The Case for Recalibrating Europe’s Hydrogen Strategy

The report argues that the EU's initial hydrogen targets were overly ambitious and calls for a pragmatic shift toward 'hard-to-electrify' sectors. It identifies a significant gap between current production (0.02 Mtpa) and 2030 targets, projecting regulated demand between 2.2 and 2.8 Mtpa. The authors advocate for a 'carrots and sticks' approach—combining subsidies with enforceable RED III mandates and penalties—to drive offtake. Financially, the report estimates that €13.9 billion in public funding is needed to meet mandates, potentially rising to €45.6 billion under an Accelerated Transition Scenario, which could unlock €276 billion in private investment.

• Current renewable hydrogen production in the EU is 0.02 million tonnes per year (Mtpa), which is significantly lower than the original EU Hydrogen Strategy target of 20 Mtpa by 2030.
• Projected demand by 2030 based on RED III mandates is estimated between 2.2 and 2.8 Mtpa, while an 'Accelerated Transition Scenario' involving voluntary demand could see this reach up to 7.0 Mtpa.
• The report recommends focusing hydrogen deployment exclusively on hard-to-electrify sectors—specifically steelmaking, e-fuels, fertilizers, and refining—while avoiding applications like building heating or light-duty vehicles that are better served by direct electrification.
• To stimulate demand, the EU should employ a 'carrots and sticks' strategy, using RED III mandates and ETS costs as 'sticks' to increase the willingness-to-pay, thereby reducing the reliance on expensive subsidies.
• There is a substantial gap in public funding disbursement; while €21.4 billion has been committed by the Commission and Member States, only €3 billion has actually been disbursed to projects and end-users.
• Public funding requirements to bridge the cost gap for RED III mandates are estimated at €13.9 billion, but this would increase to approximately €45.6 billion to achieve the Accelerated Transition Scenario, potentially leveraging €276 billion in private capital.
• Hydrogen demand is heavily concentrated in Northwest Europe, specifically Germany, the Netherlands, France, and Belgium, necessitating infrastructure that connects these centers with production hubs in the Nordic regions and the Iberian Peninsula.

APA

RMI (2025). The Case for Recalibrating Europe’s Hydrogen Strategy. https://rmi.org/resources/the-case-for-re-calibrating-europes-hydrogen-strategy/

Chicago

RMI. The Case for Recalibrating Europe’s Hydrogen Strategy. 2025. https://rmi.org/resources/the-case-for-re-calibrating-europes-hydrogen-strategy/.

Wikipedia

{{cite report |author=RMI |title=The Case for Recalibrating Europe’s Hydrogen Strategy |date=10 March 2025 |url=https://rmi.org/resources/the-case-for-re-calibrating-europes-hydrogen-strategy/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025case, author = {{RMI}}, title = {{The Case for Recalibrating Europe’s Hydrogen Strategy}}, institution = {RMI}, year = {2025}, month = mar, url = {https://rmi.org/resources/the-case-for-re-calibrating-europes-hydrogen-strategy/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }