The new European Commission and how it sees the role of renewable hydrogen

By Felix Schulz, Technische Universität Darmstadt

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Introduction

On 27 November 2024, Ursula von der Leyen, President of the European Commission, presented her new College of Commissioners and its program at the European Parliament Plenary. This new Commission will pursue seven key priorities[1]. Relevant for the promotion of renewable hydrogen is the new plan for Europe’s sustainable prosperity and competitiveness, as well as leveraging the EU power and partnerships. However, von der Leyen did not directly address renewable hydrogen in her inaugural speech. Instead, she emphasized that a technology-neutral approach is necessary to achieve the EU’s climate targets.

Dan Jørgensen, the EU Commissioner for Energy and Housing, is the only Commissioner to receive a Mission Letter focused on hydrogen. He is tasked with developing measures for a hydrogen network and expanding the aggregate demand mechanism to include hydrogen alongside gas (European Commission, 2024a). However, since the promotion of hydrogen is a cross-cutting issue that spans multiple policy areas, multiple EU Commissioners will also need to address the issue. Despite this, relatively little information is available on how the Commission intends to promote hydrogen further. As a result, this article seeks to answer the following question: How does the new Commission view and plan to advance renewable hydrogen?

The Role of Renewable Hydrogen in EU Energy and Climate Policy 

Renewable hydrogen has received lots of attention because it is widely acknowledged as a crucial solution for decarbonizing sectors with difficult-to-reduce emissions and limited alternatives, such as heavy industry, shipping, and aviation. Furthermore, the recent global energy crisis has intensified the drive for low-emissions hydrogen due to its potential to bolster energy security (IEA, 2024).

The EU has acknowledged this by introducing a policy framework as part of the ‘Fit for 55’ package, which builds on the EU hydrogen strategy. This framework includes binding targets for the use of renewable hydrogen in industry and transport by 2030, outlined in the revised Renewable Energy Directive, which took effect in 2023. Additionally, it encompasses the Hydrogen and Decarbonized Gas Market Package, in force since 2024, aimed at fostering the development of a dedicated hydrogen infrastructure and an efficient hydrogen market. Further concrete objectives are set out in the 2022 REPowerEU strategy, which targets the production and import of 10 million tons of hydrogen each by 2030. By 2050, renewable hydrogen is expected to supply approximately 10% of the EU’s energy demand. Lastly, two delegated acts on renewable hydrogen have finalized the framework, defining what qualifies as ‘renewable hydrogen’ and establishing methods for calculating the life-cycle emissions of renewable hydrogen and recycled carbon fuels (European Commission, 2025b). Despite these policies, the EU established the European Hydrogen Bank in 2022 as a financial instrument to enhance investment security and create business opportunities for European and global renewable hydrogen production.

Despite these initiatives, several challenges exist concerning the implementation of renewable hydrogen that stem from the difficulty of achieving a synchronized development of demand, supply, and infrastructure for low-carbon hydrogen (Schlund et al., 2022). For example, since the current focus is on renewable hydrogen, scaling up production remains challenging. This has led some to advocate for broadening the scope to include other low-emission hydrogen sources, such as blue or turquoise hydrogen, to achieve the EU’s climate targets (Talus et al., 2024). Additional challenges arise from uncertainty regarding the future price of renewable hydrogen, which in turn affects investment decisions. These uncertainties stem from the unpredictability of renewable energy availability, grid electricity prices, grid electricity emission intensity, and advancements in hydrogen technologies (Brandt et al., 2024). Furthermore, hydrogen competes with direct electrification, especially in the transport sector, which further creates uncertainty about the future size of the hydrogen market and, therefore, the price of renewable hydrogen.

The New Commission’s Stance on Renewable Hydrogen

In 2023, Ursula von der Leyen tasked Mario Draghi, former president of the European Central Bank, with preparing a report on the future of Europe’s competitiveness, including recommendations to address current economic challenges. Draghi published the report in September 2024, also examining renewable hydrogen and its challenges from his perspective. The report highlights several key challenges: global early-stage venture capital for hydrogen and fuel cells declined to 10% between 2020 and 2022, down from 65% between 2015 and 2019; a significant portion of current investments lacks a clear business case; hydrogen transportation remains costly, with the necessary infrastructure yet to be developed; operational costs (OPEX) are often uncertain for immature technologies, leading to a ‘first-mover disadvantage’; and, as long as electricity prices remain high, these costs tend to exceed those of traditional technologies (Draghi, 2024).

The report also presents several recommendations to promote and accelerate the market ramp-up of renewable hydrogen. For instance, the EU should enable more cities and regions to participate in hydrogen valleys[2]. Additionally, integrated planning across renewables, flexibility mechanisms, battery storage, hydrogen, and other energy sectors should help prevent inefficient investments. Another key recommendation is to extend acceleration measures and emergency regulations to heat networks, heat generators, and infrastructure for hydrogen and carbon capture and storage. Regarding funding and investment, the report advocates for using common, competitive, and straightforward instruments, such as Carbon Contracts for Difference (CfDs) or competitive auctions organized by the European Hydrogen Bank. To support the early production and deployment of hydrogen, Member States could allocate revenues from ETS allowances to further drive decarbonization (Draghi, 2024).

Von der Leyen has placed Draghi’s recommendations at the core of her second term as Commission President, incorporating their key conclusions into the Mission Letters to her Commissioners. She has also signaled the creation of a Task Force to implement these recommendations through proposals and legislation (Politico, 2024). Although the EU Commissioner for Energy and Housing has been specifically tasked with overseeing the market ramp-up of renewable hydrogen, several other commissioners will also be involved in hydrogen-related matters, according to their Mission Letters.

