Weather 
Published on
The development of a hydrogen market in the European Union is far from meeting an ambitious 2030 target thanks to high fuel production costs and regulatory uncertainty, according to the latest report from the bloc’s energy regulators.
The warning from the Agency for the Cooperation of Energy Regulators (ACER) comes as the EU tries to encourage hydrogen projects in a bid to reduce reliance on fossil fuels.
But critics argue that investments in hydrogen infrastructure will end up backing dirty hydrogen or even natural gas given the immaturity of the hydrogen market and the high energy costs of producing the gas cleanly.
True renewable hydrogen, or “green hydrogen”, is produced using electrolysers, which split water into hydrogen and oxygen. These can be powered using renewable sources such as solar, wind and hydropower.
Yet despite a substantial 51% annual increase in installed electrolyser capacity in the EU in 2024, according to ACER, the EU targets remain largely out of reach.
ACER data reveal that as of 2024, 104 megawatts of electrolyser capacity had come online, bringing the total installed capacity to 308 megawatts, double the 2022 total, with a total of 1.8 gigawatts currently under construction.
But the EU’s targets include installing a full 40 gigawatts of electrolyser capacity by 2030 – meaning the current capacity is a small fraction of the amount meant to be built by the end of the decade.
“Focused coordination, targeted policy support, and continuous monitoring are essential if the EU is to accelerate deployment and achieve cost-competitive scale,” reads ACER’s 2025 monitoring report.
The regulator estimated that up to 50% of renewable hydrogen’s production costs are linked to electricity prices. ACER’s officials said that speeding up the decarbonisation of the power sector, a plan the EU executive is presenting this week, will lower electricity costs and could be a real game-changer for the production on green hydrogen.
They also suggested that faster permitting and grid connection for both electrolysers and renewable electricity projects are key to boosting renewable hydrogen production.
Slow infrastructure development
Meanwhile, according to the European Hydrogen Observatory, only 55km of new hydrogen pipelines were commissioned in 2024, bringing the total length of the EU’s existing hydrogen networks to 1,636 km, mainly in Belgium, France, Germany, and the Netherlands.
As part of its efforts to eliminate fossil fuel use, the EU aims to produce 10 million tonnes of renewable hydrogen annually by 2030 while importing another 10 million.
The bloc also envisages the uptake of hydrogen-powered transport. The revised renewable energy law passed in October 2023 sets a target that by 2030, 1% of transport energy will come from synthetic fuels, such as e-hydrogen or e-kerosene, with renewable energy making up 29% of the transport energy mix and 42% for industry.
However, weak implementation of the law is also hampering progress. Only Denmark and Ireland have transposed the law, which sets targets for e-fuels, encouraging investors to develop the hydrogen sector with confidence.
The EU’s energy regulators suggested that member states accelerate the transposition and implementation of the law to ensure regulatory certainty and accelerate market development.
Read the full article here
