The EU’s industrial policy on renewable hydrogen : legal framework has been mostly adopted : time for a reality check. Special report 11, 2024.
Date: 2024-07-18
Institutions: European Court of Auditors
Subjects: EU Member State, EU energy policy, EU financing, EU industrial policy, audit, energy audit, hydrogen, performance audit, renewable energy, report, substitute fuel

EN 

2024 

11 

Special report  The EU’s industrial policy on 
renewable hydrogen 
Legal framework has been mostly adopted – time 
for a reality check 

 
 
Contents 

Executive summary 

Introduction 

Hydrogen explained 

Renewable hydrogen as one way to decarbonise 

Industrial policy challenges triggered by decarbonisation efforts 

Roles and responsibilities 

EU regulatory framework 

Audit scope and approach 

Observations 

The Commission set unrealistic hydrogen production and import 
targets - the EU is not on track for achieving them 

The Commission set capacity targets without recourse to robust analyses 

Member states have divergent ambitions which are not necessarily aligned 
with the EU targets 

Achieving EU targets has been compromised by a bumpy start 

The legal framework is mostly complete, but its overall impact on 
the market is as yet uncertain 

The Commission proposed most legal acts within a short period of time, but 
delays in adopting the rules for renewable hydrogen held up market 
development 

The adoption of the EU rules for renewable hydrogen provided certainty, 
but the Commission did not assess their effects on the market ramp-up 

The impact of the EU regulatory framework on the cost competitiveness of 
renewable and low-carbon hydrogen remains to be seen 

The Commission took all possible measures to speed up permitting; 
uncertainty remains whether member states can follow suit 

Certain state aid rules were amended to facilitate subsidy-granting, but the 
actual provision and level of support depends on member states 

2 

Paragraph 

I-X 

01-16 

01-04 

05-11 

12-14 

15 

16 

17-21 

22-119 

22-45 

24-30 

31-37 

38-45 

46-77 

47-53 

54-61 

62-63 

64-68 

69-77 

 
 
There are multiple EU funding sources for hydrogen projects, but 
no guarantee that they will be appropriate for developing an 
EU-wide market 

Estimates of investment needs by the Commission and member states are 
not exhaustive 

EU funding for the hydrogen value chain is scattered over several EU funding 
programmes 

3 

78-106 

80-82 

83-97 

No guarantee yet that available public funding allows hydrogen production 
potential across the EU to be harnessed 

98-106 

Insufficient coordination efforts by the Commission, both 
internally and with member states, but also with industry 

107-119 

Neither internal Commission coordination nor coordination between the 
Commission and member states yet ensures that all parties are pulling in the 
same direction 

109-114 

Good first results from coordination between the Commission and industry, 
but momentum slowed after 2 years 

115-119 

Conclusions and recommendations 

120-134 

Annexes 

Annex I – Support for renewable hydrogen in the United States 

Annex II – Renewable Energy Directive (RED III): targets 

Annex III – Information on the member states we visited 

Annex IV – Information on the projects we analysed 

Annex V – Member states’ hydrogen strategies 

Annex VI – Project announcements by member state 

Annex VII – Legal provisions for the hydrogen network 

Annex VIII – Low-carbon hydrogen, carbon capture and storage 
and carbon capture and utilisation 

Annex IX – Legislative measures to accelerate national permitting 
processes 

Annex X – State aid approved for renewable hydrogen projects 

Annex XI – Recovery and resilience plans – data on funding 
earmarked for renewable and low-carbon hydrogen 

Annex XII – Innovation Fund – data on EU hydrogen projects 

 
 
4 

Annex XIII – Analysis of projects for renewable hydrogen 
production (electrolysers) and related funding 

Annex XIV – Analysis of projects for network development, 
storage, ports, and related funding 

Abbreviations 

Glossary 

Replies of the Commission 

Timeline 

Audit team 

 
 
 
 
5 

Executive summary 

I The EU is committed to becoming climate neutral by 2050, meaning that all sectors 
that emit greenhouse gases are called on to decarbonise. The Commission saw 
renewable hydrogen as one way to decarbonise hard-to-electrify industries in 
particular. It published an EU Hydrogen Strategy in mid-2020 and updated it with its 
REPowerEU plan in 2022. The Commission also set the course for creating a renewable 
hydrogen market in the EU through setting targets for hydrogen production and 
import. It also recognised that low-carbon hydrogen could play a role in the transition 
towards climate neutrality. 

II For the 2021-2027 period, total EU funding for hydrogen-related projects is 
currently estimated at €18.8 billion. This financial support is allocated through multiple 
programmes. Two major funding sources are the Recovery and Resilience Facility and 
the Innovation Fund. 

III We decided to carry out an audit on how effective the Commission has been in 
creating the right conditions for the emerging renewable and low-carbon hydrogen 
markets, given the significant implications of this transition for the future of key EU 
industries. To this end, we assessed whether the EU is on track for achieving its targets 
and whether it has adopted the necessary legal acts to effectively provide timely 
support for the hydrogen market. We also assessed whether the EU has a 
comprehensive set of funding programmes to allow the hydrogen value chain to 
develop across the EU. Lastly, we assessed whether the Commission has appropriately 
coordinated market creation between its own services, with member states and with 
industry. 

IV Overall, we conclude that the Commission was partially successful in creating the 
necessary conditions for the emerging hydrogen market and the hydrogen value chain 
in the EU. We are calling for a reality check now as nearly 4 years have passed since 
the publication of the Hydrogen Strategy and first lessons can be drawn. 

V The Commission did not undertake robust analyses before setting the EU’s 
renewable hydrogen production and import targets. These were not broken down 
into binding targets for member states and not all member states set their own 
targets. When they did so, these national targets were not necessarily aligned with the 
Commission’s targets. In fact, the EU targets turned out to be overly ambitious: based 
on the available information from member states and industry, the EU is unlikely to 
meet them by 2030. The Commission did not set any EU targets for low-carbon 
hydrogen. 

 
 
6 

VI The renewable hydrogen legal framework is now mostly complete, while for 
low-carbon hydrogen some acts still need to be proposed and adopted. However, the 
renewable hydrogen production rules, which are key for market development, were 
set by a directive and supplemented by a delegated act without prior assessment of 
their impact (for example on production cost). Agreeing on the renewable hydrogen 
rules took time and many investment decisions were deferred during this period. 
In 2023, the EU adopted measures to increase the cost competitiveness of renewable 
and low-carbon hydrogen, but the effect of these measures will not be immediate and 
certain aspects were not included. 

VII Work on standardisation and certification is still required. Progress in market 
development will depend on several factors, including whether member states will (i) 
meet the demand targets which in turn depends on progress made by industry, and (ii) 
manage to reduce permitting timelines for renewable hydrogen and renewable energy 
projects. 

VIII Investment needs are huge, but the Commission does not have a complete 
overview of these needs or the public funding available. Industry is faced by a set of 
different EU funding programmes with different rules, making it difficult to determine 
the best-suited programme for a given project. There is still no guarantee that the EU’s 
hydrogen production potential can be fully harnessed. So far, those member states 
with a high share of hard-to-decarbonise industry are more advanced in terms of 
planned projects (either at an advanced or in the feasibility study stage). 

IX The Commission took steps to coordinate the ramp-up of the hydrogen value 
chain, but has not yet used the existing fora to discuss important strategic issues, such 
as how best to move forwards without creating new strategic dependencies. 

X We recommend that the Commission: 
(1)  following a reality check, make strategic choices on the way ahead without 

creating new strategic dependencies; 

(2)  set out an EU roadmap and monitor progress; 

(3)  obtain reliable national funding data and assess the appropriateness of EU 

funding arrangements accordingly; 

(4)  monitor the permitting process in the member states; 

(5)  take a clear decision on support and coordination actions with and for the 

hydrogen industry. 

 
 
 
 
7 

Introduction 

Hydrogen explained 

01 Hydrogen is a chemical element, which is a gas under standard conditions. There 
are also different hydrogen derivatives, such as ammonia and synthetic electrofuels 
(such as e-methane or e-methanol). 

02 The hydrogen value chain as illustrated in Figure 1 covers three phases: 
(1) production, (2) transmission, distribution and storage, and (3) use. 

Figure 1 – Hydrogen value chain 

Production

Transmission/
distribution/storage

Use

Power generation, industry,
heating in buildings, transport 

Pipeline

Storage

Maritime

Renewable
energy sources

Electrolyser 

Natural gas

Pyrolysis

Source: ECA. 

03 Hydrogen can be produced in different ways, using different energy sources and 
production technologies, as detailed in Table 1. 

Table 1 – Examples of different ways to produce hydrogen (not 
exhaustive) 

Energy source 

Process/Technology 

Renewable electricity 

Electrolysis: water is split into hydrogen and oxygen 

Nuclear energy 

Electrolysis 

Steam-methane reforming 

Natural gas 

Steam-methane reforming with carbon capture and 
permanent storage of this carbon to reduce emissions 

 
 
 
8 

04 According to the Commission, 96 % of the hydrogen used in Europe in 2022 was 
produced using natural gas, resulting in significant amounts of CO₂ emissions. In the 
same year, hydrogen accounted for less than 2 % of Europe’s energy consumption and 
the largest share of demand for hydrogen came from refineries.  

Renewable hydrogen as one way to decarbonise 

05 The EU is committed to becoming climate neutral by 2050, i.e. achieving net zero 
greenhouse gas emissions. This goal was enshrined in EU legislation through the 
European Climate Law1, which was adopted in 2021. The Law also set an intermediate 
target of reducing net emissions by 55 % by 2030, compared with 1990 levels. 

06 To achieve this target, all greenhouse gas emitting sectors therefore need to 
decarbonise. In 2020, the sectors with the highest carbon emissions were: (i) transport 
(including international aviation and shipping), (ii) energy supply, (iii) industry and (iv) 
agriculture2. 

07 Renewable hydrogen (i.e. hydrogen produced either using renewable electricity 
or biomass) is one tool for decarbonisation. This is because producing renewable 
hydrogen creates minimal carbon emissions, while using it creates zero carbon 
emissions. Apart from renewable hydrogen, low-carbon hydrogen is another way to 
reduce carbon emissions, particularly during the transitional period between now and 
when we aim to reach climate neutrality. The EU legislators defined3 low-carbon 
hydrogen as that derived from non-renewable sources and which produces at least 
70 % fewer greenhouse gas emissions than fossil fuels across its full lifecycle. 

08 In terms of using renewable hydrogen, EU legislation4 suggests the following 
focus. 

o 

It “can be used as feedstock or as a source of energy in industrial and chemical 
processes, in maritime transport, and in aviation”. It gives hard-to-decarbonise 
sectors (where either direct electrification is not technologically possible or is not 
a competitive option) the possibility to decarbonise. For example, in the following 

1  Regulation (EU) 2021/1119. 

2  Data published by statista. 

3  2024 directive on common rules for the internal markets for renewable gas, natural gas and 

hydrogen (adopted, but not yet published as of the date our report was adopted). 

4  Renewable Energy Directive EU/2023/2413, recital 75. 

 
 
 
9 

sectors there are industrial and chemical processes which are 
hard-to-decarbonise and hard-to-electrify: steel production, petrochemicals, 
cement and fertilisers. 

o 

It “can also be used for energy storage to balance, where necessary, the energy 
system”. This means it can balance a grid that has a high proportion of fluctuating 
energy generation from renewables. 

09 However, the use of renewable hydrogen comes with its own set of challenges. 
Some of these are listed below and detailed in Box 1. 

o 

o 

o 

o 

Current efficiency issues (i.e. energy losses) linked to electrolysis. 

The cost of production, which is not yet competitive because the production 
through electrolysis is still in its infancy.  

The need for renewable electricity and water. 

The infrastructure needs: ramping up the use of hydrogen requires transport and 
distribution infrastructure (which either has to be built or results from 
repurposing gas pipelines), and storage infrastructure. 

Box 1 

Renewable hydrogen – challenges 

Producing renewable hydrogen using electrolysis is very energy-intensive because 
a certain amount of the electricity used is lost in the process. Therefore, it is often 
more cost-effective to use that electricity directly, rather than converting it into 
hydrogen. Reconverting the hydrogen to electricity leads to further energy losses. 

o 

Converting electricity to renewable hydrogen (see Figure 2): an indicative 
assumption sometimes used for electrolyser efficiency is 70 %5. Efficiency 
varies depending on the technologies used. 

5  See for example: European Electrolyser Summit, Declaration 2022. 

 
 
 
10 

Oxygen

Hydrogen

Figure 2 – Producing hydrogen by electrolysis 

Electricity

Water

Source: ECA. 

Electrolyser 

Efficiency 70 %

o 

Converting electricity to renewable hydrogen (gas) and reconverting 
hydrogen (gas) to electricity: according to various sources6, the efficiency 
(“round-trip”) is estimated at below 50 %. 

