Turning the European Green Hydrogen Dream into Reality: A Call to Action

Turning the European Green Hydrogen Dream into Reality: A Call to Action

Europe’s hydrogen market is beginning to take shape … After a decade of much debate, a meaningful hydrogen market and a multibillion-euro market for green hydrogen now seems to be emerging on the horizon.

A good deal of this is driven by a flurry of regulatory activity across the hydrogen value chain: • Subsidy schemes are emerging to support investments in hydrogen production, such as the Dutch SDE++ for domestic projects or the European Hydrogen Bank and H2Global for imports.

• Infrastructure access is starting to become clearer, as the development of first elements of the European hydrogen backbone is being expedited in several countries— with the support of the EU IPCEI scheme.

• Hydrogen demand is being stimulated by investment subsidies (such as for the thyssenkrupp DRI steel plant) and by ongoing discussions on consumption subsidies (such as the German carbon contracts for difference for potential industrial offtakers).

Germany is also planning auctions for its first hydrogen-only backup power plants.

• The recently agreed RED III imposes the mandatory use of RFNBO (including green hydrogen) for EU industry consumption by way of quotas.1 Further, a combined subtarget of 5.5% for advanced biofuels and RFNBOs was agreed upon, with a minimum require[1]ment of 1% RFNBOs supplied to the transport sector in 2030.

Meaningful demand is expected to emerge if planned regulations come into effect. Several industrial sectors, primarily current gray hydrogen consumers, may be willing to pay around or above €6/kg for green hydrogen by the end of the decade. Refineries will contribute significant volumes to this demand.

Despite some uncertainty regarding RED III implementation details,2 oil players are already taking action. For instance, BP and Total are willing to pay a €12.6B premium for 7 GW offshore wind power generation that secures them green hydrogen at a cost above €6/kg.

Additional sectors such as ammonia and methanol production are also relevant, along with the portion of Europe’s steel industry capable of selling premium green steel. In Germany and the Netherlands alone, this “high-price plateau” could drive approximately 1 Mt of green

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