Green Hydrogen Was Supposed to Save European Industry. What Happened?

Green hydrogen was the darling of Europe's decarbonisation strategy. The 2020 EU Hydrogen Strategy envisioned 10 million tonnes of domestic production by 2030, supported by 40 GW of electrolyser capacity. It would replace natural gas in steel, chemicals, and heavy transport. The technology existed. All it needed was scale.

Five years later, the scale has not arrived. Europe's total electrolyser capacity at the end of 2025 stands at roughly 3 GW, less than 8% of the 2030 target. Of 132 large-scale hydrogen projects announced across the EU, only 23 have reached final investment decision. The rest are stuck in permitting, financing, or the uncomfortable space between subsidy and commercial viability.

The fundamental challenge is economic. Green hydrogen produced from renewable electricity currently costs €4-6 per kilogram. Grey hydrogen, made from natural gas, costs €1.5-2. Even with the EU's carbon border adjustment mechanism and subsidies from the European Hydrogen Bank, the price gap remains too wide for most industrial users to justify switching.

Some analysts now argue that Europe's hydrogen strategy was built on overly optimistic cost projections. A 2024 study by the Fraunhofer Institute found that electrolyser costs had declined slower than expected, and that the learning curve was flattening rather than steepening.