Based on 2022 data published by the International Energy Agency7, producing 
hydrogen by using natural gas was estimated to cost between $1/kg and $3/kg 
(2021), while producing renewable hydrogen was estimated to cost between $3.4 
and $12/kg (2022). The cost of renewable hydrogen depends on the cost of 
renewable electricity and the cost of the electrolyser. The cost of electrolysers is 
expected to decrease as their performance is expected to improve due to 
technological advancements and through the production scale-up leading to 
economies of scale. 

It is not easy to produce renewable hydrogen simply anywhere, as it requires 
water and renewable energies. Research studies look at the water consumption by 
type of electrolyser and manufacturer. As a general rule of thumb, the direct 
water consumption to produce hydrogen through water electrolysis is estimated 
at 10 litres of ultrapure water for 1 kg of hydrogen8. The volumes of raw water, 
which are required to obtain ultrapure water, depend on the type of raw water 
(for example, sea or surface water). 

Hydrogen has the highest density by mass of any fuel9. That is why it is an 
interesting option in terms of energy storage: large amounts of energy can be 
stored. However, it has a low energy density by volume at standard temperatures 
and pressures. This means that either large storage facilities are required, or the 
volume needs to be reduced. This can be done by compressing or liquefying the 
hydrogen, but these processes require energy. 

6 

(1) Fraunhofer IWES, Prof. Dr Jürgen Schmid, Speicherungsmöglichkeiten von 
Überschussenergie mit Wasserstoff oder Methan – ein Vergleich; (2) S&P Global Market 
Intelligence, Tom DiChristopher, Hydrogen technology faces efficiency disadvantage in 
power storage race, 2021. 

 
 
 
 
 
11 

10 In July 2020, the Commission published a communication outlining an 
EU Hydrogen Strategy10 for the first time, setting the course for renewable hydrogen in 
the EU. The strategy focuses on obtaining, distributing and scaling up the use of 
renewable hydrogen, and sets non-binding quantifiable targets for the EU’s production 
of renewable hydrogen. It also recognises that appropriate support will be needed for 
low-carbon hydrogen during a transitional phase. 

11 Since renewable hydrogen can contribute to reducing the import of fossil fuels 
from Russia (strategic independence), it has become even more significant in the wake 
of Russia’s war of aggression against Ukraine. The Commission went on to issue its 
REPowerEU Communication11 in 2022, which included more ambitious production 
targets compared with those in the Hydrogen Strategy. It also set import targets for 
the first time. 

Industrial policy challenges triggered by decarbonisation efforts 

12 Complying with the climate neutrality goal calls for industry to make enormous 
transformation efforts, which will require massive amounts of financing, where the 
bulk of this will have to come from the private sector (industry). At the same time, EU 
industry is already facing a number of additional challenges such as: 

o 

volatile energy prices (wholesale gas and electricity prices rose to historic levels 
over 2022-2023), especially since the war of aggression against Ukraine which 
exposed the EU’s dependence on energy imports (some member states were 
more affected than others); 

o 

disruptions to and dependence on supply chains for certain raw materials. 

These factors contribute to reducing the competitiveness of certain industries within 
the EU. A key challenge for EU policy makers is therefore to create the right conditions 

7 

IEA (2023), Global Hydrogen Review 2023, IEA, Paris https://www.iea.org/reports/global-
hydrogen-review-2023, Licence: CC BY 4.0, Figure 3.11. 

8  DVGW Deutscher Verein des Gas- und Wasserfachs e.V., Genügend Wasserstoff für die 

Elektrolyse, Februar 2023. 

9  Applied Sciences, 2019; 9(22):4842-1-4842-30; https://hdl.handle.net/2440/123912. 

10  COM(2020) 301. 

11  COM(2022) 230. 

 
 
 
12 

for decarbonisation, but at the same time to ensure that the EU’s industries remain in 
the EU and can stay competitive. 

13 Other major economies such as the United States, Canada, Japan, China and 
India12 already provide significant subsidies to support decarbonisation, including the 
production of renewable hydrogen. In addition, some countries also have less stringent 
rules on the carbon intensity of their products. Focusing more particularly on the 
United States, legal acts from 2021 and 2022 pave the way for significant public 
funding, including for renewable hydrogen. Implementing rules are still being 
adopted13, especially those for hydrogen production project developers who intend to 
apply for support in the form of a tax credit under the US Inflation Reduction Act. For 
more details, see Annex I. 

14 For specific industries in the EU, support from state resources is subject to state 
aid rules. Aside from public funding, the EU has adopted and implemented 
economy-wide market-based carbon pricing mechanisms (see Box 2) to reduce carbon 
emissions. 

o 

Since 2005, under its emissions trading system14 (ETS1), some operators in certain 
sectors of industry (e.g. power generation, the manufacturing industry and 
aviation) have to surrender allowances to compensate for their CO₂ emissions. 
The new emissions trading system15 (ETS2) of 2023 addresses CO2 emissions from 
fuel combustion in buildings, road transport and additional sectors (mainly small 
industry). 

o  On a global level, many countries do not yet have such emissions trading systems. 
As a result, the EU’s emissions trading system can put industry in the EU at a 
competitive disadvantage. This could lead to carbon leakage. 

12  A staff working document from the Commission (SWD(2023) 68) provides a short 

description of the support schemes in these countries. 

13  In December 2023, the US administration published draft rules. 

14  See special report 18/2020. 

15  Directive 2003/87/EC. 

 
 
 
13 

o 

Carbon leakage occurs when companies based in the EU move carbon-intensive 
production abroad to countries where less stringent climate policies exist. 
Leakage can also occur when EU products are replaced with imports that are 
more carbon-intensive. Therefore, the EU has put in place an additional 
mechanism (the carbon border adjustment mechanism) to prevent carbon 
leakage.  

Box 2 

Carbon pricing mechanisms applicable in the EU  

Under the emissions trading system, companies in sectors of industry other than 
power generation receive a share of cost-free allowances to protect them from 
carbon leakage as they compete on an international scale. 

These free allowances will gradually be phased out as the EU’s carbon border 
adjustment mechanism is phased in. The aim of this mechanism is twofold: firstly, 
to put a fair price on the carbon emitted through producing carbon-intensive 
goods that enter the EU, and secondly to encourage cleaner industrial production 
in non-EU countries. 

The carbon border adjustment mechanism will initially apply to imports of certain 
goods and selected relevant input materials (known as precursors) with 
carbon-intensive production. This is also where there is the greatest risk of carbon 
leakage, namely in the cement, iron and steel, aluminium, fertiliser, electricity and 
hydrogen sectors. 

The Commission stated that the transitional period of this mechanism (up to end-
2025) will serve as a pilot to be able to finetune the methodology. 

 
 
14 

Roles and responsibilities 

15 The roles of the Commission, member states and industry are detailed 
in Figure 3. 

Figure 3 – Roles and responsibilities 

COMMISSION
Policy and strategic leadership

Directorate-General (DG) ENER is responsible for energy policy and is the leading 
policy DG for hydrogen. DG GROW is responsible for industrial and internal 
market policy. DG COMP is responsible for setting the rules on state aid (a form 
of market intervention) and checks the application of these rules. 

State aid rules have an effect on national industrial policies because member 
states decide on the level of financial support for industry at national level, 
including decarbonisation efforts.

Funding

Seven directorates-general are involved in managing the different EU funds.

The Innovation Fund, the Connecting Europe Facility and parts of Horizon 
Europe are managed by the Commission's European Climate, Infrastructure and 
Environment Executive Agency (CINEA).

MEMBER STATES 
– decide on their energy mix;
– establish their own national strategies for industry and energy (including 

hydrogen, its transport and its distribution);
– decide on their level of public support (state aid);
– implement some of the EU funds (such as those under cohesion policy);
– decide about countries from which to import energy, the countries to which 
they will export energy, and the EU and non-EU countries with which they 
will form energy partnerships. 

INDUSTRY
Industry, in particular the electrolyser manufacturing and user industries also 
take investment decisions on their route to climate neutrality. The Commission 
consults industry, for example in the context of the Clean Hydrogen Alliance, 
which it launched to bring together industry, public authorities, civil society and 
other stakeholders. The aim is to discuss the large scale deployment of clean 
hydrogen technologies and the requirements for such a deployment.

Source: ECA. 

 
 
 
15 

EU regulatory framework 

16 Since the publication of the Hydrogen Strategy in July 2020 (see paragraph 10), a 
number of legal acts have been adopted. The most important of these, which relate to 
renewable and low-carbon hydrogen, are set out in Figure 4. 

 
 
 
 
16 

Figure 4 – Legal acts 

RENEWABLE ENERGY DIRECTIVE (RED III) 
Renewable Energy Directive EU/2023/2413; amendment of 2023 

The latest amendment of 18.10.2023 increases the share of renewable energy in the EU’s overall energy 
consumption to 42.5 % by 2030, with an additional 2.5 % indicative top up. Moreover, it sets binding targets: 

— 

— 

for the use of renewable fuels of non-biological origin (mostly renewable hydrogen and 
hydrogen based synthetic fuels) in industry; and 
for the use of renewable fuels of non-biological origin in the transport sector. 

RULES FOR RENEWABLE HYDROGEN (hereafter referred to as DELEGATED ACT) 
Commission Delegated Regulation (EU) 2023/1184 

Establishes an EU methodology, setting out detailed rules for the production of renewable liquid and gaseous 
transport fuels of non-biological origin. For example, gaseous renewable hydrogen (which is produced by 
feeding renewables based electricity into an electrolyser) is included in this category. For details, see Annex II. 

METHODOLOGY TO ASSESS GREENHOUSE GAS EMISSION SAVINGS 
Commission Delegated Regulation (EU) 2023/1185 

Establishes a minimum threshold for greenhouse gas emission savings from recycled carbon fuels. Also 
specifies a methodology to assess greenhouse gas emission savings from renewable liquid and gaseous 
transport fuels of non biological origin, and from recycled carbon fuels. 

GAS PACKAGE 
2024 directive and 2024 regulation (adopted, but not yet published) 

These legal acts seek to facilitate the entry and integration of renewable and low carbon gases into the 
energy system. This enables a shift away from natural gas in line with the EU’s goal to achieve climate-
neutrality by 2050. The Regulation establishes common internal market rules for renewable and natural gases 
and hydrogen. 

ReFuelEU AVIATION 
Regulation (EU) 2023/2405 

Aviation fuel suppliers will have to blend increasing amounts of sustainable aviation fuels with conventional 
fuels, starting with a 2 % minimum blend in 2025 and reaching 70 % in 2050. From 2030, 1.2 % of fuels must 
also be synthetic fuels, rising to 35 % in 2050. Sustainable aviation fuels include, for example, electric fuels 
produced from renewable hydrogen. 

FuelEU MARITIME  
Regulation (EU) 2023/1805 

The greenhouse gas intensity of energy used on board a ship should decrease gradually (by 2 % in 2025 to as 
much as 80 % by 2050). This would be achieved particularly through the uptake of renewable fuels of non-
biological origin with a high potential for decarbonisation (including hydrogen). 

TEN-E REGULATION 
Trans-European Networks for Energy Regulation (EU) 2022/869 

Lays down guidelines for the timely development and interoperability of the priority corridors and areas of 
trans-European energy infrastructure 

NET ZERO INDUSTRY ACT 
Regulation (EU) 2024/1735 

The aim is to boost the industrial deployment of net-zero technologies needed to achieve the EU’s climate 
goals. Among other measures, it eases conditions for investing in green technologies, by simplifying permit-
granting procedures and supporting strategic projects. 

Source: ECA. 

 
 
17 

Audit scope and approach 

17 This report assesses the Commission’s effectiveness in creating the conditions for 
the emerging market on renewable and low-carbon hydrogen. To this end, we 
examined whether: 

o 

o 

o 

o 

the EU is on track for achieving its hydrogen-related targets; 

the EU adopted the necessary legal acts to support the nascent market for 
renewable and low-carbon hydrogen effectively and in a timely manner; 

the EU has a comprehensive set of funding programmes to allow the hydrogen 
value chain to develop across the EU; 

the Commission appropriately coordinated market creation between its own 
services, with member states and with industry. 

18 We took the EU policy (Hydrogen Strategy and REPowerEU plan) on renewable 
and low-carbon hydrogen as starting point. Since the policy focused more on 
renewable than low-carbon hydrogen, our report does the same. For those sections of 
the report where low-carbon hydrogen was relevant, we have specifically referred to 
it. We excluded research-related aspects and regulations and support for the transport 
sector from the scope of our report. Our audit covers the period from July 2020 to the 
end of 2023. 

 
 
19 We analysed evidence from a range of sources as detailed in Figure 5. 

Figure 5 – Evidence 

18 

Documents
EU policy documents on hydrogen, the regulatory framework, information on the 
various EU funding schemes, national strategies, national energy and climate plans 
(on a sample basis) and reports on the hydrogen ecosystem published by research 
bodies, industry associations and academics.

