European Commission

Country: European Commission

Document type: Supranational Strategy

Title: A Hydrogen Strategy for a Climate-Neutral Europe

Released: July 2020

Summary Points:

  • The Strategy notes that in the Commission’s Communication of November 2018 A Clean planet for all – A European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy, the share of hydrogen in Europe’s energy mix is projected to grow from less than 2% presently to 13-14% by 2050.
  • The Strategy includes ‘Towards a Hydrogen Ecosystem in Europe: A Roadmap to 2050’ based on three phases:
    • First phase: 2020-2024 – a key objective is the installation of at least 6 GW of renewable hydrogen electrolysers in the EU (and the production of up to one million tonnes of renewable hydrogen); in this phase, the manufacturing of electrolysers (including up to 100 MW units) needs to be scaled up.
    • Second phase: 2025-2030 – a key objective is that hydrogen becomes an intrinsic part of an integrated EU energy system, with at least 40 GW of renewable hydrogen electrolysers installed in the EU by 2030 (and the production of up to 10 million tonnes of renewable hydrogen); in this phase hydrogen gradually becomes cost competitive though demand activation policies would be needed to accelerate its use in new applications (e.g. steel making); local hydrogen clusters/hydrogen valleys are developed.
    • Third phase: 2030-2050 – renewable hydrogen technologies reach maturity and are deployed at large-scale to reach across all hard-to-decarbonise sectors (where alternatives are not possible or are higher cost).
  • Overall investment needs in the period 2020-2030 are estimated across a range of areas:
    • Investments in electrolysers – €24-42 billion
    • Scaling up of solar and wind production/connection capacity by 80-120 GW – €220-340 billion
    • Investments in retrofitting half of the existing plants with carbon capture and storage – around €11 billion
    • Investments in hydrogen transport, distribution and storage, and hydrogen refuelling stations – around €65 billion
  • Between 2020 and 2050, investments in production capacities is estimated at between €180-470 billion in the EU
  • The Strategy notes that adapting end-use sectors to hydrogen consumption and hydrogen-based fuels will also require significant investments (e.g., it notes €160-200 million is needed to convert a typical EU steel installation coming to end-of-life to hydrogen).
  • Various measures are indicated as being able to facilitate public and private funding, including:
    • The European Clean Hydrogen Alliance (launched at the same time as this EU Strategy) would identify and build up a pipeline of viable investment projects capable of accessing public and private funds.
    • The Strategic Forum for Important Projects of Common European Interest (IPCEI) may recommend hydrogen-related joint investments or actions across several Member States
    • Support through the Strategic European Investment Window of Invest EU (from 2021) and through the European Regional Development Fund and the Cohesion Fund
  • In addition to the investment agenda, other Key Actions included:
    • Boosting demand for and scaling up hydrogen production
    • Designing an enabling and supportive framework; support schemes, market rules and infrastructure
    • Promoting research and innovation in hydrogen technologies
    • Strengthening the International Dimension

In December 2020, the Council of the European Union released its Conclusions ‘Towards a hydrogen market for Europe’.

Clean Hydrogen Partnership

In late February 2021, the European Commission presented its proposal to establish 10 new European Partnerships (including a Clean Hydrogen Partnership) between the EU, Member States and/or the industry, with the EU to provide nearly €10 billion of funding that the partners would match with at least an equivalent amount of investment. The Clean Hydrogen Partnership would focus on producing, distributing and storing clean hydrogen and, on supplying sectors that are hard to decarbonise, such as heavy industries and heavy-duty transport applications.

