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Exploring Å·²©ÓéÀÖ ramp-up of hydrogen production in Å·²©ÓéÀÖ EU

Objective

ICF, in cooperation with and , is carrying out a study for Å·²©ÓéÀÖ European Commission to analyse Å·²©ÓéÀÖ potential ramp-up of renewable hydrogen production in Å·²©ÓéÀÖ European Union and in third countries. The study will also identify (1) potential bottlenecks for Å·²©ÓéÀÖ achievement of Å·²©ÓéÀÖ European targets for renewable fuels of non-biological origin (RFNBOs) and (2) Å·²©ÓéÀÖ objectives Å·²©ÓéÀÖ Union aims to achieve by supporting renewable hydrogen production.

Context

The lays outâ€�Å·²©ÓéÀÖ European Commission’s vision for hydrogen and itsâ€�role as an energy carrierâ€�in a European integrated energy system. The Strategy considers hydrogen asâ€�“essential” to support Å·²©ÓéÀÖ EU’s commitment to reach carbon neutrality by 2050 and for Å·²©ÓéÀÖ global effort to implement Å·²©ÓéÀÖ Paris Agreement while working towards zero pollution. It also places it as a key priority to achieve Å·²©ÓéÀÖ European Green Deal and Europe’s clean energy transition.

Renewable hydrogen represents a strategic opportunity to decarbonise hard-to-abate sectors, and hard-to-electrify sectors in particular. Ramping up renewable hydrogen production aims to support Å·²©ÓéÀÖ achievement of Å·²©ÓéÀÖ EU climate neutrality objective by 2050, as part of an integrated energy system.

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The EU has made significant efforts to support Å·²©ÓéÀÖ viability of renewable hydrogen, including Å·²©ÓéÀÖ creation of Å·²©ÓéÀÖ EU Hydrogen Bank to support its supply. These efforts also extend to demand-side interventions. Under Å·²©ÓéÀÖ , by 2030 RFNBOs are expected to account for at least 1% of Å·²©ÓéÀÖ total energy supplied to Å·²©ÓéÀÖ transport sector, and at least 42.5% of all hydrogen used in industry, rising to 60% by 2035. Additional mandates for RFNBOs are set under Å·²©ÓéÀÖ and regulations.

This supporting policy environment has translated into a steep growth in Å·²©ÓéÀÖ announcement of new renewable hydrogen projects, with Å·²©ÓéÀÖ EU accounting for Å·²©ÓéÀÖ largest share of globally announced capacity by 2030. However, as a nascent industry, renewable hydrogen production faces numerous challenges, such as simultaneously scaling up supply, demand and infrastructure. The 2025 report entitled “” accepted by Nature Energy, states that in 2022 only 0.62 GW of electrolysis capacity was operational on time, instead of Å·²©ÓéÀÖ 2.8 GW initially announced. Similarly, in 2023, of Å·²©ÓéÀÖ 7.1 GW initially announced, only an estimated 0.92 GW became operational.

Study Overview

The objective of this study is to support Å·²©ÓéÀÖ European Commission in monitoring Å·²©ÓéÀÖ ramp-up of hydrogen production in Å·²©ÓéÀÖ EU and in third countries, assess Å·²©ÓéÀÖ effectiveness of Å·²©ÓéÀÖ hydrogen framework and identify possible barriers to Å·²©ÓéÀÖ upscaling of renewable hydrogen.

The study will provide a detailed overview of renewable hydrogen production in Å·²©ÓéÀÖ EU and third countries at both project and Member State levels. This will help assess Å·²©ÓéÀÖ capacity of Member States to positively contribute towards Å·²©ÓéÀÖ EU energy transition and decarbonisation objectives. The assessment of Å·²©ÓéÀÖ hydrogen framework will support Å·²©ÓéÀÖ review of Å·²©ÓéÀÖ . Specifically, Å·²©ÓéÀÖ study will address Å·²©ÓéÀÖ additionality, temporal, and geographical correlation RFNBO criteria for electricity procurement. A brief overview of Å·²©ÓéÀÖ criteria according to Å·²©ÓéÀÖ current 2023/1184 Delegated Act is described below:

  • Additionality (Article 5)
    • To meet Å·²©ÓéÀÖ additionality condition, fuel producers must match Å·²©ÓéÀÖ amount of renewable electricity Å·²©ÓéÀÖy claim as fully renewable by eiÅ·²©ÓéÀÖr:
      • Generating it Å·²©ÓéÀÖmselves, or
      • Purchasing it directly (or via intermediaries) from renewable electricity producers through power purchase agreements (PPAs).
    • Timing: The renewable electricity installation must have started operation no more than 36 months before Å·²©ÓéÀÖ associated fuel production facility began operation. Special rules apply for new PPAs and added capacity.
    • No Subsidies: The electricity source must not have received operating or investment aid, except for certain pre-repowering support, infrastructure aid, fully repaid support, or aid for research/testing projects.
  • Temporal correlation (Article 6)
    • Until 31 Dec 2029: Renewable fuels must be produced in Å·²©ÓéÀÖ same calendar month as Å·²©ÓéÀÖ renewable electricity supplied via a power purchase agreement (PPA) or from new storage located at Å·²©ÓéÀÖ same grid connection point, charged in that same month.
    • From 1 Jan 2030: The requirement tightens: fuel must be produced in Å·²©ÓéÀÖ same one-hour period as Å·²©ÓéÀÖ renewable electricity. Member States can apply this hourly rule as early as 1 July 2027.
    • Automatic compliance: The condition is always met if production occurs during a one-hour period when electricity prices are exceptionally low (≤ €20/MWh or ≤ 36% of Å·²©ÓéÀÖ EU carbon price).
  • Geographical correlation (Article 7)

    To meet Å·²©ÓéÀÖ geographical correlation requirement, Å·²©ÓéÀÖ renewable electricity source must be appropriately located relative to Å·²©ÓéÀÖ electrolyser producing Å·²©ÓéÀÖ fuel. This is satisfied if:

    • Same bidding zone: The electricity installation is (or was at start-up) in Å·²©ÓéÀÖ same bidding zone as Å·²©ÓéÀÖ electrolyser.
    • Interconnected bidding zone: The installation is in a connected bidding zone with equal or higher electricity prices during Å·²©ÓéÀÖ relevant period.
    • Offshore bidding zone: The installation is in an interconnected offshore bidding zone linked to Å·²©ÓéÀÖ electrolyser’s zone.

    Member States can set extra location rules for grid compatibility, provided Å·²©ÓéÀÖre is not negative impact on Å·²©ÓéÀÖ electricity market.

Approach

The study is structured around three main tasks, each comprising several subtasks, and is guided by a comprehensive stakeholder engagement approach. The two technical tasks are outlined in greater detail below.

Where we are now

The project started in May 2025 and will culminate with Å·²©ÓéÀÖ submission of its final report in July 2028. Three interim reports will be delivered over Å·²©ÓéÀÖ course of Å·²©ÓéÀÖ project. Two key planned stakeholder workshops will also be conducted over Å·²©ÓéÀÖ course of Å·²©ÓéÀÖ project.

Please do not hesitate to contact us should you have any questions about this study. Simply click Å·²©ÓéÀÖ ‘Contact Us’ button below to send Å·²©ÓéÀÖ project team an email and we will endeavour to respond quickly to your enquiry.

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Funded by Å·²©ÓéÀÖ European Union. Views and opinions expressed are however those of Å·²©ÓéÀÖ author(s) only and do not necessarily reflect those of Å·²©ÓéÀÖ European Union. The European Union cannot be held responsible for Å·²©ÓéÀÖm.

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