Data
Data from different sources (mainly the International Energy Agency and the 
European Commission), for example on projects announced, projects financed by 
EU funding programmes, funding allocated to hydrogen under the national 
resilience plans and authorised state aid.

Four member states 
For a sample of four member states (Germany, Spain, Netherlands, Poland, see 
Annex III), we looked at their hydrogen strategies, legislative and policy documents, 
funding support, etc.

We judgementally sampled member states to include both frontrunners in 
renewable hydrogen and those that are progressing more slowly, those with 
different roles in the value chain (such as production, import and use), and 
member states with a significant number of companies in sectors deemed 
hard to decarbonise.

Seven projects
For a sample of seven projects (in the same four member states), we looked at 
project applications, state aid approval and grant approval (see Annex IV).

We judgementally sampled projects to include (i) projects of important size, 
(ii) hydrogen production and use and (iii) projects that either received 
financing from the EU budget in the 2021-2027 period or for which state aid 
was authorised.

Interviews

Interviews with staff from Commission directorates-general, the European Climate, 
Infrastructure and Environment Executive Agency and with representatives from 
national ministries and bodies.
Interviews with industry associations at EU and national level, staff from the 
International Energy Agency and representatives from the Clean Hydrogen Alliance.

Source: ECA. 

 
 
 
19 

20 This report forms part of our series of reports examining certain aspects related 
to industrial policy, namely a 2019 review on energy storage technologies (including 
hydrogen)16 and a 2023 special report about the EU’s industrial policy on batteries17. In 
addition, we are currently undertaking an audit on microchips and another on state aid 
rules18. 

21 We decided to carry out this audit because renewable hydrogen is seen as a way 
to support the EU’s commitment to reaching carbon neutrality and because of the 
significant implications of the decarbonisation on the future of key EU industries. This 
report can feed into the Commission’s reflections and decisions on its next steps in 
developing the emerging market for renewable hydrogen. 

16  Review 04/2019. 

17  Special report 15/2023. 

18  See the ECA’s 2024+ Work programme. 

 
 
 
 
 
20 

Observations 

The Commission set unrealistic hydrogen production and 
import targets - the EU is not on track for achieving them 

22 To succeed in building a market for hydrogen and to enable the EU’s 
hard-to-decarbonise industry to remain in the EU and stay competitive, it is essential 
that member states and industry move in the same direction in terms of developing 
production capacity and use their strengths to their own and the EU’s advantage. As 
previously mentioned, the Commission set the course at EU level using hydrogen 
targets (see paragraphs 10-11). Targets should be based on robust assumptions and 
should be ambitious, but realistic. 

23 We assessed whether: 

o 

the Commission had defined clear targets based on a robust rationale; 

o  member states’ objectives were aligned with the EU’s targets; 

o 

industry in the EU is implementing sufficiently large projects in enough time to 
meet the EU 2030 targets. 

The Commission set capacity targets without recourse to robust analyses 

24 The Commission announced the targets (see Figure 6) for producing and 
importing renewable hydrogen in its communications which are non-binding for 
member states. It did not set targets for low-carbon hydrogen. 

 
 
21 

Figure 6 – Targets set by the Commission for producing and importing 
renewable hydrogen 

Hydrogen
Strategy

REPowerEU plan

By 2024

Install at least 6 GW of 
renewable hydrogen 
electrolysers 

Produce up to 1 million 
tonnes of renewable 
hydrogen

By 2030

Install at least 40 GW of 
renewable hydrogen 
electrolysers

Produce 10 million 
tonnes of renewable 
hydrogen (domestically)

Produce up to 10 million 
tonnes of renewable 
hydrogen  

Import 10 million tonnes 
of renewable hydrogen

Source: ECA, based on Commission communications. 

25 We assessed how the hydrogen-related targets were determined and specified. 
For the Hydrogen Strategy and the REPowerEU plan, we found that the definitions 
were unclear, both in terms of the electrolyser capacity to be installed for the target 
production level (for 2024 and 2030), and in terms of imports (for 2030). 

o 

It was not clear whether the capacity (in GW, unit of power) is measured in terms 
of renewable electricity input or in terms of hydrogen output. In fact, the 
difference between both (input and output) is determined by electrolyser 
efficiency, which falls short of 100 % because of energy losses (see Box 1). 

 
 
 
22 

o 

o 

The estimates relating to renewable hydrogen production (in million tonnes, Mt) 
that can be achieved with electrolysers with a total capacity of 40 GW varied in 
different Commission documents, as did the electrolyser capacity required to 
produce 10 Mt (see Table 2). 

For imports, the REPowerEU plan refers to 10 Mt of imported hydrogen. 
However, one Commission document indicates that imports are composed of 
6 Mt of renewable hydrogen and approximately 4 Mt of ammonia, a hydrogen 
derivative (see paragraph 01). It is not clear whether this figure refers to 4 Mt of 
hydrogen that should be imported (equivalent to around 25 Mt of ammonia) or 
4 Mt of ammonia (equivalent to 0.6 Mt of hydrogen). 

Table 2 – Estimated production and required electrolyser capacity 

Electrolyser 
capacity 

Production 
in Mt 

Reference document 

40 GW 

4.4 

40 GW 

6.6 

Commission documents 

The Hydrogen Strategy refers to the “2x40 GW 
Initiative”, i.e. that 40 GW would produce 4.4 Mt of 
hydrogen 

Commission staff working document accompanying 
the REPowerEU plan 
(SWD(2022) 230, page 9) 

40 GW 

5.6 

Commission communication on the European 
Hydrogen Bank 

65-80 GW 

10 

Commission staff working document accompanying 
the REPowerEU plan 
(SWD(2022) 230, page 16) 

80-100 GW 
output 

10 

Commission communication on the European 
Hydrogen Bank 

90-100 GW 
output 

140 GW 
input 

10 

European Electrolyser Summit, 2022 Declaration 
(co-signed by the Commission) 

 
 
23 

Electrolyser 
capacity 

Production 
in Mt 

Reference document 

Other papers (for comparison) 

192 GW 

10 

A. van Wijk, K. Westphal, J. F. Braun, How to deliver on 
the EU Hydrogen Accelerator, Brussels, May 2022 

60-120 GW 

10 

M. de Vries, E. van den Toorn, N. Voulis, C. Jongsma, 
Additionality of renewable electricity for green 
hydrogen production in the EU, CE Delft, 
September 2022 

26 When the Commission set the 2020 and 2022 targets, it faced the following 
challenges. 

o 

o 

o 

The definition of what is considered renewable hydrogen had not yet been 
adopted (i.e. by the Delegated Act19). 

The market is only in its infancy, so it was difficult to set an accurate target. 

Setting a target in terms of quantity (Mt) means that assumptions need to be 
made about electrolyser efficiency (see Box 1) and its capacity utilisation rate. 
This rate depends on the energy source (such as its availability): for example, an 
electrolyser that runs on energy from a stand-alone solar farm has a lower rate 
than an electrolyser that runs on electricity from the grid. 

27 Regarding the targets set by the Hydrogen Strategy, we analysed the 
Commission’s underlying documents and found the following points. 

o 

The initial production target (10 Mt) was mainly based on the EU’s actual 
consumption of fossil-based hydrogen (i.e. produced using natural gas): 8-10 Mt 
in 2020, depending on the data source used. There is, however, no guarantee that 
this fossil-based hydrogen consumption will be fully replaced by renewable 
hydrogen. 

o 

The initial electrolyser capacity target (40 GW) was advocated by a paper 
(“2x40 GW Initiative”) issued by a hydrogen lobby (see Table 2). 

28 The updated targets (20 Mt for production plus import) were based on a 
Commission modelling exercise. Since in 2023 the EU adopted three legal acts (the 

19  Commission Delegated Regulation (EU) 2023/1184. 

 
 
 
 
24 

Renewable Energy Directive20, the REFuelEU Aviation Regulation21 and the FuelEU 
Maritime Regulation22), which set targets for the use of renewable fuels of non-
biological origin (mostly renewable hydrogen and hydrogen based synthetic fuels) in 
industry and transport, we compared different estimates of the demand stimulated by 
these measures. We found that the demand expected to be stimulated will not even 
reach 10 Mt by 2030, let alone 20 Mt (see Table 3). Last but not least, a Commission 
modelling exercise conducted in 202323 concludes that the amounts of import of 
hydrogen will be relatively modest, at least until 2040 (i.e. below 10 Mt). 

Table 3 – Estimates of the demand for renewable hydrogen stimulated 
by new regulatory measures (by 2030) 

in Mt 

Estimate of demand 

Reference 

3.8 

5.6 

6.3 

7.1 

Estimate of the demand stimulated 
by EU measures (1.4 Mt for industry, 
1.8 Mt for transport) and by policies 
in force in member states (0.6 Mt) 

Estimate of the demand stimulated 
by EU regulatory measures 

Estimate of the demand stimulated 
by EU regulatory measures (and 
additional assumptions) 

Consumption estimate based on 
plans announced by industrial 
buyers in Europe 

4.8-10.5 

Estimate of the demand stimulated 
by EU regulatory measures 

International Energy Agency 

Commission staff working 
document accompanying the 
REPowerEU plan 
(SWD(2022) 230) 

Hydrogen Europe, Clean 
Hydrogen Monitor, 2023 

C. Robinson, C. Laurencin, Back in 
the driving seat? Europe agrees 
on renewable hydrogen 
consumption targets, S&PGlobal 
Commodity Insights, April 2023 

20  Directive EU/2023/2413. 

21  Regulation (EU) 2023/2405. 

22  Regulation (EU) 2023/1805. 

23  Impact assessment report, SWD(2024) 63, Part 3, p. 28. 

 
 
 
 
25 

29 The Commission considered the production and import targets to be more 
aspirational than compulsory. We take note that under the Renewable Energy 
Directive (RED III), the Commission will develop an EU strategy for imported and 
domestic hydrogen, based on newly introduced data reporting by member states. 
However, the Directive does not set a deadline for this new strategy. 

30 The Commission did not set a target for the cost of producing hydrogen; the 
Hydrogen Strategy simply mentions that renewable energy should be available at a 
competitive price. By comparison, the United States did set such a target, namely $1 
per kilo by 203124. 

Member states have divergent ambitions which are not necessarily 
aligned with the EU targets 

31 There was no obligation for member states to create hydrogen strategies, but 
member states did have to establish national energy and climate plans (NECPs), 
outlining all policies and measures designed to meet the EU’s climate objectives in 
general. Such policies can include promoting renewable hydrogen, for example. 

32 The first NECPs were due by the end of 2019, i.e. before the Commission set 
renewable hydrogen targets. Member states were required25 to update these national 
plans: draft plans were due by mid-2023 and final plans by mid-2024. They were 
asked26 to report on measures, initiatives and incentives that were either planned or 
had been undertaken to meet the EU targets for renewable hydrogen. Moreover, they 
should “reflect measures stemming from the REPowerEU plan”. Member states were 
not specifically asked to provide national targets for renewable hydrogen. 

33 We analysed the targets included in the strategies of those member states with a 
strategy (1827). We also looked at the production and import targets of all 24 draft 
NECPs available as of 31.12.2023, as well as the demand support instruments for 

24  U.S. National Clean Hydrogen Strategy and Roadmap, June 2023. 

25  Regulation (EU) 2018/1999. 

26  Commission Notice, 2022/C 495/02. 

27  This number includes Finland, which at the time of writing did not have a separate strategy, 

but did have a roadmap attached to its national energy and climate plan. 

 
 
 
26 

seven28 of these drafts. We assessed the extent to which the strategies and NECPs 
converged towards a common EU ambition. The results of our analysis for certain 
aspects are shown in Table 4. Further details on the national strategies can be found 
in Annex V. 

Table 4 – Comparison of some of the aspects included in national 
hydrogen strategies and draft NECPs 

Aspect 

National hydrogen strategies 

Draft NECPs (2023) 

Production 

The sum of the targets in terms 
of installed electrolyser capacity 
ranged from 34 GW to 39 GW 
(input), and relate to 13 member 
states. 

However, not all this capacity is 
necessarily linked to renewable 
hydrogen; some strategies also 
envisage low-carbon hydrogen. 

No member state set targets in 
terms of production (renewable 
hydrogen) in Mt. 

Import 

Only Germany set import targets. 

The sum of the targets in terms 
of installed electrolyser capacity 
ranged from 46 GW to 50 GW 
(input), and relate to 16 member 
states1. This is some way off any 
estimate of the installed capacity 
required to produce 10 Mt 
(see Table 2). 

Moreover, not all of this capacity 
is necessarily linked to renewable 
hydrogen; some of the 24 plans 
also envisage low-carbon 
hydrogen. 

Of the 24 plans, only one 
(Germany) included import 
targets. 

Instruments 
to support 
demand 

With the exception of one 
strategy, none includes a clear 
set of instruments to support 
demand for renewable hydrogen. 

With the exception of two plans 
(out of seven), the demand 
support measures are not clearly 
set out. 