  • The Council of the EU adopted on 19 November 2021 the regulation establishing the Clean Hydrogen Joint Undertaking (Clean Hydrogen Partnership). The Clean Hydrogen JU will build on the success of the FCH JU to accelerate the development and deployment of a European value chain for clean hydrogen technologies. The EU will support the Clean Hydrogen JU with €1 billion Euros for the period 2021-2027, complemented by at least an equivalent amount of private investment (from the private members of the partnership).
  • On 25 February 2022, the Governing Board of the Clean Hydrogen JU adopted the Strategic Research and Innovation Agenda for the period 2021-2027 and the Annual Work Programme for 2022.  The €2 billion Euros total funding contribution for the JU for the period 2021-2027 will be distributed annually, with the first call for proposals having an overall indicative budget of €300 million, covering a wide spectrum of research and innovation activities along the entire hydrogen supply and value chain.
  • In May 2022, in its communication “REPowerEU Plan”, the EC announced an additional investment of €200 million available for the Clean Hydrogen Partnership through the Horizon Europe Programme. The funds are intended to help double the number of Hydrogen Valleys in Europe.
  • In January 2023, the Clean Hydrogen Partnership launched its hydrogen research call for proposals on 17 January. A total of € 195 million, covering 26 topics grouped into 11 Innovation Actions, 13 Research and Innovation Actions, 2 Coordination and Support Actions.
  • In January 2023, the Clean Hydrogen Partnership announced selection of 15 regions to receive support in the framework of the latest Project Development Assistance (PDA) initiative. The regions are from a total of ten different countries.
  • In January 2023, the Clean Hydrogen Partnership announced selection of 9 Hydrogen Valley projects following its first call for proposals (2022), with the total funding requested for the 9 Hydrogen Valleys amounting to €105.4 million.
  • In January 2024, the Clean Hydrogen Partnership launched a new hydrogen research call for proposals; a total of €113.5 million is to be made available through Horizon Europe for projects to cover R&I activities across the whole hydrogen value chain. Additional €60 million (from the RePowerEU plan budget) is to be used to support different activities (including topping-up of related call topics and a procurement to set-up and run a ‘Hydrogen Valleys Facility’) for increasing the number of Hydrogen Valleys across Europe.

The Clean Hydrogen Partnership Projects Repository can be found here.

European Green Deal: Fit for 55

In July 2021, almost two years after the EC presented its communication on the European Green Deal in December 2019 ( the ‘Green Deal’ is a growth strategy designed, amongst other things, to make Europe climate neutral by 2050), the EC adopted a set of proposals to make the EU’s climate, energy, transport and taxation policies consistent with reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels (labelled as ‘Delivering the European Green Deal’ and  described in the EC Communication ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality.  The EC indicates that one-third of the €1.8 trillion investments from the Next Generation EU Recovery Plan, and the EU’s seven-year budget will finance the European Green Deal.

In October 2023, the European Council adopted a new law under the RefuelEU aviation initiative (a key part of the Fit for 55 package) to increase the demand for and supply of sustainable aviation fuels (SAF), with main provisions in the new regulation including:

  • The obligation for aviation fuel suppliers to ensure that all fuel made available to aircraft operators at EU airports contains a minimum share of SAF from 2025 and, from 2030, a minimum share of synthetic fuels, with both shares increasing progressively until 2050. Fuel suppliers will have to incorporate 2% SAF in 2025, 6% in 2030 and 70% in 2050. From 2030, 1.2% of fuels must also be synthetic fuels, rising to 35% in 2050.
  • The scope of eligible sustainable aviation fuels and synthetic aviation fuels includes certified biofuels, renewable fuels of non-biological origin (including renewable hydrogen) and recycled carbon aviation fuels complying with the Renewable Energy Directive (RED) sustainability and emissions saving criteria.

In April 2024, the EC (via the European Climate, Infrastructure and Environment Executive Agency – CINEA) announced the award of over €424 million of funding for the roll-out of alternative fuels supply infrastructure, including around €100 million for hydrogen refuelling stations (and hydrogen production plant in some cases).

Carbon Border Adjustment Mechanism

On 14 July 2021, the EC adopted a proposal for a new Carbon Border Adjustment Mechanism (CBAM) which would put a carbon price on imports of a targeted selection of products.  The CBAM, by equalising the price of carbon between domestic products and imports, aims to:

  • Ensure that European emission reductions contribute to a global emissions decline, instead of pushing carbon-intensive production outside Europe.
  • Encourage industry outside the EU and its international trading partners to take steps in the same direction.

The CBAM is to be phased in gradually and would initially apply only to a selected number of goods considered at high risk of carbon leakage: iron and steel, cement, fertiliser, aluminium and electricity generation. A simplified CBAM system, where importers will have to report emissions embedded in their goods without paying a financial adjustment will apply from 2023 for selected products (with the objective of facilitating a smooth roll out and to facilitate dialogue with third countries). The ‘definitive system’ is to become fully operational in 2026.

In June 2023, the EC published a first call for feedback on the rules governing the implementation of the CBAM during its transitional phase (starting October 2023).

REPowerEU Communication / Electrolyser Summit Joint Declaration

In May 2022, the Electrolyser Summit Joint Declaration sets out a target agreed by electrolyser manufacturers in Europe to increase their manufacturing capacity tenfold to 17.5 GW per year by 2025; such level supporting the annual EU production target of 10 million tons of renewable hydrogen by 2030, set as target in the March 2022 REPowerEU Communication. (In the REPowerEU communication, the EU will strive to achieve a supply twenty million tonnes of green hydrogen by 2030 – 10 million tonnes being EU produced and 10 million tonnes imported.)

