The EU needs a competitive hydrogen strategy for renewable and low-carbon hydrogen and their derivatives

Eurogas has published its recommendations for developing a competitive EU hydrogen strategy for renewable and low-carbon hydrogen and their derivatives.

As the European Union accelerates its transition to a climate-neutral economy, hydrogen and its derivatives (i.e., ammonia, methanol, etc.) have been identified as a key energy vector to support decarbonisation across industries. However, ensuring a secure, affordable, and competitive hydrogen supply remains a significant challenge.

The hydrogen market is currently at early stages of development, faced by challenges both on the production and demand side, as underlined by many industries representing the hydrogen sector and, as confirmed by the ACER MMR on Hydrogen Markets (2024). At the same time, hydrogen imports can play a complementary role in the development of the EU market as they can help bridge the gap between the expected growing demand and limited domestic production capacity of hydrogen. Given the EU’s ambitious decarbonisation targets, imports can provide a cost-effective and scalable supply, ensuring security while supporting industrial competitiveness. By leveraging global hydrogen markets, the EU can accelerate use, drive down costs, and create a more competitive and resilient hydrogen economy.

This paper assesses existing national/European instruments alongside EU legislation and provides key recommendations to shape a strategic and well-defined EU hydrogen strategy covering domestically produced hydrogen and imports. With the REPowerEU Plan setting a target of 10+10 Mt of domestically produced and imported renewable hydrogen, it is essential to determine how existing/in development instruments and frameworks can be leveraged and what additional measures are needed to reach this target.

To that end, Eurogas proposes the following key recommendations:

1. Support the growth of the European hydrogen market by expanding EU support mechanisms, particularly through the European Hydrogen Bank (EHB), to include low carbon molecules and support Final Investment Decisions (FIDs). Proposals for demand aggregation should be discouraged due to the nascent state of the hydrogen market.
2. Explore additional alternative instruments such as the H2Global mechanism as a limited and temporary reference for EU hydrogen import strategies, focusing particularly on business case building, to reduce costs and create synergies.
3. Revise the European Hydrogen Strategy (2020) with a technology-neutral approach, recognising low carbon hydrogen as a bridge to fully developed renewable hydrogen. The revision should include a Union Strategy for H2 imports, clarifying viable mechanisms, import corridors, and strategic partnerships to support EU’s supply ambitions.
4. Ensure the consistent reporting of methane emissions while minimising the burden on the industry when finalising the Low-Carbon Fuels Delegated Regulation, as thoroughly explained in Eurogas targeted recommendations.
5. Effectively implement the Renewable Energy Directive (Directive 2024/1711) and address existing issues with the Union Database: resolve existing challenges regarding the inclusion of gaseous fuels import/exports under the Union Database, to ensure consignments complying with EU law are traceable and can contribute to compliance markets.
6. Develop key hydrogen infrastructure for imports: it is essential to develop the necessary infrastructure for imports, including terminals, storage and transport facilities, to ensure a scalable and secure supply. This should be done by both providing additional support to the Connecting Europe Facility, and with a swift implementation of the provisions of the Hydrogen and Decarbonised Gas Market Package (2024).

Read the full recommendations below.