1  Where member states had not yet provided the draft NECP but had included a target in their 

strategy, we took that target into account. 

34 While two member states (Germany and the Netherlands, the group of first 
movers) issued national hydrogen strategies around the same time as the Commission, 
10 other member states produced their strategies after the Hydrogen Strategy, but 
before the REPowerEU plan. The remaining six took longer. No formal process was 
agreed between the Commission and the member states to ensure that targets and 
objectives as set in the national strategies would be aligned with those set by the 

28  The seven drafts are those of our sampled member states, with the exception of Poland as 

it had not yet submitted its plan, plus Czechia, France, Italy and Romania. 

 
 
 
27 

Commission. The same is true for the draft NECPs. The Commission considers that the 
relevant regulation29 does not provide for such an interaction with member states. 
In late 2023, the Commission president announced that the Commission will assess 
how member states plan to implement the national hydrogen commitments to provide 
a clear roadmap towards 2030 in each member state. 

35 Close to 80 % of the total envisaged electrolyser capacity is planned to be 
installed in five member states (Denmark, Germany, Spain, France and the 
Netherlands). They are mostly also among the most advanced member states in terms 
of projects that are operational, under construction, or for which final investment 
decisions have been taken (see Annex VI). Some ministry representatives we met 
consider that most of the measures between now and 2030 are “no-regret” measures, 
i.e. they are worth implementing whatever the actual market developments turn out 
to be. 

36 While certain member states have the potential to produce renewable hydrogen 
for export (within or outside the EU), we found that only very few include specific 
indications relating to the export of renewable hydrogen in their strategies. 

37 As at the end of December 2023, the Commission had reviewed 21 of the 24 draft 
NECPs submitted. In a communication30, it concluded that there “is still a large 
unexplored potential to further promote electrolyser capacity for renewable hydrogen 
and related products in demand sectors, including through international partnerships 
for hydrogen imports in line with the objectives of the REPowerEU plan”. On this basis, 
the Commission: 

o 

o 

asked all but seven member states to describe how they aim to promote 
hydrogen in industry and prepare the EU for trade in renewable hydrogen, but  

did not issue any recommendations to member states asking them to either set or 
increase national capacity targets. The Commission considers that it does not 
have the mandate to do so. 

29  Regulation 2018/1999. 

30  COM(2023) 796. 

 
 
 
28 

Achieving EU targets has been compromised by a bumpy start 

38 Based on data collected by the International Energy Agency (project 
announcements), we assessed whether a sufficient number of hydrogen production 
projects in an advanced stage exist to be able to meet the EU’s production targets. 

39 We found that the production target of 10 Mt, which may require up to 140 GW 31 
in terms of electrolyser capacity (input), is unlikely to be met as shown in Figure 7. 

Figure 7 – Electrolyser capacity of projects announced (cumulative, 
in GW) by stage and projected year of entry into operation (as of 
October 2023) 

Concept stage

Feasibility study stage

Advanced stage

(GW)

140

130

120

110

100

90

80

70

60

50

40

30

20

10

2023

2024

2025

2026

2027

2028

2029

2030

Note: Advanced stage includes projects that are operational, or where the stage is “under construction”, 
or for which a final investment decision has been taken. 

Source: ECA, based on data from the International Energy Agency. 

31  European Electrolyser Summit, 2022 Declaration (co-signed by the Commission). 

 
 
 
 
29 

40 Moreover, these figures include projects for producing both renewable and 
low-carbon hydrogen. Therefore, the actual electrolyser capacity for renewable 
hydrogen projects alone is even lower. We also analysed data published by Hydrogen 
Europe in its Clean Hydrogen Monitor 2023 and found that all renewable hydrogen 
projects considered to be in an advanced stage in Europe (i.e. including also non-EU 
countries) are projected to produce around 2.7 Mt by 2030. The situation in the four 
member states visited is shown in Annex III. 

41 In fact, although there are many announcements about future projects to 
produce renewable hydrogen, project developers had only taken a few final 
investment decisions by the end of 2023. However, projects that are supposed to be 
operational in 2030 should make their investment decisions between 2025 and 2027 at 
the latest. This is because of the average project lead time32: it takes approximately 
3-5 years for the final investment decision to be made and another 3-5 years for 
construction and commissioning before operations can start. 

42 The stakeholders we met indicated that the lack of rules defining renewable 
hydrogen did delay investment decisions. This was remedied when the Delegated Act 
was published in June 2023. In fact, the International Energy Agency noted33 that the 
number of announced electrolyser projects had grown rapidly between 2022 and 
2023. 

43 Representatives from ministries and industries in the four member states we 
visited listed additional reasons for project developers to defer investment decisions, 
some of which are linked to the fact that this is a nascent market (the “chicken and 
egg” problem, meaning supply is waiting for demand to develop and vice versa). These 
reasons include the following. 

o 

o 

o 

The lack of standards and certification schemes. 

The difficulty in securing demand, i.e. buyers (offtakers) for the renewable 
hydrogen produced. This is due to uncertainties surrounding available quantities 
and price. 

The inflationary environment leading to significant increases in project 
construction costs and in electricity prices. 

32  International Journal of Hydrogen Energy, 2022. 

33  Global Hydrogen Review, 2023. 

 
 
 
30 

o 

o 

o 

o 

The difficulty in sourcing renewable energy (see paragraphs 54-61). 

The lengthy permitting processes (see paragraphs 64-68). 

The lack of funding sources (see paragraphs 83-97). 

The lack of a transmission and distribution network (see paragraph 102). 

44 Similarly, challenges also exist for the electrolyser manufacturing industry.  

o 

o 

o 

o 

Scaling up the production capacity of electrolysers – in Europe, there are currently 
no electrolysers above 20 MW, but the first orders for larger electrolysers have 
been placed (see project examples in Annex IV). 

Component and raw materials value chains – delivery times may be long and 
dependent on certain countries outside the EU. 

Skilled labour – sufficient quantities required for increased demand are not 
necessarily available. 

A proposal (under the Regulation on the Registration, Evaluation, Authorisation 
and Restriction of Chemicals) to ban the use of per- and polyfluoroalkyl 
substances (mostly known by its abbreviation, PFAS) in different sectors, including 
the energy sector. The proposal provides that the Commission can grant a 
derogation for the energy sector. The legislative process is still ongoing. According 
to stakeholders, there is currently no available alternative to these substances, 
which are used in the industry’s fundamental technologies (namely electrolyser 
membranes and fuel cells). 

45 Like the Commission, some ministry representatives in the four member states 
we visited explained that they see their country’s 2030 production targets as 
aspirational rather than hard targets.  

 
 
31 

The legal framework is mostly complete, but its overall impact 
on the market is as yet uncertain 

46 Many different aspects require regulation to establish a market for hydrogen. We 
therefore assessed whether: 

o 

o 

o 

the legal acts shaping the nascent market were proposed in good time; 

the definition of the rules on renewable hydrogen production was based on an 
appropriate rationale; 

the legal acts include appropriate provisions to increase the cost competitiveness 
of renewable and low-carbon hydrogen; 

o  within its remit, the Commission took measures to speed up the permitting 

process; 

o 

the Commission decided swiftly on the compatibility of state aid with EU law 
whenever member states pre-notified their intentions to provide support to 
industry. 

The Commission proposed most legal acts within a short period of time, 
but delays in adopting the rules for renewable hydrogen held up market 
development 

47 Certainty regarding the legal framework is a key factor in establishing a new 
market. We therefore analysed the length of time required for the legislative process, 
to create the legal acts and shape the nascent market, i.e. from a Commission 
proposal, through to publication by the legislators. 

48 The Commission proposed most of its legal acts within about a year of publishing 
the Hydrogen Strategy (see Figure 8). The only exception to this was a Directive34 and 
a Regulation35 (the “gas package”) which were proposed 17 months after the 
Hydrogen Strategy was published. The package was eventually adopted in May 2024. 
With this last adoption, the regulatory framework on renewable hydrogen is mostly 
complete. However, a great deal of work on standardisation and certification is still 
required. 

34  2024 directive (adopted, but not yet published as of the date our report was adopted). 

35  2024 regulation (adopted, but not yet published as of the date our report was adopted). 

 
 
 
32 

Figure 8 – Legal acts – duration of the legislative process 

Subject
Legal act

Definition

Renewable hydrogen
Delegated Regulation

Low-carbon hydrogen
Directive (gas package)

Methodology for assessing
greenhouse gas emission savings 

Renewable hydrogen
Delegated Regulation

Low-carbon hydrogen
Delegated Regulation

Incentivisation

Demand from industry and 
the transport sector
Renewable Energy Directive

Demand from the aviation sector
Regulation

Demand from the maritime sector
Regulation

2021

2022

2023

2024

20 May

10 February

20 June

15 December

2nd proposal

July

20 May

10 February

20 June

2nd proposal

Does not exist

14 July

18 October

23 October

13 September

15 December

July

Transmission/distribution/
storage/terminals 

Directive/Regulation (gas package)

Priority corridors and related 
infrastructure projects 

TEN-E Regulation

15 December

30 May

Note: The Delegated Regulations on the definition of renewable hydrogen and on the methodology for 
assessing greenhouse gas emission savings (for renewable hydrogen) were due by December 2021. 

Source: ECA. 

49 The gas package is intended to regulate elements such as planning (10-year 
network development plan at EU level and national development plans), access to 
dedicated hydrogen infrastructures, separating hydrogen production and transport 
activities and tariff setting (for more details, see Annex VII). The first 10-year network 
development plan and national plans specifically for renewable hydrogen are due 
by 2026.  

 
 
 
 
33 

50 The Directive also defines low-carbon hydrogen, but:  

o 

a delegated act still needs to be adopted (with a deadline of 12 months after the 
date on which the Directive enters into force) relating to the methodology for 
assessing greenhouse gas emissions savings from low-carbon fuels; 

o 

implementing acts are due for network codes and guidelines. 

Further details on low-carbon hydrogen, carbon capture and storage and carbon 
capture and utilisation are found in Annex VIII. 

51 Under the TEN-E Regulation36, an EU-wide 10-year network development plan is 
the basis for selecting projects of common interest and projects of mutual interest. 
These are projects that are of cross-border relevance and that benefit from 
accelerated planning and permitting, among other things. This 2022 regulation already 
established that dedicated hydrogen-related projects (including renewable hydrogen) 
could apply and be selected as being of “common interest” from 2023 onwards. This 
was to ensure progress in developing the dedicated hydrogen network and while 
waiting for a legal base for a hydrogen-specific 10-year network development plan. 
The selection of projects was based on scenarios for a 10-year network development 
plan, which were established involving all relevant hydrogen market stakeholders. The 
list of projects of common and mutual interest was published in November 2023. It 
included 31 hydrogen network projects, 7 hydrogen storage projects, 10 reception 
facilities in ports and 17 electrolyser projects. 

52 In line with the Renewable Energy Directive37, two essential pieces of legislation 
were due by December 2021, namely the Delegated Regulation defining the rules for 
renewable hydrogen (i.e. the requirements to be met) (hereafter referred to as the 
Delegated Act) and the Delegated Regulation on the methodology to assess 
greenhouse gas emission savings. However, these acts were proposed in May 2022, 
with a 5-month delay. For both, a new version was proposed in February 2023 and 
following approval by the European Parliament and the Council they were published 
in June 2023. The time between the two proposals and the overall delay incurred is 
partially due to the fact that the hydrogen industry deemed the first proposal on the 

36  Regulation (EU) 2022/869. 

37  Article 27 of the Renewable Energy Directive EU/2018/2001 (RED II) that came into force 

in December 2018. 

 
 
 
34 

definition of renewable hydrogen to be too strict and too much of a burden. 
Conflicting interests made the Delegated Act very controversial. 

53 According to stakeholders, the uncertainty created by the absence of this crucial 
Delegated Act was one of the main reasons that project developers were holding off 
before making their final investment decisions (see paragraph 43). 

The adoption of the EU rules for renewable hydrogen provided certainty, 
but the Commission did not assess their effects on the market ramp-up  

54 The rules on renewable hydrogen production as set out by the Delegated Act are 
illustrated in Figure 9. 

 
 
35 

REQUIREMENTS

Additionality
Starting from 1.1.2028
Installation generating 
renewable electricity came into 
operation at most 
3 years before the electrolyser 

Figure 9 – Rules in the Delegated Act 

Direct connection

Renewable energy
installation

Electrolyser 

Grid electricity

THREE DIFFERENT SCENARIOS  

REQUIREMENTS

1

Share of renewable energy
in the power mix > 90 % 
(last 5 calendar years)

Renewable
energy
installation

2

Power purchase agreement 

Low carbon electricity mix
(< 64,8 g CO2 eq/KWh)

3

Power purchase agreement 

Power grid

Electrolyser 

None

None

Additionality
Starting from 1.1.2028
Installation generating 
renewable electricity came 
into operation at most 3 years 
before the electrolyser 

Temporal correlation
Until 31.12.2029: same month
From 1.1.2030: same hour

Geographic correlation
– same bidding zone; or
– interconnected bidding zone 

with equal or higher 
electricity price; or  
– interconnected offshore 

bidding zone.

