Europe projects more than 74 GW of hydrogen by 2030, but less than a fifth is viable today. The continent faces a critical gap between hydrogen ambitions and reality. Although the European Union set targets for renewable and low-carbon hydrogen production by 2030, around 20% of projects—equivalent to 29.2 GW (LHV)—have been canceled or are stalled.

Westwood Global Energy Group warns that if three essential factors—regulatory framework, financing mechanisms, and demand mandates—are not addressed, only 17% of the current pipeline will be operational by 2030. This represents only 12 GW (LHV) of installed capacity, a considerable figure but well below the 40 GW target.

Regulatory Frameworks: Urgent Need for Clarity and Realism

One of the main obstacles has been the European regulatory framework itself. The current regulations on renewable fuels of non-biological origin (RFNBO), adopted in 2023, have received harsh criticism from governments and developers. Several countries—including Germany, France, the Netherlands, and Denmark—have asked the EU executive to review the additionality and time-correlation requirements.

However, no changes are expected before July 2028. “Regulatory stability is a priority,” the report states, warning that any premature changes could erode investor confidence.

In parallel, the new Delegated Act on low-carbon hydrogen—expected for the first quarter of 2025—is expected to enable production routes based on carbon capture and storage (CCS) and nuclear energy. Countries such as Belgium and Germany have already expressed their support for these alternatives to unblock the advancement of projects.

In the United Kingdom, the sector is still waiting for definitions on business models for hydrogen on the grid and for use in heating. “Without regulatory progress, hydrogen for electricity generation is unlikely to scale before 2030,” the document assesses.

Financing: The Shift to Demand

The initial subsidy scheme promoted by the European Hydrogen Bank (EHB) proved insufficient. In its first auction, incentives averaged €0.50/kg, far from the estimated target price of €6/kg. As a result, one of the seven winning projects—El Alamillo H2, in Spain—was canceled due to a lack of buyers.

In response, the EHB shifted toward more targeted approaches. In December 2024, it launched a €200 million auction aimed exclusively at the maritime sector, where clear regulatory mandates already exist. Furthermore, its third auction incorporates a novel offtake mechanism that links producers with end-users through guaranteed contracts.

Simultaneously, the H2Global model, based on a double auction, is consolidating and also aims to secure demand. “The connection between production and consumption is the great challenge,” the report summarizes.

Meanwhile, in the United Kingdom, only three of the 11 projects selected in Hydrogen Allocation Round 1 (HAR1) have successfully signed contracts. Although the government allocated £2 billion in support, the slowness of the process and uncertainty about the mechanisms have hindered the implementation.

Demand-side mandates: a Europe that compels and a United Kingdom that lags behind
Mandatory quotas, incentives, and penalties are consolidating as key instruments for driving hydrogen adoption.

In the European Union, multiple mandates are already in place or are planned:

• 42% of industrial hydrogen must be non-binding renewable energy sources (RFNBO) by 2030, according to the RED III Directive.
• Fertilizer production: 42% mandatory and 50% non-binding renewable energy sources (RFNBO).
• Maritime transport: minimum 1% renewable energy sources (RFNBO) in the mix by 2031.
• Aviation: 1.2% synthetic fuels (e-SAF) by 2030.
• Road transport: 1% renewable energy sources (RFNBO) in the energy supply for mobility.

Belgium and Germany are taking more flexible stances, including low-carbon hydrogen as a valid way to meet the targets. Germany has even ruled out individual company quotas, focusing instead on emissions reduction targets.

In contrast, the United Kingdom only has a 2% SAF mandate for aviation starting in 2025, with no origin requirements, which reduces its impact on hydrogen production. It also does not consider including hydrogen in primary steel production, relying instead on electric furnace plants with recycled scrap.

An uncertain future with room for action

Westwood’s scenario establishes three levels of project feasibility: probable, possible, and at risk. Of the total 74.2 GW (LHV) targeted for activation in Europe, only 12.4 GW of electrolytic hydrogen has a realistic chance of being realized.

This figure could rise to 13.5 GW if potential CCS hydrogen projects are added, especially in countries that are opening up their regulations to these technologies.

In the United Kingdom, the pipeline reaches 16.7 GW (LHV), compared to a national target of 8.5 GW. The report indicates that 4 GW of hydrogen via CCS could materialize within the Hynet and East Coast clusters, which have £21.7 billion in committed investments over 25 years. So far, only the first phase of Hynet’s HPP1 project—350 MW (LHV)—has been confirmed.

“Without offtakers, 72% of potential projects are at risk,” warns Westwood. Viability depends on securing long-term contracts and having clear regulations that drive demand.

The future of hydrogen depends on immediate decisions

The Westwood Global Energy Group study shows that Europe’s hydrogen goals may not be met, but there is still room to avoid a critical scenario.

“The industry needs clear policies, financial mechanisms to secure demand, and effective mandates in key sectors,” the report’s authors argue. If these three conditions are met, production capacity could grow by an additional 29 GW, bringing the region closer to its target of 40 GW (LHV) by 2030.

However, without urgent progress, Europe could be left with only a fraction of its projected capacity. And the United Kingdom, even further behind, would see its ambition limited to specific niches dominated by hydrogen with carbon capture.

“The time to act is now”, concludes the report.