The Joint Declaration also features Commission actions to put in place a supportive regulatory framework, facilitate access to finance and promote efficient supply chains, including:

  • Ensuring that regulation governing the production of renewable hydrogen support a fast and affordable ramp-up of the market for renewable hydrogen and its production in Europe.
  • Adoption of a recommendation and a legislative proposal on accelerated permitting for renewable energy projects, including renewable hydrogen.
  • Assessment of State aid notification for hydrogen projects as a matter of priority
  • Commitment by electrolyser manufacturers to apply only with high quality project proposals that are fully aligned with the climate targets and REPowerEU ambition.
  • Collaboration with the EIB to facilitate the financing of electrolyser manufacturing and deployment projects.
  • Establishment of an ‘Electrolyser Partnership’ that will bring together electrolyser manufacturers and suppliers of components and materials within the existing structures of the European Clean Hydrogen Alliance.

Innovation Fund  

In July 2022, the EC announced an investment of over €1.8 billion in 17 large-scale innovative clean-technology projects with a third round of awards under the EU Innovation Fund (two large-scale project rounds, one small-scale project round) of which three projects are hydrogen-related. Hydrogen-related awards under the first two rounds can be found here and here.

In July 2023, the EC announced award of a total grants amount of more than €3.6 billion (to 41 projects) under the third call for large scale projects, including almost €1.2 billion to 13 projects under the ‘industry electrification and hydrogen’ topic (with six projects focussed on renewable hydrogen production and seven projects on hydrogen use in chemicals, refineries and steel). Under the ‘clean tech manufacturing’ topic, four electrolyser manufacturing related projects received grant awards. In December 2023, the EC announced that 36 large-scale projects from the July 2023 announcement (and one reserve project from the reserve list of the previous call) have signed grant agreements with the European Climate, Infrastructure and Environment Executive Agency (CINEA), the implementing body of the Fund.

In October 2024, the EC announced the selection of 85 projects across 18 countries to receive €4.8 billion in grants from the Innovation Fund, and included projects of different scales (large, medium and small, alongside pilots) and with a cleantech manufacturing focus. This is the largest award since the start of the Innovation Fund in 2020. The selection includes, amongst other things, projects that can contribute to 9.3 GW of electrolyser manufacturing capacity in the EU, and projects that can deliver 61 kilotonnes of renewable hydrogen.

Important Projects of Common European Interest (IPCEI)

In July 2022, the EC approved, under EU State aid rules, an Important Project of Common European Interest (‘IPCEI’) to support research and innovation and first industrial deployment in the hydrogen technology value chain. The project, called “IPCEI Hy2Tech” was jointly prepared and notified by fifteen Member States. The Member States will provide up to €5.4 billion in public funding, which is expected to unlock additional €8.8 billion in private investments. As part of this IPCEI, 35 companies with activities in one or more Member States will participate in 41 projects.

In September 2022, the EC approved, under EU State aid rules, a second IPCEI award round; the project, called “IPCEI Hy2Use” was jointly prepared and notified by thirteen Member States. The Member States will provide up to €5.2 billion in public funding, which is expected to unlock additional €7 billion in private investments. As part of this IPCEI, 29 companies with activities in one or more Member States will participate in 35 projects.

In November 2023, the EC adopted the first list of Projects of Common Interest (PCIs) and Projects of Mutual Interest (PMIs). The list is adopted under the revised Trans-European Networks for Energy Regulation (TEN-E) and focuses on cross-border energy infrastructure. It includes PCIs, which are projects within the EU territory and PMIs, which connect the EU with other countries. Out of the 166 selected PCIs and PMIs, hydrogen and electrolyser projects (65 projects) are included.

In February 2024, the EC approved, under EU State aid rules, a third IPCEI award round; the project, called “IPCEI Hy2Infra”, was jointly prepared and notified by seven Member States. The Member States will provide up to €6.9 billion in public funding, which is expected to unlock additional €5.4 billion in private investments. As part of this IPCEI, 32 companies with activities in one or more Member States will participate in 33 projects.