Note: Electrolysers can be directly connected and take grid electricity. 

Source: ECA, based on the Delegated Act. 

 
 
 
36 

55 The main rationale38 behind the Delegated Act was to avoid creating incentives 
for increased fossil fuel-based electricity generation, by ensuring that the production 
of renewable hydrogen: 

o 

o 

o 

incentivises the deployment of new renewable electricity generation capacity 
(additionality principle); 

takes place at times when renewable electricity is available, i.e. the generation of 
renewable electricity and its use for hydrogen production must occur within the 
same timeframe, e.g. hour or month (temporal correlation); 

takes place in locations where renewable electricity is available (geographic 
correlation). 

56 The Commission considers that allowing renewable hydrogen producers, 
connected to the grid, to operate indefinitely on a 24/7 basis would place a 
considerable burden on the electricity system, electricity consumers, taxpayers and 
the environment. However, for many industrial production processes, a constant flow 
of hydrogen is required (electrolyser output) while the supply of renewable energy 
fluctuates (electrolyser input). There are therefore trade-offs between the objective of 
achieving energy efficiency on the one hand, and incentivising the use of renewable 
hydrogen as a tool for decarbonisation in certain cases (such as hard-to-decarbonise 
industry) on the other. 

57 Considering the hydrogen production side, certain public studies39 have 
estimated that the requirement relating to hourly temporal correlation (applicable 
from 2030 as set in the Delegated Act, see Figure 9), would increase the cost of 
renewable hydrogen. The extent of the increase varies because the studies were based 
on different models and assumptions: the increase ranges from moderate to between 
25 % and 35 %. On the other hand, some of the studies estimated that a stricter 
temporal correlation leads to lower carbon emissions. 

38  Recital 8 of Commission Delegated Regulation (EU) 2023/1184. 

39  See for example the following studies: (i) Oliver Ruhnau, Johanna Schiele, Flexible green 
hydrogen: The effect of relaxing simultaneity requirements on project design, economics, 
and power sector emissions, Energy Policy, Volume 182, 2023, 113763, ISSN 0301-4215, 
https://doi.org/10.1016/j.enpol.2023.113763, 
(https://www.sciencedirect.com/science/article/pii/S0301421523003488), Licence: CC BY 
4.0 DEED and (ii) Grünstromkriterien der RED II – Auswirkungen auf Kosten und 

 
 
 
 
37 

58 As explained by the stakeholders we met, companies may either have to accept 
higher costs or slow down the hydrogen ramp-up phase to succeed in this balancing 
act. The following are examples. 

o 

o 

To ensure a constant flow of renewable hydrogen for offtakers, renewable 
hydrogen producers will have to build storage facilities or larger electrolysers 
(although these assets may not be fully utilised at all times). 

Alternatively, companies may decide to pause their own planned hydrogen 
production projects (on their industrial sites) and instead wait until renewable 
hydrogen can be delivered through pipelines from elsewhere. This scenario is 
particularly likely for industrial companies located in areas with low potential for 
producing renewable electricity. 

59 While the stakeholders we visited welcomed the Delegated Act with its 
long-awaited legal certainty, they also considered it very complex and too strict for the 
ramp-up phase. For example: 

o 

o 

the 3-year window between the point when the installation that produces 
renewable energy becomes operational and the point when the electrolyser 
becomes operational is considered to be very short, given the many factors 
beyond the control of companies installing an electrolyser; 

companies located either in countries which are not very advanced in terms of 
producing renewable electricity, or in regions with limited potential for renewable 
electricity may be at a disadvantage, as renewable electricity complying with the 
additionality criterion may not be easily available; 

o  many developers of renewable hydrogen projects financed by the Innovation 
Fund confirmed that they have or have had problems in securing sufficient 
amounts of electricity from renewables, through power purchase agreements, 
which comply with the Delegated Act. 

Verfügbarkeit grünen Wasserstoffs in Deutschland, Frontier Economics, July 2021, (iii) 
Johannes Brauer, Manuel Villavicencio, Johannes Trüby, Green hydrogen – How grey can it 
be?, European University Institute, Robert Schuman Centre for Advanced Studies, The 
Florence School of Regulation, RSC Working Paper 2022/44, (iv) Elisabeth Zeyen et al, 2024, 
Environ. Res. Lett. 19 024034, Temporal regulation of renewable supply for electrolytic 
hydrogen, DOI 10.1088/1748-9326/ad2239. 

 
 
 
38 

60 Aware of these possible negative effects and to provide more flexibility, the 
Commission allowed for transitional measures, marked in green in Figure 9 above. The 
transitional period after which the additionality rule will become applicable ends 
on 1.1.2028. The transitional period is therefore rather short. Indeed, most projects 
with plans to install electrolysers have not yet started and, given the lead time 
(see paragraph 41), they run the risk of not being able to benefit from this transitional 
period. We note that the draft rules with which hydrogen production project 
developers will have to comply to apply for support under the US Inflation Reduction 
Act (see paragraph 13) are similar to those in the Delegated Act. 

61 The Commission did not carry out an impact assessment before proposing the 
Delegated Act on the rules for the production of renewable hydrogen (correlation and 
additionality) because this is not a legal requirement for a delegated act. The relevant 
article40 of the Renewable Energy Directive (RED II), which the Delegated Act was 
designed to supplement, was added during the legislative process and was therefore 
not covered by the Commission’s impact assessment of this directive. We note that the 
Delegated Act requires the Commission to assess the impact of these requirements 
by mid-2028. 

The impact of the EU regulatory framework on the cost competitiveness 
of renewable and low-carbon hydrogen remains to be seen 

62 We assessed whether the EU regulatory framework includes effective measures 
to improve the level playing field between producers of renewable and low-carbon 
hydrogen on the one hand, and producers of fossil-based hydrogen on the other. 

63 The EU has adopted some important regulatory measures, but their impact is not 
immediate and the extent of the impact remains to be seen.  

o  Demand-boosting measures (see paragraph 28 and Annex II). The demand targets 

for the use of renewable hydrogen in industry and in the transport sector are to 
be met by 2030 and 2035. Five member states stated in a Council document41 
that the targets were either unrealistic or very difficult to achieve. The 
Commission has no enforcement means to ensure that the targets are respected, 
other than lengthy and time-consuming infringement procedures. We note that 
according to the Directive (RED III), the Commission must submit a report 

40  Article 27 of the Renewable Energy Directive EU/2018/2001. 

41  Note 13188/23 ADD 1 REV 3 (October 2023). 

 
 
 
39 

by July 2028, assessing various elements including the EU’s ability to achieve its 
targets for renewable fuels of non-biological origin. 

o 

Carbon pricing through the emissions trading system and the carbon border 
adjustment mechanism. The effect of the carbon border adjustment mechanism 
and the 2023 emissions trading system revision on the level playing field will only 
be felt from 2026 onwards. Moreover, the system does not cover all hydrogen 
derivatives as explained in Box 3. 

Box 3 

The coverage of hydrogen by the emissions trading system and the 
carbon border adjustment mechanism 

Up until end-2023, only producers of fossil-based hydrogen in the EU were eligible 
to receive CO2 allowances free of charge. From January 2024 onwards, EU 
producers with new installations producing hydrogen from electricity (including 
renewable electricity) are also entitled to receive CO2 allowances free of charge. 
However, operators of existing fossil-based hydrogen installations wishing to 
transition to renewable hydrogen production will not be eligible for CO2 
allowances free of charge for this renewable hydrogen up until 2026. The 
producers that receive the CO2 allowances receive the same amount of free 
allowances, but fossil-based hydrogen producers need to surrender them for the 
emissions they produce. Producers with zero emissions can, however, sell their 
free allowances and therefore create a revenue stream for themselves. Free 
allowances will be phased out between 2026 and end-2033. 

The carbon border adjustment mechanism also applies to ammonia but does not 
yet apply to other hydrogen derivatives such as methanol and electrofuels or to 
liquid organic hydrogen carriers. This means that no price has yet been put on the 
carbon emitted when producing hydrogen derivatives (except ammonia) that 
enter the EU. 

Moreover, the carbon border adjustment mechanism does not so far cover 
exports to non-EU countries. This is a cause for concern when such countries have 
either low carbon pricing or none at all. The potential shift in trade patterns 
towards more processed goods poses a risk of circumvention. To take steel as an 
example: while steel and iron ore are subject to the carbon border adjustment 
mechanism, finished goods which are produced using steel, such as cars, are not. 

 
 
40 

The Commission took all possible measures to speed up permitting; 
uncertainty remains whether member states can follow suit 

64 The stakeholders we met singled out the permitting process as one of the factors 
which leads to delays in project implementation. This problem has been recognised by 
the Commission and the ministries or stakeholders in all four of the member states we 
visited. 

65 In this early phase of the hydrogen ramp-up, delays in granting permits are a 
more pressing issue for installations that produce renewable electricity than for 
installations that produce renewable hydrogen using electricity from the grid through 
power purchase agreements. This is mainly because so far, many of the renewable 
hydrogen installations (i.e. electrolysers) are built on existing industrial sites. This is the 
case for six of our seven sampled projects (see Annex IV). 

66 We therefore analysed whether the Commission had taken legislative measures 
to help resolve the issue. The Commission did in fact take a number of legislative steps 
intended to accelerate procedures for both renewable energy production and the 
production of hydrogen. However, we found that the duration of the permitting 
process that has to be respected by authorities in the member states varies between 
the different legal acts (see Annex IX). For example, a hydrogen production project 
(using an electrolyser) may fall under the rules of the TEN-E Regulation (with a 
permitting process duration of 18 months (excluding the time needed for the 
preparatory study phase), plus a possible 9-month extension), or the gas package 
Directive (with a duration of 24 months, plus a possible 12-month extension). The 
TEN-E Regulation also sets a timeline for the complete process including the 
preparatory phase (42 months). This is not the case for the gas package Directive. The 
Commission justifies these differences by the fact that projects falling under TEN-E 
should have a higher priority and should therefore be implemented even faster.  

67 Moreover, the organisational aspects of the permitting process fall fully within 
the member states’ remit. The extent to which member states implement the 
requirements from the EU legal acts remains to be seen. The Commission’s only 
enforcement tools are lengthy and time-consuming infringement procedures. 

68 The Commission’s guidance document relating to the content of NECPs also asks 
member states to address the challenge of permitting. By end-2023, the Commission 
had reviewed 21 of the 24 plans submitted and recommended42 the following: 14 

42  COM/2023/796. 

 
 
 
41 

should describe more clearly how they plan to accelerate the permitting process, while 
all should detail their simplified procedures. Finally, we found that the Commission had 
not yet set up detailed monitoring of national permitting processes, for example 
through the European Semester. However, we note that for projects of common and 
mutual interest under the TEN-E Regulation, project promoters must submit annual 
reports which include information on progress with regard to the permitting process.  

Certain state aid rules were amended to facilitate subsidy-granting, but 
the actual provision and level of support depends on member states  

69 As national subsidies can provide a financial advantage for specific operators, 
these subsidies must comply with EU rules on state aid: 

o  member states must notify new subsidy schemes or aid to an individual company 
to the Commission and can only implement them once the Commission has 
confirmed either that there is no aid, or that it is compatible with EU rules; 

o 

in certain cases, concerning lower amounts of aid, no mandatory notification is 
required, in particular when aid is granted based on the General Block Exemption 
Regulation (GBER). 

70 The EU state aid framework sets out various sets of rules under which member 
states can notify the Commission of aid they intend to provide to an individual 
company or of aid schemes. The most important aspects for hydrogen-related projects 
are set out in Table 5. 

Table 5 – State aid rules relevant for hydrogen projects 

Sets of rules 

Important projects 
of common 
European interest 
(IPCEIs) 

Climate, Energy 
and Environmental 
Aid Guidelines 
(CEEAG) 

Short description 

IPCEIs are large cross-border projects involving multiple 
member states to overcome important market or systemic 
failures. 

Framework to help member states provide the necessary 
support to reach the Green Deal objectives. The Guidelines 
were updated in early 2022. They explicitly refer to the fact 
that investments in renewable hydrogen are covered. 
Moreover, for the first time they include investments in 
decarbonising production processes. 

 
 
42 

Sets of rules 

Short description 

Temporary Crisis 
and Transition 
Framework (TCTF) 

Member states can adopt the support measures necessary for 
the transition to net zero industry, particularly schemes to 
speed up the rollout of renewable energy and energy storage, 
and schemes to decarbonise industrial production processes.  

The deadline for using the TCTF is short as aid must be granted 
by 31.12.2025. 

General Block 
Exemption 
Regulation (GBER) 

Under this Regulation, unless otherwise specified, investment 
aid for environmental protection which does not exceed 
€30 million per undertaking per investment project is exempt 
from the requirement of notification and consequently from 
Commission approval. 

