20% of EU electrolysis-based green hydrogen production by 2030 according to international agency forecasts.  The country has also secured significant innovation funding through the EU’s Clean Hydrogen Partnership.

Several major initiatives — such as the Valle Andaluz del Hidrógeno Verde, a multi-GW industrial ecosystem project — have secured government and EU support, reflecting Spain’s rising strategic position within Europe’s hydrogen landscape.

Sweden, Netherlands and Others

Sweden and the Netherlands were among the countries expected to contribute significantly to cluster hydrogen output supported by EU innovation funds, illustrating that northern and central Europe also play a large role in project deployment.

Barriers to Scale and Market Uncertainties

Despite technological progress, green hydrogen has faced persistent hurdles:

• High costs: Electrolysis remains more expensive than fossil-based methods, and production economics depend heavily on renewable electricity prices and subsidies.

• Policy and financing lags: Even with robust EU strategy frameworks, slow permitting and complex funding processes have delayed many projects.

• Market maturity: As of 2025, most European green hydrogen plants were still small-scale or pilot-stage, underscoring the nascent nature of the market.

In some cases, private sector adjustments reflected these realities. For instance, a major oil and energy producer revised its green hydrogen targets downward due to market and regulatory uncertainties.

Policy Frameworks and Strategic Goals

European hydrogen policy has been a key driver. The 2020 EU Hydrogen Strategy set multi-phase targets up to 2050, with the most pivotal goals covering 2025–2030:

• 40 GW of renewable hydrogen electrolysis capacity by 2030.

• Up to 10 million tonnes of renewable hydrogen production in the EU by 2030.

The REPowerEU plan reinforced these ambitions, outlining the development of green hydrogen as central to energy independence, climate mitigation and industrial transformation.

To accelerate adoption, the EU has also launched funding instruments like the Clean Hydrogen Partnership and various member-state incentive schemes to lower the cost and risk of deployment.

Towards 2025: A Sector Coming of Age

By the end of 2025, green hydrogen had gone from strategic policy language to emerging industrial reality across Europe. Electrolyser capacity grew year by year, new plants came online, and national strategies translated into concrete project pipelines.

Yet while progress is clear, green hydrogen remains a small share of total hydrogen production and EU energy consumption overall. Achieving scale will require continued policy support, deeper renewable electricity integration, investment in infrastructure and stable demand signals for industrial users.

Conclusions and Future Outlook

The story of green hydrogen in the EU from 2020 to 2025 is one of ambition meeting reality. Early strategy proposals have materialised into real-world investments and initial commercial facilities. Countries with strong renewable resources and industrial backing are consolidating leadership positions. But on the whole, the sector is still in early development, with many announced projects yet to reach operation and most hydrogen consumption today still reliant on fossil-derived sources.

Looking forward, the European Union’s strategic objectives point toward rapid acceleration over the next decade:

• By 2030: the EU aims to achieve at least 40 GW of electrolysis capacity and produce up to 10 million tonnes of renewable hydrogen domestically — complemented by imports.

• Beyond 2030: renewable hydrogen is expected to play a broader role in decarbonising heavy industry, long-distance transport and seasonal energy storage, with further scaling toward 2050 climate neutrality goals.

Green hydrogen’s evolution thus mirrors the broader energy transition: substantial progress is underway, but fulfilling its potential will require concerted policy action, investment and innovation across EU Member States and industrial sectors.