Since the adoption of renewable hydrogen and fuel cells falls under clean tech, several tasks outlined in the Mission Letters to the Commissioners are highly relevant. One key initiative is the Clean Industrial Deal, which is supposed to unlock investment, establish lead markets for clean technologies, and create the conditions for companies to grow and compete—objectives that also apply to the market ramp-up of renewable hydrogen. The implementation of this initiative is led by Teresa Ribera Rodríguez, Executive Vice-President-designate for a Clean, Just, and Competitive Transition; Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy; and Wopke Hoekstra, Commissioner for Climate, Net Zero, and Clean Growth (European Commission, 2024d). While unlocking investment is particularly crucial for advancing renewable hydrogen, the means to achieve this remain unclear.

According to REPowerEU, 10 million tons of renewable hydrogen should be imported by 2030, necessitating the establishment of energy partnerships—a priority also reflected in the Mission Letters to the Commissioners. Jozef Síkela, Commissioner-designate for International Partnerships, is responsible for ensuring that these partnerships, along with Global Gateway investments, align with new Clean Trade and Investment Partnerships. This alignment aims to secure the supply of raw materials, clean energy, and clean technologies from around the world.

Regarding renewable hydrogen, this could involve deepening cooperation with regions well-suited for its production, such as Chile, Australia, and North Africa (European Commission, 2024b). Additionally, High Representative Kaja Kallas has been tasked with improving the coordination between internal and external EU policies, including climate and energy (European Commission, 2024c). Effective collaboration between the Commissioner and High Representative could help ensure that renewable hydrogen imports are closely aligned with domestic demand.

Additional aspects related to the market ramp-up of renewable hydrogen, as outlined in the Mission Letters, include expanding hydrogen infrastructure and reducing energy prices—both of which are critical for the cost-effectiveness of electrolyzers. Another key element is the commitment to a technology-neutral approach in the transport sector, which also encompasses e-fuels.

The EU Competitiveness Compass provides more concrete insights into how the Commission plans to accelerate investment in hydrogen technologies. It envisions expanding auction-based funding mechanisms, building on those pioneered by the European Hydrogen Bank. Additionally, the initiative introduces changing the state aid measures to incentivize the industrial adoption of hydrogen technologies. Another key aspect is de-risking investments in hydrogen refueling infrastructure, supporting the automotive sector’s clean transition (European Commission, 2025a).

Lastly, the Commissioner for Energy and Housing has been tasked with accelerating the development and deployment of Small Modular Reactors (SMRs) in Europe throughout the 2030s. If these SMRs meet the ‘Do No Significant Harm’ (DNSH) criteria (European Commission, 2025e), they can also be used for low-emission hydrogen production. This could contribute to increasing European low-emission hydrogen output in the future while also enhancing energy security.

Key Challenges and Risks

Despite the Commission’s plans for promoting renewable hydrogen, significant challenges and risks remain. First, the future trajectory of investment in renewable hydrogen and fuel cell technologies remains uncertain. However, the Commission is actively addressing these risks, with particular focus on adapting state aid rules and de-risking investments—both of which hold promising potential.

Next, bottlenecks in the necessary distribution infrastructure could pose significant challenges, with potential delays in planning and developing these projects. In this context, pragmatism is essential. For instance, when Germany’s natural gas imports plummeted following the Russian invasion of Ukraine, an LNG terminal was planned and constructed within a remarkably short period (Heilmann et al., 2023). A similar approach may be needed to accelerate hydrogen infrastructure development.

Additionally, the new Commission has emphasized a technology-neutral approach. In the context of the hydrogen market ramp-up, other forms of hydrogen, such as blue and turquoise, may receive additional EU funding. This approach could accelerate the growth of the low-emission hydrogen market by expanding production capacity. However, it remains unclear to what extent the Commission is willing to adapt its delegated acts defining renewable hydrogen. If the Commission were to revise its definition and adjust rules on additionality, as well as spatial and temporal correlation, it could reduce the cost of renewable hydrogen (Hordvei et al., 2024).

Conclusion

The new Commission continues to regard renewable hydrogen as a cornerstone of its strategy to achieve climate targets. The Draghi report has outlined the necessary steps to accelerate its market ramp-up, and Ursula von der Leyen has directed her College of Commissioners to implement these recommendations.

However, many of the longstanding challenges and risks are likely to persist, particularly uncertainties surrounding the future scale of the hydrogen market and the cost of renewable hydrogen. Nevertheless, if the new Commission adheres to the Draghi report’s recommendations—particularly those related to financial incentives, such as allocating revenues from ETS allowances to support decarbonization—private investors may gain greater confidence in the market’s growth. A promising outcome would be a renewed surge in global early-stage venture capital for hydrogen and fuel cell technologies.

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[1] The key priorities include: 1. A new plan for Europe’s sustainable prosperity and competitiveness. 2. A new era for European Defense and Security. 3. Supporting people, strengthening the European societies and social model. 4. Sustaining the quality of life, including food security, water, and nature. 5. Protecting democracy and upholding European values 6. Being a global Europe that is leveraging its power and partnerships. 7. Delivering together and preparing the EU for the future (European Commission, 2025d)

[2] Hydrogen Valleys were named in the RePowerEU plan as an essential prerequisite for expanding the European hydrogen economy. It has four characteristics: Large in scale, high value-chain coverage, supply of more than one sector, and geographically defined scope (European Commission, 2025c).

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