71 With the amendments to this toolbox that have been adopted over the last 
2 years, the Commission aimed to ease the provision of state aid to support the green 
transition and other initiatives. This already resulted in the Commission declaring large 
amounts of aid as compatible with EU rules (see Annex X for details). Moreover, 
according to information from the Commission, since the adoption of the Delegated 
Act (see also paragraph 53), member states (two in particular – Germany and the 
Netherlands) have opened discussions with the Commission about future schemes to 
support renewable hydrogen, envisaging aid of around €5 billion. 

72 We found that successive reviews of the different sets of rules (see Figure 10) led 
to confusion among some project developers. Due to the nature of certain projects, 
the Commission asked to move around 20 projects (partially already pre-notified to 
the Commission) out of the relevant IPCEI, so they could be assessed either under the 
CEEAG or the GBER.  

Figure 10 – Revision of different sets of rules – timeline 

Date of
adoption/revision

Set of rules

17.12.2020

18.2.2022

23.3.2023

23.6.2023

IPCEI open to 
hydrogen

Manifesto

CEEAG 

TCTF

GBER

Update of the rules

Note: End-2020, 22 member states signed a Manifesto, committing to start IPCEIs in the field of 
hydrogen (renewable and low-carbon). 

Source: ECA. 

 
 
 
 
43 

73 Industry representatives we met also complained about the length of time taken 
for the notification and approval process by the member states and the Commission. 
The longer it takes, the higher the risk that it will lead to a delayed project start and 
cost increases due to inflation. While applying for state aid does not preclude projects 
from starting earlier without aid at their own risk, project developers are often 
reluctant to do so. Timing can also be a factor that multinational companies take into 
account when deciding on the location (worldwide) and sequence of their investments. 
We therefore assessed the amount of time between the moment that projects or aid 
schemes were pre-notified to the Commission and when projects were awarded a 
grant by member state authorities. For three hydrogen-related IPCEIs Figure 11 
illustrates the time that elapsed between national calls for interest, notifications to the 
Commission, approvals by the Commission, and the grant award.  

Figure 11 – Time taken by the Commission to approve three IPCEIs 

National calls
for expression
of interest

Indicative planning
according to the
Manifesto
(17/12/2020)

Notification

Project implementation

Pre-notification

Decision

Hy2Tech

January

September

June and July

May

Commission evaluation 
(10.5 months)

9 months after the decision, 
not all member states had 
launched the calls

January

September

August and September

Hy2Use

May

Commission evaluation 
(12 months)

Hy2INFRA

January

12 months after the decision, 
not all member states had 
launched the calls

Last changes in projects 
structure (April)

January 
and 
February

August

April

Commission evaluation 
(16 months)

2021

2022

2023

2024

Note: A further IPCEI (Hy2Move) is not included in our scope as it relates to the transport sector, which 
was not within the scope of our audit. 

Source: ECA, based on Commission information. 

 
 
 
44 

74 We found that two hydrogen-related IPCEIs were approved within a year of 
pre-notification. The evaluation phase for the third (Hy2Infra) was significantly longer 
and lasted 22 months. We analysed the reasons for this lengthy duration (Hy2Infra) 
and found the following. 

o 

o 

o 

o 

The Commission’s workload was intense between 2021 and end-2023: in parallel, 
it had to evaluate five to seven IPCEIs from various sectors, on top of its work on 
non-IPCEI notifications.  

The Commission approved the IPCEIs as a whole. An IPCEI consists of numerous 
sub-projects from different developers in different member states (see Annex X). 
This implies that the more mature sub-projects will have to wait for the less 
mature sub-projects to catch up; member states pre-notified a few sub-projects 
between 2 and 12 months after April 2022. 

For a handful of sub-projects, the relevant member states introduced updated 
information in the course of the process (such as project size, companies involved 
or purpose). 

The Commission had to request additional information for all sub-projects, and 
for some sub-projects these requests required several rounds. 

75 In May 2023, the Commission issued a code of good practice to facilitate 
transparent, inclusive and faster design of the IPCEIs, which is meant to allow a 
streamlined assessment. In October 2023, the Commission set up the Joint European 
Forum for IPCEIs43, which brings together the Commission and member states to 
identify potential areas of European interest for future IPCEIs and to further streamline 
IPCEI procedures. 

76 The Commission’s approval for the provision of state aid for the IPCEIs does not 
necessarily mean that public funding will eventually become available. For example, 
for the IPCEI Hy2Use, comparing the four member states we visited, neither Poland 
nor Spain has launched a process to make funding available, although they are two of 
the three countries with the largest amounts of planned aid for projects under this 
IPCEI. Member states may also need some time to make a grant decision. However, for 
the IPCEIs to achieve their objectives it is necessary that member states honour their 
financial commitments. 

43  JEF-IPCEI. 

 
 
 
45 

77 For hydrogen-related projects submitted under the CEEAG, our analysis of the 
time taken by the Commission to approve state aid (nine projects as at end-2023) 
showed that eight had been initially pre-notified under the IPCEI Hy2Use, but were 
then taken out of the IPCEI and assessed under the CEEAG. For three of these, the 
approval time under the CEEAG was similar to the approval time of the IPCEI itself; for 
five projects, it took the Commission an additional 5 to 10 months. The main reasons 
for this lengthy duration are similar to the ones described in paragraph 74. 

There are multiple EU funding sources for hydrogen projects, 
but no guarantee that they will be appropriate for developing 
an EU-wide market 

78 Creating a market for renewable hydrogen requires large private and public 
investments along the entire value chain (see Figure 1). To make appropriate decisions 
on the volume of public funding to be provided alongside private sector investments, 
policy makers need a proper place-based needs analysis. Moreover, the Commission’s 
funding approach should ensure that the hydrogen market is developed so that it 
addresses the value chain across the EU for the benefit of the EU’s single market. 

79 We assessed whether: 

o 

o 

o 

the Commission comprehensively estimated private and public funding needs;  

EU public funding addresses the whole value chain across the EU; and 

EU and national public funding will allow the EU domestic potential for producing 
renewable hydrogen to be harnessed. 

Estimates of investment needs by the Commission and member states 
are not exhaustive 

80 We understand that estimates are necessarily subject to a certain degree of 
uncertainty in a nascent market. We also understand that reliable information about 
investment decisions may be of a sensitive nature and difficult to obtain. We analysed 
the different estimates of investment needs included in various Commission 
documents over time (see Table 6). 

 
 
46 

Table 6 – Estimates of investment needs for the domestic production of 
renewable hydrogen until 20301 (in billion euros) 

Hydrogen 
Strategy 
(2020) 

REPowerEU 
plan2 
(2022) 

Net Zero Industry 
Act proposal4 
(2023) 

Max. 1.3  
(if the capacity of 
domestically produced 
10 Mt is entirely 
produced in the EU) 

Upscaling the manufacture of 
electrolysers 

Up to 2 

Electrolysers 

24-42 

50-75 

Industry and carbon capture 
and storage 

11 

Pipelines 

Storage 

28-38 

6-11 

Infrastructure 

65 

Additional electricity 

220-340 

200-300 

Total investment cost 

Not 
indicated 

335-4713 

Not indicated 

1  The table does not include needs related to future imports (international value chain). 

2  Staff working document SWD/2022/230. 

3  The total indicated in the staff working document does not correspond to the addition of the 

amounts by category. Difference: €45-49 billion. 

4  Staff working document SWD/2023/68. 

81 We found that:  

o 

o 

o 

figures included in the documents, issued within a narrow timeframe, are not all 
consistent; 

figures for electrolysers increased, but not to the same extent as the required 
increase in electrolyser capacity to be able to reach the production target (initial 
capacity of 40 GW versus updated estimate of up to 140 GW, see Table 2); 

figures for pipelines and storage are low considering that estimates44 for the 
German core network alone stand at €19.8 billion; 

44  FNB Gas website. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47 

o 

there is no comprehensive estimate in terms of the user industry’s needs to be 
able to adapt production processes. 

82 We also analysed the hydrogen strategies of the four member states we visited 
and found that none included a complete estimate of investment needs. In particular, 
none of them referred to the funding required to adapt industrial processes 
(see Annex V). 

EU funding for the hydrogen value chain is scattered over several EU 
funding programmes 

83 The bulk of the investments along the hydrogen value chain will have to be 
financed by the private sector. Nevertheless, EU and national public funding can play a 
decisive role in supporting hydrogen infrastructure deployment all along the chain. We 
therefore assessed whether EU funding is available to project developers along the 
whole value chain. 

84 During the 2021-2027 period, several EU funding programmes are providing 
funding for investments in the field of renewable and low-carbon hydrogen, as shown 
in Figure 12. They are managed by different Commission directorates-general (DGs) 
and according to different management modes. Due to data availability, for some 
programmes we indicate the amounts committed as of 31.12.2023, for others we 
indicate the amounts allocated for a given period. In the latter case, the actual amount 
that will eventually be spent on hydrogen may turn out to be higher or lower. Our 
current estimate is that there is €18.8 billion available for hydrogen-related projects, of 
which around 72 % is from the Recovery and Resilience Facility (RRF). 

 
 
 
 
48 

Figure 12 – EU funding programmes for hydrogen-related projects 
(renewable and low-carbon hydrogen) as at 31.12.2023 

Funding programmes 

EU funds 
(in million euros) 
and type of costs 

Period 
(funding data, 
column 2) 

Commission 
DGs 

Recovery and Resilience Facility 
(including REPowerEU chapter) 
All types of projects along the hydrogen 
value chain 

DIRECT MANAGEMENT 
13 628 (allocated) 

Capital and 
operating costs 

2021-2026 

SG RECOVER 
DG ECFIN 

Innovation Fund – Projects  
Projects for production and use of hydrogen 
and electrolyser manufacture 

2 202 (committed) 
Capital and 
operating costs 

2021-2023 

DG CLIMA 
DG CLIMA 

Innovation Fund – Hydrogen Bank 
Promotes the domestic production and 
import of renewable hydrogen 

800 (committed) 
Gap between 
renewable and fossil-
based hydrogen 

Connecting Europe Facility – Transport 
Hydrogen refuelling stations, green hydrogen 
production and storage facilities 

250 (committed) 
Capital costs 

2021-2023 

DG MOVE 

Connecting Europe Facility – Energy  
Networks (transport infrastructure) 
and storage 

3.4 (committed) 
Studies and  
capital costs 

2021-2023 

DG ENER 

Horizon Europe –  
Clean Hydrogen Joint Undertaking 
Research and innovation projects 

1 200 (allocated) 
Capital and operating 
costs 

2021-2027 

DG RTD 

SHARED MANAGEMENT 
See paragraph 85 

Funds under cohesion policy 
(European Regional Development, Cohesion 
and Just Transition Funds) 
All types of projects along the hydrogen 
value chain 

INDIRECT MANAGEMENT 

2021-2027 

DG REGIO 

InvestEU (implemented by the European 
Investment Bank; guarantee from EU 
budget) 
Renewable hydrogen production, supply 
(at commercial scale), and on-site storage 
projects as well as the deployment of low 
carbon technologies 

799 (committed) 

2019-2022 

DG ECFIN 

Capital and 
operating costs 

OUTSIDE THE EU BUDGET 

Modernisation Fund 
(for lower income member states) 

All types of projects along the hydrogen 
value chain 

Source: ECA, based on Commission data. 

Unknown, as most of 
the funding is directed 
to grant schemes  
Unknown  
(see previous line) 

2021-2027 

DG CLIMA 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49 

85 Apart from the Modernisation Fund45, which is managed outside the EU budget, 
all other programmes are either funded by the EU budget or by NextGenerationEU, 
which finances post-pandemic recovery and the EU economy’s green and digital 
transformation. The RRF accounts for 90 % of the total NextGenerationEU budget. All 
of these programmes can be used to finance projects in several fields, so do not 
include a specific budget for hydrogen. 

o 

o 

For the RRF, we were able to identify the amounts that member states allocated 
to hydrogen measures in their recovery and resilience plans. 

For cohesion policy funds there was no requirement for project applicants or 
authorities to use a specific reporting code for hydrogen-related projects. We 
were therefore unable to extract the planned amounts for this type of project. 

86 Moreover, the European Investment Bank provides loans (either using its own 
funds, or based on mandates from governments or the Commission). Last but not 
least, national and regional governments can also allocate funding from their own 
budgets which, depending on the member states, can reach significant amounts. 

87 The industry representatives we met found this set-up unnecessarily complex, 
making it difficult for them to decide under which programme to apply. This set-up 
also contrasts with the much simpler approach under the US Inflation Reduction Act, 
where companies can apply for a tax credit for hydrogen production and investment 
(which is fixed per kilo of hydrogen produced) (see Annex I). 

88 In late 2023, the Commission president announced the creation of a one-stop 
shop under the European Hydrogen Bank, to guide hydrogen project developers on EU 
funding. At the time of the announcement, the Commission already had a webpage 
providing information on the various funding programmes, but it never became fully 
operational. 

