The European Union has set ambitious targets for hydrogen: 10 Mt of green H2 produced and 10 Mt imported by 2030. However, implementation is lagging far behind expectations.

According to the European Hydrogen Index 2025, a report developed by EY and Hyvolution, 98% of European hydrogen projects are still at the concept or feasibility stage, highlighting the industry’s lack of maturity.

One of the main challenges is that while the European Commission has promoted regulations and incentive programmes, funding processes remain slow and complex. “Access to subsidies is a major obstacle, with approval times ranging from 12 to 24 months,” the report states. These delays create a domino effect that slows investment and the development of large-scale projects.

Financing: The Biggest Barrier to Hydrogen Expansion

Europe has allocated between €50 billion and €75 billion to expand electrolysis capacity and an additional €200 billion to €340 billion for new renewable electricity production. However, these funds are not reaching project developers quickly enough.

The EU Innovation Fund has distributed €2.8 billion to hydrogen initiatives, but approval processes can take up to two years. Moreover, technical and regulatory requirements favour large companies, leaving many smaller players out. “Access to these funds remains a challenge, particularly for projects in urgent need of financing,” the document warns.

A Supply Chain Not Yet Ready for Scaling

Developing a hydrogen industry requires a robust supply chain, but Europe faces significant bottlenecks in electrolyser manufacturing and hydrogen transport infrastructure.

To meet the 100 GW installed capacity target by 2030, Europe needs to increase electrolyser production at a compound annual growth rate (CAGR) of 150% between 2025 and 2030, significantly higher than the 45% recorded between 2020 and 2024.

However, electrolyser manufacturing faces multiple challenges:

• Production is dominated by proton exchange membrane (PEM) and alkaline electrolyser technologies, which remain costly.
• Access to critical raw materials, such as platinum and iridium, remains a challenge, driving up production costs.
• China leads in manufacturing capacity, with electrolysers of over 100 MW in operation, while European projects are still in the demonstration phase.

To mitigate this risk, the EU has launched initiatives such as the Net-Zero Industry Act (NZIA), but the report warns that “without concrete measures to accelerate industrialisation, Europe will fall behind China and the United States.”

Uncoordinated Member States: A Structural Problem

Another key obstacle is the lack of coordination among Member States. While the EU has set a 10 Mt renewable hydrogen production target, only 60% of this figure is backed by national commitments.

Countries such as France and Spain have adopted ambitious strategies, but others, such as Italy and Poland, have yet to define clear plans. “The lack of a unified vision is affecting investment and the development of shared infrastructure, such as hydrogen transport corridors,” the report states.

Additionally, initiatives such as Germany’s H2Global, which aims to promote hydrogen imports, are not fully aligned with the EU’s overarching strategy, creating uncertainty for investors.

The Major Challenge: Attracting Private Investment

The report highlights that without a solid and guaranteed market, investors will remain cautious. “Long-term purchase agreements are essential for projects to reach the final investment decision (FID),” the document states.

Currently, only 0.3% of hydrogen demand in the EU comes from renewable sources, indicating slow adoption. Moreover, key sectors such as steel, maritime transport, and aviation have yet to fully embrace renewable hydrogen as a viable alternative.

To make the market more attractive, several solutions are proposed:

• Expanding the use of Contracts for Difference (CfD) to reduce price volatility.
• Greater support for hydrogen consortia and ecosystems, such as Green Hysland in Mallorca.
• Developing storage and transport infrastructure, such as the hydrogen corridor between Germany and Denmark.

Without a clear strategy to secure demand, many projects will remain stuck in the concept stage.

Can Europe Bridge the Gap?

The European Hydrogen Index 2025, developed by EY and Hyvolution, makes it clear that the gap between ambition and reality remains significant. While progress has been made in regulation and financing, delays in implementation, lack of infrastructure, and uncertain demand continue to pose major challenges.

To accelerate the growth of hydrogen in Europe, the following actions will be essential:

• Streamlining access to investment funds and reducing approval times.
• Developing a more competitive supply chain that is less dependent on China.
• Better coordination between Member States’ objectives and the EU’s overall strategy.
• Securing long-term purchase agreements to attract investors.

Although the EU has made progress in establishing a regulatory and financial framework, the report concludes that the real challenge lies in executing these plans. Only through decisive action and a coordinated strategy can Europe establish itself as a global leader in the transition to renewable hydrogen.

Full report:

1741684663699