Green Hydrogen Faces Reality Check in Europe
Cyril Widdershoven

Realism is still far away in the European green hydrogen sector; the IEA reports significant constraints. It is high time to bring a more realistic approach to the forefront of our strategies.

Realism still seems to be out of reach when the world hydrogen sector has been sailing into the Port of Rotterdam, all having coffee at the World Hydrogen Summit 2025. The last day's optimism has been vented by major green hydrogen producers, technology suppliers, and a wide range of governments, led by the Dutch government and its counterparts from Oman, Algeria, Australia, and other far-fetched regions. While hearing the optimism and official strategies, realities on the ground are much more tricky—or even negative—especially when looking at real project volumes in place or the bankability of most other projected investments. While the European Union and the Dutch or German governments are pushing—via subsidies and market manipulation—a possible growth of supply and demand for green hydrogen, or its derivatives, green ammonia or methanol, market fundamentals are all red.

As stated by the OECD energy watchdog in Paris, the International Energy Agency (IEA), in its latest Northwest European Hydrogen Monitor 2025, strategies and implementation are still not in sync. In its report, which was presented by Greg Molnar, gas analyst at the IEA, at the World Hydrogen Summit 2025 in Rotterdam, Northwest Europe is at the forefront of low-emission hydrogen developments, as it accounts for 40% of total European hydrogen demand. At the same time, NW-Europe also holds vast and untapped renewable energy and carbon storage potential, mainly in the North Sea. While massive investments are being made in setting up the so-called green hydrogen backbone—a NW-European hydrogen pipeline network supported by Germany and the Netherlands—demand is still fledgling or doesn’t exist. While plans (NL, Belgium, Denmark, Germany, and the UK) promise to reach a 30–35GW electrolyzer capacity by 2030, no real progress is made. As Molnar indicated in his presentation, only 6% of the total projects mentioned or discussed at present are being implemented. At the same time, only 9% of total projects under discussion are reaching FID. The reality is that most strategies are hit by a lack of investments, a lack of demand, too-high price settings, and no or very meager bankability.

Even though the IEA officially doesn’t mention it, nor does any other green hydrogen party at present, there is no market without getting a green hydrogen commodity market working. Establishing a viable commodity market is not just a necessity—it is the backbone of the industry. Without a possible price point developed for green hydrogen and derivatives, the financial world will not be willing or interested in taking the risk. The bankability of projects that cannot show a feasible margin or projected income stream is out of order. As shown in most other commodity markets, such as crude oil, price points make a commodity financially attractive. Without a possible volatile but working commodity market, the need for long-term contracts—based on subsidy schemes or government interference—is not a strategy that should be followed.

While speaking on the sidelines of the Summit in Rotterdam, some participants also questioned the current full-scale push for green hydrogen, not green ammonia or other options. While markets are looking for low-emission or renewable energy solutions, choices are being made by politicians and others based on their assumptions, not based on technical and commercial facts. (Green) ammonia is a much easier and more functional alternative, as it doesn’t have the same transport issues, doesn’t need vast new vessels, and poses fewer risks when emitted into the air. Current developments are based on strategies that seem neither feasible nor functional, especially when looking at the price levels of green hydrogen versus other alternatives. Competitiveness is not there, and assessments indicate that it will not even reach price levels that could become commercially interesting before 2040. Enforcing green hydrogen as a fuel by increasing emission tariffs or other instruments should—especially in Europe—not be taken as an option, considering the dire state of mainstream industrial sectors and transportation within the European Union and the UK.

The IEA, as representative of its member governments, still advocates a renewed push to integrate regional markets, targeting synergies. However, as history has proven, the choices made by companies will ultimately shape the future of the European green hydrogen sector, often contrary to the perceived goals of governments or NGOs.

Still, European governments seem to be sticking to their already fledgling strategies. The European Union has allocated almost €1 billion for renewable hydrogen production projects. The latter will be mainly used as a subsidy, indicating a subsidy range of €0.20 to €1.88 per kg of green hydrogen. The EU also stated that it has selected 15 renewable hydrogen projects to receive €992 million in budget funding. This funding in five countries is slated to produce around 2.2 million tons of hydrogen over 10 years. The EU ETS system funds the total.

The market is also eagerly awaiting the next auction of the European Hydrogen Bank, which is scheduled for the end of 2025 with a budget of up to €1 billion. During the World Hydrogen Summit, Dutch Minister Hermans announced that the Netherlands and Germany agreed to invest around €600 million in the acquisition of green hydrogen, trying to push the market to become more fluent. The latter will be organized via Hintco, set up by H2 Global. The latter will be a competition-based sales process, entailing a 10-year green hydrogen purchase agreement (HPA). The latter is still interesting, as the whole process also allows for the inclusion of green ammonia and methanol.

While market participants—such as suppliers, manufacturers, and governments—maintain a clear optimistic view, the reality is still bleak. Investments are lacking, subsidies are distorting most progress, and demand is not available. It is crucial to reconsider strategies and realize that green hydrogen will be part of the solution (by 2050) but will not dent hydrocarbon or nuclear demand. The time for action is now.

By Cyril Widdershoven for Oilprice.com

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently he works as Director of Energy Security and Supply Chains, at Strategy International Cyprus. Next to this, he fills several advisory positions with international think tanks in the Middle East and energy sectors in the Netherlands, the United Kingdom, and the United States.

Dr.Widdershoven earned his post graduate degrees at King’s College, University of London, Department of War Studies, and an MA in Middle East Studies at the University of Nijmegen, the Netherlands. The main focus of his work has been on geopolitical risks, terrorism, 
fundamentalism and military/defense related issues in the MENA region. At the same time, due to consulting work and advisory, he has become involved in the oil, gas and energy sectors in the region and Africa.

He held several senior publishing positions in leading energy publications such as Afroil, Middle East Oil and Gas, and North Africa Oil and Gas Magazine Cairo, and he continues to oversee the Mediterranean Energy Political Risk Consultancy. Dr. Widdershoven worked on M&A operations in Egypt, Libya, Sudan, and Iran, he studied the pipeline operations in Libya, Algeria, Nigeria and Turkey, and he assessed risk for institutional investors and banks in Libya, Egypt, Saudi Arabia, Oman and Iraq, all while advising the Dutch government and international organizations on related issues.

Dr Cyril Widdershoven is owner of Dutch consultancy VEROCY and Global Head Strategy & Risk at Berry Commodities Fund.

 

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