89 Applying for EU funding is also perceived as complex because project developers 
need to resubmit proposals every time they apply to a different programme. This 
means that projects that were already positively evaluated by the Commission under 
one programme (but eventually did not receive funding due to a lack of budget) have 
to go through a new evaluation procedure if they apply under a different fund. 

45  See explanations in special report 05/2023, paragraph 43 and Box 4. 

 
 
 
50 

90 In that respect, we take note that the co-legislators agreed46 on the Commission’s 
proposal (of June 2023) to create a “seal of sovereignty”, which would be applicable to 
projects that were evaluated positively under a variety of EU instruments (under direct 
management), including Horizon Europe and the Innovation Fund. The features of this 
seal are the following.  

o 

o 

It would allow member states to provide support from other EU funding sources 
to these projects directly (such as from cohesion policy programmes, the RRF or 
the Modernisation Fund). 

Support remains subject to compliance with the applicable state aid rules and 
specific eligibility rules for the relevant programmes. Considering the time needed 
to obtain approval for state aid (see paragraphs 73-77), there is a risk that the 
benefits of this seal may be limited47. Moreover, member state authorities 
themselves decide whether or not to make use of the seal. 

91 EU programmes provide funding to cover both the supply side (scale-up of 
electrolyser manufacture, hydrogen production, transport and storage infrastructure) 
and the demand side (use by industry). However, they have a number of drawbacks, as 
detailed below. 

92 With regard to the demand side, we found that the Commission had not yet 
developed “Carbon Contracts for Difference”, despite having announced that it would 
do so under the Hydrogen Strategy and the REPowerEU plan. Put simply, the purpose 
of such contracts is to provide grants to companies that are switching to a 
climate-friendly production process, to allow them to be competitive when faced with 
companies that use conventional technologies. 

93 The most significant share of EU funding for hydrogen is provided by the RRF 
(see Figure 12), but not all member states plan to use the RRF for that purpose. Details 
on the amounts earmarked by each member state are included in Annex XI. While the 
RRF provided momentum for renewable energy-related projects, one major drawback 
is nevertheless that milestones and targets must be achieved by 2026 as set out in the 
relevant regulation48 (end-date of the RRF). This is challenging for projects which have 

46  Regulation (EU) 2024/795. 

47  See also special report 23/2022, paragraph 74, on a similar concept, the “seal of 

excellence”. 

48  Regulation (EU) 2021/241. 

 
 
 
51 

long lead times (see paragraph 41) and long-term operating costs (such as electricity). 
Project developers may have to find new funding sources for subsequent phases of 
their projects. 

94 For the four member states we visited, we analysed the national recovery and 
resilience plans and their degree of implementation. We also analysed those of Italy 
and France (to cover the member states that had earmarked the highest amount for 
renewable hydrogen) and found the following points.  

o 

For some countries, the milestones and targets set in the respective Council 
implementing decisions (and based on a Commission proposal) related to 
electrolyser installation projects are stricter than in others. These differences in 
targets also reflect in the evidence expected to demonstrate that these 
milestones and targets are met. For Germany, proof of installation or project 
completion is expected. For Spain, proof of authorisation is sufficient and for 
Poland, after revision of the Council implementing decision at the end of 2023 
resulting in easing the relevant milestone, proof of signature of subsidy 
agreements and transfer of money to the beneficiaries is sufficient. 

o  Where the required proof is stricter and more meaningful in terms of measuring 
results, there is an increased risk of missing the deadline for completion and the 
final project deadline of 2026. In particular, the time taken to approve state aid 
(see paragraphs 73-77), and the time taken by member states to make a grant 
decision can risk affecting some of the milestones and targets for Germany. 

o 

Poland incurs an additional risk of missing its milestones and targets because, due 
to its rule of law issues49, Poland submitted its first payment request only 
in December 2023. In February 2024, the Commission made a positive preliminary 
assessment of all milestones relating to this payment request. In April 2024, the 
Commission made the first regular disbursement.  

95 The Innovation Fund is another major EU funding source for renewable hydrogen 
projects. It finances the following. 

o 

Projects selected by the European Climate, Infrastructure and Environment 
Executive Agency, based on annual calls for projects. Details on the calls and 
funding are presented in Annex XII. 

49  For details, see special report 03/2024. 

 
 
 
52 

o 

An innovative instrument, called the Hydrogen Bank, launched in 2023. See 
details on the pillars of this instrument in Box 4. 

Box 4 

The pillars of the Hydrogen Bank 

Domestic pillar: EU producers of renewable hydrogen can bid for support at an 
auction in the form of a fixed premium per kilogram of hydrogen produced. In a 
market where non-renewable hydrogen is still cheaper to produce, the premium 
(subsidy) is intended to bridge the gap between the price of production and the 
price that consumers are currently willing to pay. The Innovation Fund finances 
this pillar.  

International pillar: third country producers willing to export to the EU can bid for 
support at an auction in the form of a green premium. 

Apart from these financing mechanisms, the aim of the Bank is to improve 
coordination between the existing EU and member state support instruments, and 
ensure transparency and coordination of information to support market and 
infrastructure development. 

96 The Innovation Fund was positively perceived by the stakeholders we met. Under 
the REPowerEU plan, the Commission announced that the funding available under the 
2022 large-scale call would be increased to €3 billion. For the first time, this included a 
specific REPowerEU window to fund “innovative clean technology manufacturing” 
(such as electrolysers). However, we also found that the time between the launch of a 
call for projects and the final grant decision was around 13 to 14 months. In an 
inflationary context, this time lag has an effect on final project costs. 

97 Points to note with regard to the European Hydrogen Bank. 

o 

The Commission president announced in November 2023 that additional auctions 
for domestic hydrogen producers would take place in 2024. Combined with the 
2023 auction (for €800 million), the total amount made available would reach 
€3 billion. The Commission has not yet made a financing decision for the 
additional €2.2 billion. There is still no clarity or certainty for the market in terms 
of the budget that will be available beyond 2024. 

 
 
53 

o 

The Commission has not yet allocated funding to the international pillar. Instead, 
it is considering combining resources from member states (“Team Europe 
approach”) and making use of the H2Global initiative, which was put in place by a 
German foundation. In 2022, with German funding, a subsidiary of the foundation 
organised the first auction for importers. 

No guarantee yet that available public funding allows hydrogen 
production potential across the EU to be harnessed 

98 To ensure that a hydrogen market with a European mindset develops, the 
following factors play a key role: 

o 

as a priority, renewable hydrogen should be made available to 
hard-to-decarbonise sectors where no other energy or cost-efficient alternatives 
are available50; 

o  member states should use their potential for producing renewable hydrogen, in 
particular those that also have potential for producing the renewable power 
required, to export surplus renewable hydrogen within the EU; 

o 

an interconnected European hydrogen backbone (transmission and distribution 
network, plus storage) should be created so that renewable hydrogen can be 
transported from producers to buyers. 

99 According to a research paper51, member states such as Spain, France, Sweden, 
Finland, Poland, Greece and Italy have high or good potential for creating a renewable 
energy surplus. This can be used to produce renewable hydrogen. At the same time, 
the majority of hard-to-decarbonise industrial sites are situated in Germany, Italy, 
France, Spain (but not necessarily in the regions of these countries which have good 
potential for producing hydrogen from renewable energies), Poland and the 
Netherlands. Not all of these countries have good potential to produce renewable 
hydrogen. 

50  See for example 2024 directive (gas package), Article 3. 

51  Quitzow, R.; Triki, A.; Wachsmuth, J.; Fragoso Garcia, J.; Kramer, N.; Lux, B:; Nunez, A. 

(2023): Mobilizing Europe’s Full Hydrogen Potential: Entry-Points for Action by the EU and 
its Member States. HYPAT Discussion Paper No 5/2023. Karlsruhe: Fraunhofer ISI (Ed.). 

 
 
 
54 

100 Both for renewable hydrogen production and network development, we 
analysed data from different sources for projects that are likely to be implemented ((i) 
project announcements collected by the International Energy Agency, (ii) projects 
included in the most relevant hydrogen-related IPCEIs, and (iii) projects of common 
and mutual interest). Furthermore, we analysed the EU funding available under the 
two most significant sources (the Innovation Fund and the RRF).  

101 Looking at hydrogen production (see Annex XIII), we found that the majority of 
projects that have been announced as being at an advanced stage or in the feasibility 
study stage (61 %, data of the International Energy Agency) are concentrated in four 
member states52. These four member states produce a significant share of the EU’s 
total greenhouse gas emissions from hard-to-decarbonise industry. Moreover, we 
identified the following. 

o 

Among the six member states with a significant share of hard-to-decarbonise 
industry, Poland in particular does not yet have any major-sized projects (in GW) 
that are at an advanced or feasibility study stage, nor is it among the biggest 
recipients of EU funds for hydrogen-related projects. 

o  Of the other 21 member states (i.e. those with a less significant share of 

hard-to-decarbonise industry, but which may also have future needs for energy 
storage and renewable hydrogen-based fuels), only seven have planned projects 
(as per data of the International Energy Agency). Among those seven are nearly all 
those with good or high potential for renewable energy production. The 
exception is Romania: it has good potential for renewable energy production but 
does not have any projects at an advanced stage or in the feasibility study stage. 

o 

As these 21 member states only have a few projects, they have consequently 
received little or no funding from the Innovation Fund. Most of these countries 
only earmarked small amounts for renewable hydrogen under the RRF 
(see Annex XI). It is therefore not known whether or when these projects will be 
implemented. 

52  Germany, Spain, France, the Netherlands. 

 
 
 
55 

102 Looking at the hydrogen network (see Annex XIV), we found that around 90 % 
of the projects in the feasibility study stage (in terms new pipelines to be built) are 
concentrated in four member states53. These four member states produce a significant 
share of the EU’s total greenhouse gas emissions from hard-to-decarbonise industry. 
Moreover, we identified the following.  

o  Of the six member states with a significant share of hard-to-decarbonise industry, 
all but Poland have projects that are in the feasibility study stage, but some 
member states are more advanced than others (see examples from the 
Netherlands and Germany in Box 5). Member states have only earmarked small 
amounts for hydrogen networks under the RRF. 

Box 5 

Network development in the Netherlands and Germany 

In the last quarter of 2023 in the Netherlands, the transmission system operator 
started constructing the first part of the national hydrogen network. Around 85 % 
of the network is estimated to consist of repurposed gas pipelines54. The 
estimated cost for the entire national hydrogen network is €4.5 billion. 

In Germany, a plan for a 9 700 km core network was published at the end of 2023. 
It is estimated that around 60 % of the network will consist of repurposed gas 
pipelines. The estimated core network cost (to be established by 2032) is 
€19.8 billion55. 

o  Of the other 21 member states, several have no projects in the feasibility study 

stage. In particular, south-eastern EU member states do not yet have any projects 
of common and mutual interest. Of those countries with good or high potential 
for renewable energy production, only Portugal had projects in an advanced stage 
or that already had a feasibility study (as of October 2023). Moreover, none of the 
countries has earmarked RRF funding for their networks. 

53  Germany, Spain, France, Italy. 

54  Gasunie website. 

55  FNB Gas website. 

 
 
 
56 

o 

o 

Projects of common and mutual interest can apply for funding under the 
Connecting Europe Facility-Energy. As hydrogen projects are mostly at an early 
stage the facility is likely to mainly finance feasibility and technical studies in the 
next few years. National funding will be necessary for other project stages. 
Annex VII shows the infrastructure as planned under the projects of common and 
mutual interest and the IPCEI Hy2Infra. 

The low amount of EU funding allocated for the network tallies with the national 
hydrogen strategies, most of which provided few or no details on infrastructure. 
We analysed the draft NECPs available as of 31.12.2023 for the three of the four56 
member states we visited, plus another five (Belgium, Czechia, France, Italy and 
Romania). We found that all but Romania refer to hydrogen infrastructure and, in 
particular, to the projects of common and mutual interest. However, four of these 
eight member states (Czechia, Spain, France and Romania) provided little or no 
information on how they expect the infrastructure to be financed. 

103 The fact that projects are planned (whether hydrogen production or network 
projects) does not mean that they will all be implemented. However, network 
functionality will crucially depend on all involved member states doing their part. 
Examples include the following. 

o 

Projects under the IPCEIs do not automatically qualify for EU funding. Moreover, 
there is no guarantee that they will receive any national funding, because this 
depends on each country’s fiscal space (see paragraph 76). 

o  Member states have to analyse how to finance their network. Networks are 
usually financed with user fees. However, the hydrogen network needs to be 
developed at a time with uncertainty about future demand and uncertainty about 
when booked capacity will match the network’s technical capacity. The gas 
package Regulation allows network development costs to be spread over time. 
Through an inter-temporal cost allocation, this allows member states to provide 
for the possibility that future users will pay part of the initial costs. 

