Europe is racing against time. Five years after the launch of the Hydrogen Strategy, regulatory progress has not been enough to bring most projects to final investment decision (FID). In 2024, just 4% of global hydrogen projects had achieved FID—most of them in China—according to a report by Hydrogen Europe. This figure exposes a financial gap threatening the continent’s energy competitiveness.

Despite a maturing regulatory framework and a massive pipeline of renewable and low-carbon hydrogen projects, Europe still struggles to secure the investments needed to move from planning to execution. Halfway between the launch of the EU Hydrogen Strategy and the 2030 climate targets, the priority must now be to close the financial gap and move projects forward.

Hydrogen Europe’s report notes growing optimism in the sector, mainly because many companies have managed to navigate uncertainty, regulatory hurdles, and a still-immature value chain to get their projects moving.

In the first two months of 2025 alone, four additional projects reached FID—three based on water electrolysis totaling 35 MW, and one large-scale €800 million renewable methanol project by Repsol in Tarragona. Several more are already under development.

“We are well on track to surpass the number of FIDs in 2025 compared to the previous year,” the report states.

Mathieu Guesné, CEO and co-founder of French renewable hydrogen producer Lhyfe, explains: “Nothing happens overnight. You need to understand that solar energy now attracts more investment than oil, but it took decades. Batteries also took about 40 years to reach gigawatt scale,” says Guesné, with the optimism and confidence of someone who’s achieved results.

Lhyfe represents a turning point. The company operates five plants in France and signed an offtake agreement with INOCEL for 140 tonnes per year. In December 2023, it secured a €28 million corporate financing package from Crédit Agricole, HSBC, and Bpifrance. “What allows Lhyfe to secure corporate debt is that we’ve shown we’re profitable and scalable,” Guesné explains. “You’re not selling PowerPoints—you’re selling hydrogen.”

The key: a bankable model. Lhyfe also secured €149 million under the third wave of IPCEI and an €11 million grant from Sweden’s Klimatklivet for a new project. “We’ve shown that producing and selling hydrogen can be viable,” he adds. His view is clear: each country must develop long-term policies tailored to its production potential and demand.

From an institutional perspective, the European Investment Bank (EIB) sees immediate potential in replacing grey hydrogen in sectors such as steel, fertilizers, and chemicals. “The key to bankable projects is securing competitive electricity supply,” says Thomas Östros, EIB Vice President. The EIB has already allocated €1.3 billion to hydrogen projects over the past decade, including a 100 MW electrolyser in Portugal and funding for the H2 Green Steel plant in Sweden.

Still, challenges persist. “The technologies are mature but not yet competitive,” Östros warns. The EIB anticipates modest growth near industrial demand centers and encourages project developers to reach out for financing and advisory support.

While securing commercial debt, as Lhyfe did, should be a goal for all hydrogen players, early-stage support from multilateral development banks is essential for the industry’s success. Being able to attract funding while managing elevated risk is the only way to reduce it over time.

The EIB’s positive stance is reinforced by its REPowerEU+ package of €45 billion, through which the bank aims to mobilize €150 billion in new investments by 2027 for green technologies, including renewable hydrogen.

Among the supported projects are a 20 MW electrolyser in Spain for the fertilizer sector, and a 100 MW facility in Portugal for refining. Additionally, alongside the Nordic Investment Bank, the EIB raised €371 million to co-finance Sweden’s H2 Green Steel. In the Netherlands, it supports hydrogen refueling infrastructure through venture debt, while in Germany, it finances innovations in solid oxide electrolyser design.

“We have a strong pipeline of projects and expect the number of investment proposals to rise in the medium term, driven by EU policies and growing industrial demand,” says Östros with cautious optimism.

 IPCEI: The Flagship That Has Yet to Set Sail

The IPCEI (Important Projects of Common European Interest) program pledged €18.9 billion in public funding to mobilize an additional €24.7 billion in private investment. But of the 122 projects evaluated, only 21% have reached FID. Outside IPCEI, the figure stands at just 8–10%.

The reasons are structural. According to Hydrogen Europe:

• Only €12.8 billion of the €18.9 billion announced has actually been allocated.

• 31% of projects have not received any funding.

• 69% have signed grant agreements—but with delays of up to two years.

• 78% of developers expressed frustration with the European Commission’s approval process.

“Bureaucracy has overwhelmed the system—some companies received over 400 separate queries from different EU directorates,” the report warns. Countries apply inconsistent rules: Austria caps subsidies at 35%, France at 70%, and Belgium has no national cap—though Flanders limits support to 50%.

The disparity is stark. Germany stands out for its speed: 80% of Hy2Infra projects that reached FID are based there. Other countries struggle, especially those relying on the Recovery and Resilience Facility (RRF), which imposes strict deadlines for fund disbursement by 202

Recommendations to Unblock Investment

To help IPCEI achieve its goals, Hydrogen Europe proposes key reforms:

• Centralize the grant system, modeled on the Innovation Fund’s “Grant-as-a-Service.”

• Accelerate the approval process, with strict deadlines and early in-person presentations.

• Ensure transparency about allocated funds and project status.

• Foster informal, regular meetings between governments and industry to build alliances.

“We’ve awakened the giant, now it must become agile,” said former European Commission Vice President Margrethe Vestager.

Global Outlook: Can Europe Lead?

From the European Bank for Reconstruction and Development (EBRD), Harry Boyd-Carpenter insists on strong regulatory frameworks. “We need integrated planning and clear regulation,” he says. The EBRD has funded hydrogen projects in Egypt and Uzbekistan, both aimed at industrial use.

According to Boyd-Carpenter, a healthy hydrogen market requires a balance between domestic production and imports, connected infrastructure, and competitive pricing. “Projects must be bankable, sustainable, and make sense within the wider energy system,” he concludes.

Europe is playing for more than just investment returns. Its position as a global leader in clean industrial technologies hangs in the balance. To avoid repeating past mistakes—as with solar and batteries—the region must act decisively, equitably, and efficiently.

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