Hydrogen Europe is urging the European Union to become the main driver in transforming the clean hydrogen economy from a collection of pilot projects into a large-scale, structured market with clear and predictable demand. In its latest position paper, the association argues that the current regulatory framework, although solid in some areas, is not sufficient to stimulate real market uptake of low-carbon hydrogen technologies.

“The key lies in unlocking and scaling hydrogen demand through policy tools that go beyond mandates and activate real markets for low-carbon products,” the document states. One of the main proposals is the establishment of Green Lead Markets (GLMs) as a core pillar of the upcoming Industrial Decarbonisation Accelerator Act (IDAA).

The EU’s critical role in creating demand

Hydrogen Europe estimates that even if current EU regulations are fully implemented at the national level, clean hydrogen demand would only reach around 1.8 million tonnes (Mt) by 2030. With more ambitious obligations, that figure could climb to 4.2 Mt. However, this is still far below the 8 Mt needed to replace grey hydrogen currently used in EU industry.

“These numbers remain well below the ambitions laid out in the 2020 Hydrogen Strategy,” the document warns. It further highlights the importance of demand-side measures, especially in strategic sectors such as steel, fertilisers, aviation and shipping. Additionally, it urges that imported products must meet the same green criteria to avoid distorting competition and carbon leakage.

Addressing the green premium

Hydrogen Europe notes that renewable hydrogen remains significantly more expensive than fossil-based alternatives, with current production costs ranging between €5.5 and €13 per kilogram depending on scale and location. This is a major challenge for industries seeking to decarbonise without losing competitiveness.

Still, success stories are emerging. Yara has partnered with PepsiCo and Lantmännen to supply low-carbon fertilisers. In the steel sector, the Stegra project in Sweden has signed supply agreements with Mercedes-Benz, BMW and Volvo for green steel. “The key to unlocking demand has been the active engagement of downstream buyers,” Hydrogen Europe affirms.

Carbon footprint labelling as a transparency mechanism

Hydrogen Europe underscores the urgent need for an EU-wide, standardised carbon labelling system for consumer and industrial products derived from clean hydrogen. According to the position paper, uniform certification of carbon intensity—particularly at the level of final goods—would create transparency in emissions accounting and drive market demand for low-carbon alternatives.

“Robust and transparent certification schemes are essential to support the development of Green Lead Markets,” the association states, referring to these labels as a cornerstone for market activation. The example set by the steel industry is cited as a benchmark. The Low-Emission Steel Standard (LESS), developed by the German Steel Association (WV Stahl) and later institutionalised in Brussels, is recommended as a model. This scheme uses a sliding scale that accounts for both embedded emissions and recycled content, avoiding the pitfalls of rigid carbon thresholds.

Hydrogen Europe argues that such labelling must include the renewable content of hydrogen used—especially in processes like direct reduced iron (H₂-DRI)—to reinforce sectoral climate ambition. In parallel, the fertiliser sector is highlighted as another promising field for carbon labelling. A harmonised certification scheme under the Fertilising Products Regulation (FPR) is proposed, particularly for nitrogen-based fertilisers.

“Labelling is a necessary condition, but not sufficient on its own,” the paper clarifies. To be effective, it must be combined with incentives and downstream obligations that reward the highest-performing product categories, thus creating real pull factors for hydrogen-based production.

Driving demand through public procurement and obligations

Hydrogen Europe identifies public procurement and regulatory obligations as critical instruments to create lead markets for clean hydrogen-based products.

• Steel: Around 11% of the EU steel market is driven by public procurement. The EU should set mandatory minimum shares of low-carbon steel in publicly funded infrastructure projects. Using instruments like the LESS standard, procurement schemes can differentiate between emission levels and incentivise RFNBO use.

• Fertilisers: Public food procurement in hospitals, schools and institutions could become a major driver of green fertilisers. While cities like Copenhagen and Brussels already apply strict organic and local sourcing rules, Hydrogen Europe recommends adding criteria related to fertiliser origin and carbon intensity.

• Transport: The Clean Vehicles Directive requires a growing share of zero-emission public buses. However, hydrogen-powered vehicles are underrepresented, especially in intercity and heavy-duty applications. New procurement rules could specifically require hydrogen-based mobility solutions.

Obligations for private operators

While public procurement can stimulate demand in construction, transport and public services, most industrial sectors depend on private procurement. In this case, Hydrogen Europe recommends:

• Incentives or mandatory quotas for automakers, appliance manufacturers and tech companies to use low-carbon steel and materials.

• Partnerships with large corporate buyers in agriculture and food to adopt minimum shares of clean fertilisers.

• New sustainability criteria in biofuel value chains, including a requirement that first-generation biofuel crops use clean fertilisers.

These tools would send clear market signals, reduce uncertainty for investors, and build scale for clean hydrogen applications across industries.

A call to action for the EU

Hydrogen Europe concludes its paper with a clear message: now is the time for the EU to act decisively. With production technologies maturing and frontrunners proving market viability, the next step is to implement strong, coordinated demand-side strategies that balance the cost of decarbonisation and reduce investment risk.

“Lead markets offer an implementable pathway to mainstream clean hydrogen across the European economy,” the paper states. The upcoming Industrial Decarbonisation Accelerator Act (IDAA) is seen as a once-in-a-generation opportunity to link climate ambition with industrial strategy.

“Hydrogen is not just a decarbonisation tool—it is a strategic input for securing supply chains, supporting competitiveness, and building Europe’s industrial future,” concludes Hydrogen Europe.