In May 2024, the EC approved, under EU State aid rules, a fourth IPCEI award round; the project called ‘IPCEI Hy2Move‘, with participating Member States to provide up to €1.4 billion in public funding, which is expected to unlock an additional €3.3 billion in private investments. IPCEI Hy2Move will cover a wide part of the hydrogen technology value chain, including mobility and transport applications, high-performance fuel cell technologies, and next generation on-board storage solutions for hydrogen

EC Communication: A Green Deal Industrial Plan for the Net-Zero Age

In February 2023, the EC released its communication on the Green Deal Industrial Plan for the Net-Zero Age. Included within the Plan, the Commission would launch in 2023 a first auction – or competitive bid – for supporting the production of renewable hydrogen. Successful applicants would receive a fixed premium for each kg of renewable hydrogen produced over a period of 10 years. The first auction has a budget of €800 million.

It is intended that the pilot auction will be followed by further auctions or other forms of support for hydrogen production and use that contribute towards the REPowerEU hydrogen targets (thereby covering the EU domestic part of the Hydrogen Bank).

In late August 2023, the Commission published the final auction design elements (terms and conditions) for the first auction of the Innovation Fund renewable hydrogen production auctions, including a disclosed ceiling price of 4.50 €/kg of hydrogen produced as a maximum bid for the fixed premium (to be reviewed in subsequent auction rounds). It is intended to open the pilot auction on 23 November 2023 (estimated auction closure: 8 February 2024).

Net Zero Industry Act Proposal 

In March 2023, the EC released a proposal for a regulation of the European Parliament and of the Council on establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing base (Net Zero Industry Act). The objective is to approach or reach, in aggregate, at least 40% of the annual deployment needs for strategic net-zero technologies manufactured in the EU by 2030. The proposal supports in particular eight strategic net-zero technologies, including electrolysers and fuel cells. The proposal also includes mechanisms to simplify and speed-up permitting processes.

In February 2024, it was announced that the Council of the EU and the European Parliament had reached provisional agreement on the regulation establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing base (Net Zero Industry Act). In May 2024, the European Council adopted the regulation.

European Hydrogen Bank

In order to support production, the Commission President, in her State of the Union 2022 address, announced the creation of a new European Hydrogen Bank, with funding of €3 billion from the existing Innovation Fund.  In March 2023, a Communication on the European Hydrogen Bank details the concept, tasks and structure of the Bank, identifying financing mechanisms that relate to domestic market creation and imports to the EU.

At the end of May 2023, the EC Energy Commissioner and the German Federal Minister for Economic Affairs and Climate Action agreed to enhancing the global hydrogen ramp-up by linking the (EC) European Hydrogen Bank initiative with the German H2Global initiative. The joint media releases noted that H2Global would be open to all EU Governments interested in conducting hydrogen tenders; in addition, H2Global would also work together with the European Hydrogen Bank on joint European auctions open to all EU countries (to make a visible contribution to international hydrogen imports).

In November 2023, the EC launched the first auction under the European Hydrogen Bank to support the production of renewable hydrogen in Europe, with an initial €800 million of emissions trading revenues, channelled through the Innovation Fund. The bids are to be based on a proposed price premium per kilogram of renewable hydrogen produced, up to a ceiling of 4.5€/kg. In February 2024, the EC noted that the pilot (first) auction under the European Hydrogen Bank had attracted 132 bids from projects located in 17 European countries; the selected projects would have to start producing renewable hydrogen within five years of signing the Gant Agreement; they would receive the awarded fixed premium subsidy for up to 10 years and only upon certified and verified renewable hydrogen production. At end April 2024, the EC announced the award of nearly €720 million to seven renewable hydrogen projects in Europe. In total, the winning bidders plan to produce 1.58 million tonnes of renewable hydrogen over ten years. The subsidy the seven projects will receive ranges from €8 million to €245 million.

In December 2023, Germany announced its participation in the European Hydrogen Bank’s EU “Auctions as a Service” mechanism, providing an additional €350 million for electrolyser projects in Germany (this being in addition to the €800 million earmarked by the EU Innovation Fund for projects across the EU). The “Tenders as a Service” mechanism under the Hydrogen Bank allows EU Member States to finance additional projects that participate in the call but can no longer be funded from the [EC] Innovation Fund budget. This tool allows Member States to identify and support competitive projects on their territory without the need for a separate national tender. Member States’ participation is voluntary.

In September 2024, the EC published the final Terms and Conditions for its second auction under the European Hydrogen Bank for the production of renewable hydrogen (IF24 Auction) via the Innovation Fund. The auction is to open on 3 December 2024 and will award up to €1.2 billion support to renewable hydrogen producers in the European Economic Area.

In November 2024, in a joint release, the EC, Spain, Lithuania and Austria announced that the three Member States will participate in the ‘Auctions-as-a-Service’ scheme as part of the second European Hydrogen Bank auction. In addition to the €1.2 billion in EU funding from the Innovation Fund, the three EU Member States will deploy over €700 million in national funds to support renewable hydrogen production projects located in their countries, bringing the funding mobilised by the ‘IF24′ renewable hydrogen auction to around €2 billion.

In December 2024, the EC announced the launching of the second auction under the European Hydrogen Bank, with an allocation of €1.2 billion in EU funding.  The release noted that Spain, Lithuania and Austria recently announced their participation in an Auctions-as-a-Service mechanism, pledging up to €836 million in national funds to support renewable hydrogen production projects located in their countries.

Renewable Energy Directive (RED) Revision

In October 2023, the European Council adopted the new Renewables Energy Directive to raise the share of renewable energy in the EU’s overall energy consumption to 42.5% by 2030 with an additional 2.5% indicative top up that would allow the target of 45% to be achieved.

  • In Transport, the new rules set a binding combined sub-target of 5.5% for advanced biofuels (generally derived from non-food-based feedstocks) and renewable fuels of non-biological origin (mostly renewable hydrogen and hydrogen-based synthetic fuels) in the share of renewable energies supplied to the transport sector. Within this target, there is a minimum requirement of 1% of renewable fuels of non-biological origin (RFNBOs) in the share of renewable energies supplied to the transport sector in 2030.
  • In Industry, the directive provides that industry will increase the use of renewable energy annually by 1.6%. Member states agreed that 42% of the hydrogen used in industry should come from renewable fuels of non-biological origin (RFNBOs) by 2030 and 60% by 2035 (though the possibility to discount the contribution of RFNBOs in industry use by 20% exists under two conditions).

Delegated Acts on Renewable Hydrogen Production

In June 2023, the EC formally published two Delegated Acts outlining detailed rules on the EU definition of renewable hydrogen. The final texts are unchanged from the draft acts adopted by the Commission on 13 February 2023. The rules formally entered into force on 10 July 2023.

The first Act defines under which conditions hydrogen, hydrogen-based fuels or other energy carriers can be considered as renewable fuels of non-biological origin (RFNBOs). It clarifies the principle of “additionality” for hydrogen set out in the EU’s Renewable Energy Directive as well as setting criteria around when and where renewable hydrogen is produced and outlines how producers can demonstrate compliance.

The second Act provides a framework for calculating the life-cycle greenhouse gas emissions for RFNBOs, and takes into consideration, emissions associated with taking electricity from the grid, from processing, and those associated with transporting these fuels to the end-consumer.

The new rules will apply to both domestic producers and international producers exporting renewable hydrogen to the EU.

Regulation for the deployment of alternative fuels infrastructure (AFIR)

The AFIR is part of the Fit for 55 package. In early June 2022, the Transport Council reached a general approach on the proposal and, following negotiations with the European Parliament, the two co-legislators reached a provisional agreement on the regulation in late March 2023. The European Council endorsed the regulation in late July 2023 after which it is to be published in the EU’s official journal after the summer.

The regulation sets deployment targets for, amongst other things, electric recharging and hydrogen refuelling infrastructure for the road sector. A key deployment target, amongst others, is that hydrogen refuelling infrastructure that can serve both cars and lorries must be deployed from 2030 onwards in all urban nodes and every 200 kilometres along the TEN-T core network.

Internal markets in renewable and natural gases and in hydrogen

In December 2023, the European Council and the European Parliament reached agreement on the regulation to establish common rules for the internal markets in renewable and natural gases and in hydrogen. The Council adopted the regulation in May 2024. Amongst other things, the Council and the Parliament agreed on the split between Transmission System Operators (TSOs) and Distribution System Operators (DSOs) for hydrogen.

Communication on Europe’s 2040 climate target and path to climate neutrality by 2050

In February 2024, the EC published a detailed impact assessment on possible pathways to reach the goal of making the European Union climate neutral by 2050; based on this impact assessment, the Commission recommended a 90% net greenhouse gas emissions reduction by 2040 compared to 1990 levels. Reporting on the Communication suggests that, under the impact assessment, hydrogen is set to play a key role in the decarbonisation of hard to abate industry and transport areas, with production of 20 to 35 million tons of renewable-based hydrogen expected by 2040, depending on the scenario chosen.

 

Updated: December 2024