56  The Polish NECP was not available as of 31.12.2023. 

 
 
 
57 

104 So far, RRF and Innovation Fund funding for hydrogen are concentrated in a 
limited number of member states (see also Annex XI and Annex XII). For the other EU 
funding sources, the situation is as follows.  

o 

o 

The Modernisation Fund: only eastern and central EU member states, Greece and 
Portugal (i.e. 13 lower-income member states) can make use of the Fund. 
However, only two member states (Czechia and Slovakia) have so far put in place 
multi-technology grant schemes, which may (but do not have to) include 
renewable hydrogen projects. 

Cohesion policy funds: no information is yet available regarding whether or to 
what extent member states and regions intend to use these funds for 
hydrogen-related projects (see paragraph 85). 

105 In early 2023 the Commission announced that it would explore the possibility 
of pooling member states’ resources and increasing efforts at EU level. It also called for 
greater EU funding to avoid exacerbating any regional disparities in scaling up the net 
zero industry. However, the resulting Regulation57 establishing the Strategic 
Technologies for Europe Platform does not provide for additional funds. Instead, 
investments in critical technologies may benefit from higher co-financing (up to 100 %) 
under the 2021-2027 cohesion policy funds (and retroactively for the final accounting 
year of the 2014-2020 period). 

106 Looking at overall public funding (EU and national) for hydrogen-related 
investments, we found that the Commission does not have a complete or up-to-date 
overview. The Commission has requested annual studies on energy subsidies58 
since 2020, but these studies have mainly highlighted data quality issues (e.g. 
scattered or non-consolidated data). They did not provide their own estimates of 
national public funding for hydrogen-related investments. In fact, similarly to the 
Commission’s programmes, member states’ funding schemes are also often 
multi-technology programmes, which require assumptions about the share of funding 
that will be allocated to the different technologies, e.g. hydrogen. 

57  Regulation (EU) 2024/795. 

58  Studies were carried out twice prior to 2020, once for 2014 and again for 2018. 

 
 
 
58 

Insufficient coordination efforts by the Commission, both 
internally and with member states, but also with industry 

107 In a 2015 Communication59, the Commission expressed its vision of the Energy 
Union. Among other things, in this union “Member States see that they depend on 
each other to deliver secure energy to their citizens, based on true solidarity and 
trust”. The Commission also stressed that the EU should speak with one voice because 
“a stronger and more united EU can engage more constructively with its partners, to 
their mutual benefit.”  

108 We assessed the appropriateness of cooperation: 

o  within the Commission, and between the Commission and the member states; 

and 

o 

between the Commission and industry. 

Neither internal Commission coordination nor coordination between the 
Commission and member states yet ensures that all parties are pulling in 
the same direction 

109 Several Commission DGs are responsible for different aspects of the hydrogen 
value chain financing, as indicated in Figure 12. Internal coordination is dealt with 
through various procedures and processes. To a certain extent, there may be 
differences in objectives various DGs pursue or between various policies. Some 
examples follow. 

o 

o 

There is an inherent trade-off between energy efficiency (a priority of DG ENER) 
and rapidly ramping up the value chain to allow certain industrial sectors to 
decarbonise (a priority of DG GROW) (see paragraph 56). 

There is also a mismatch between energy security (reducing strategic dependence 
on Russia by reducing natural gas) and the use of low-carbon hydrogen, which is 
produced using fossil fuels with carbon capture methods. With the publication of 
the Communication on industrial carbon management for the EU in February 
2024, low-carbon hydrogen (produced using natural gas with carbon capture 
methods) may come to the fore (see Annex VIII).  

59  COM/2015/080. 

 
 
 
59 

o 

The Commission announced or took initiatives either before there was any clarity 
or where there was (and is) no clarity about the availability of funding or the path 
to implementation (see also paragraph 97, last indent). 

110 Overarching coordination between the Commission and the member states 
mainly takes place through a specific network, the Hydrogen Energy Network. This 
network organises meetings twice a year. Our review of the minutes showed that this 
network is a forum for sharing information (including the work of international 
organisations and the Commission) rather than for discussing strategic issues. As yet, 
however, this forum was not used to discuss a common vision for the hydrogen value 
chain in the EU. Examples of this would be the following. 

o  How can we best coordinate different funding sources to avoid an imbalance in 

development across the EU (see paragraphs 98-106)? 

o  How and where can we ensure and support the production of renewable 

hydrogen in the EU? This is even more important, as member states may have 
diverging interests and approaches, including with regard to the level of 
protectionism. 

The member state representatives we interviewed during our audit also confirmed 
that there was no single point of contact within the Commission for strategic 
hydrogen-related issues. 

111 Moreover, we found that the Commission did not provide any guidance or 
support to member states on how to establish their strategies, nor did it discuss its 
targets (either initial or updated, see Figure 6) with the member states to ensure that 
they were working together towards the same outcome (see paragraphs 31-37 on the 
diverging nature of the national strategies). 

112 To pave the way for possible hydrogen imports or for technological 
cooperation, three of the four member states we visited are actively establishing 
energy or hydrogen partnerships, or signing memoranda of understanding with 
countries outside the EU. In addition, the Commission is also active in establishing 
partnerships. The partnerships and memoranda are illustrated in Figure 13.  

 
 
Figure 13 – Hydrogen partnerships and memoranda with countries 
outside the EU (as of mid-March 2024 for member states and as of 
end-2023 for the Commission) 

60 

European
Union

Germany 

Netherlands

Poland

Norway

United Kingdom

Ukraine

Kazakhstan

India

Morocco

Algeria

Egypt

Namibia

South Africa

Türkiye

Saudi Arabia

United Arab Emirates

Oman

Canada

United States

Argentina

Chile

Uruguay

Australia

Indonesia

Japan

Taiwan

Source: ECA, based on Commission documents and our visit to four sampled member states. 

113 At present, there is no overall EU import strategy. The Commission coordinates 
EU external action in relation to hydrogen policy through the Council. As unanimity is 
required, the Commission also seeks Council’s approval before signing a memorandum 
of understanding with a third country on behalf of the EU. However, the individual 
member states’ steps to organise cooperation with third countries are not 
coordinated. This means that the EU is not yet speaking with one voice, although this 

 
 
 
61 

was one of the aims set out in a 2015 Commission communication 
(see paragraph 107). 

114 Nevertheless, in 2020, the Commission started Team Europe initiatives, which 
are bundling efforts with member states to foster the development of renewable 
hydrogen projects in third countries. However, so far there have only been four such 
initiatives. Member states participate on a voluntary basis: those that have 
participated so far are Belgium, Germany, Spain, France and the Netherlands. 

Good first results from coordination between the Commission and 
industry, but momentum slowed after 2 years 

115 Immediately after issuing the Hydrogen Strategy in July 2020, the Commission 
set up the European Clean Hydrogen Alliance, which consisted of members from 
industry, public authorities, civil society and other stakeholders. The Alliance’s aim is to 
promote investments and stimulate clean hydrogen production and use, and to 
accelerate the decarbonisation of industry in line with climate change objectives. The 
Alliance set up a number of roundtables and working groups, covering different areas 
of the value chain. 

116 The Alliance operates alongside other organisations that were set up by 
industry itself, such as Hydrogen Europe and the European Hydrogen Backbone, which 
is an initiative of 31 energy infrastructure operators that define a developing network 
of essential pipelines. 

117 One major outcome of the Alliance’s work, as requested by the Commission, 
was a specific pipeline of projects to stimulate rolling out the production and use of 
hydrogen. The list of projects was issued in November 2021 and was updated 
in November 2022. However, we found that the list included very limited information 
on project characteristics (e.g. there was no information on financial needs, viability, or 
production capacity) and project status (i.e. whether it was in the conceptual phase, or 
if feasibility studies were being carried out). Moreover, this pipeline is out of date: 
little new information was added with the 2022 update, and no further updates have 
been added since then. We note that after we discussed this with relevant Commission 
services, the latter launched a survey (in December 2023) to obtain updated project 
information.  

 
 
62 

118 Apart from this list of projects, the Alliance also produced a number of other 
reports. The Commission did not systematically follow up all findings from all of the 
reports. 

119 The Commission changed the composition of the Alliance’s roundtables 
in March 2023. We interviewed members from different roundtables who indicated 
that there was no clear mandate for upcoming work and that they had noted a general 
slowdown in activity. 

 
 
 
 
63 

Conclusions and recommendations 

120 With the publication of the Hydrogen Strategy for the EU, for the first time the 
Commission had a central role to play in creating a new market. Our overall conclusion 
is that the Commission was partially successful in creating the necessary conditions for 
this market. While the Commission took a number of positive steps, challenges remain 
all along the hydrogen value chain. 

121 With its 2020 Hydrogen Strategy and the 2022 REPowerEU plan, the 
Commission set targets at EU level for renewable hydrogen production and for 
importing renewable hydrogen. Both documents are Commission communications, 
and as such are therefore non-binding. There was less focus on low-carbon hydrogen 
at the time: although it was mentioned, no targets were set (see paragraph 24). 

122 We found that the renewable hydrogen targets were not clearly defined. 
Moreover, they were driven by political will rather than being based on robust 
analyses. In addition, at the time of writing, it is unlikely that these targets for 2030 can 
be achieved (see paragraphs 25-30 and 38-45). 

123 It is not mandatory for member states to prepare hydrogen strategies, but they 
did have to provide updated national energy and climate plans by mid-2023 (final 
versions have to be submitted by mid-2024), including reporting on measures to 
achieve the non-binding EU targets. The Commission reviewed the draft national plans 
and issued recommendations to member states. However, it did not ask them to set 
targets in line with the EU’s targets. The Commission did not establish a coordination 
process with member states to ensure a certain degree of alignment. In fact, member 
states did not necessarily align their targets and measures with those of the EU. They 
are not all moving at the same speed or with the same level of ambition. In late 2023, 
the Commission president announced that the Commission will assess how member 
states plan to implement the national hydrogen commitments to provide a clear 
roadmap towards 2030 in each member state (see paragraphs 31-37). 

124 Within a relatively short period of time, the Commission has proposed most of 
the legal acts to regulate the hydrogen market. An act defining the methodology for 
assessing greenhouse gas emissions savings for low-carbon hydrogen is still 
outstanding. Work on standardisation and certification is still required 
(see paragraphs 47-50). 

 
 
64 

125 Industry representatives indicated to us that they had deferred investment 
decisions until the rules for producing renewable hydrogen (Delegated Act) were 
published in June 2023. Once published, these rules delivered the much needed legal 
certainty. However, the Commission had not yet assessed the impact of these rules on 
either the cost or the timing for rolling out renewable hydrogen. The Commission is 
now required to carry out such an assessment before mid-2028. In fact, several public 
studies show that the temporal correlation (hourly correlation) rule increases the 
production cost for renewable hydrogen, thereby reducing its competitiveness 
compared to fossil-based hydrogen (see paragraphs 42 and 61). 

126 On the positive side, we found the following. 

o 

o 

Targets for the use of renewable hydrogen in industry and transport as 
introduced by several EU legal acts boost demand (see paragraphs 28 and 63). 

The Commission asked member states to address the slowness of domestic 
permitting processes in their national energy and climate plans and took several 
legislative measures requiring member states to accelerate the process 
(see paragraphs 64-66).  

127 The timelines established in the various legal acts relating to the permitting 
process varied. The Commission has not yet established a plan to monitor member 
states’ implementation of permitting process reforms (see paragraphs 66-68). 

128 The speed and degree of implementation of the legal requirements relating to 
demand targets and permitting depend on the member states. For example, some 
member states consider that certain demand targets are unrealistic and very difficult 
to achieve. Apart from lengthy and time-consuming infringement proceedings, the 
Commission has no means to ensure that member states adhere to these targets or 
requirements (see paragraphs 63 and 68). 

129 The Commission estimated the amount of investment that would be needed to 
create a market for renewable hydrogen, but did not consider all parts of the hydrogen 
value chain. Our analysis showed that the demand side was not properly considered 
and that the Commission’s estimates across different documents were not consistent 
(see paragraphs 80-82). 

130 The Commission does not have complete data on allocated or planned national 
public funding for renewable hydrogen. For the 2021-2027 period, total EU funding for 
hydrogen-related projects is currently estimated at €18.8 billion, mostly funded by the 

 
 
65 

Recovery and Resilience Facility. EU funding is available for the supply and demand 
side of the hydrogen value chain. On the demand side, the Commission has not yet 
developed the key scheme announced in its Hydrogen Strategy, namely “Carbon 
Contracts for Difference”. Regarding the innovative Hydrogen Bank, there is still no 
clarity in terms of the budget that will be available beyond 2024 (see paragraphs 83-
86, 91-97 and 106). 

131 EU funding is scattered over several programmes with different funding rules. 
This makes it difficult for hydrogen project developers to determine which programme 
is best suited to their project. The Commission has developed a webpage to provide 
information on various EU funding programmes, but at the time of our audit this 
webpage was not yet fully operational. In late 2023, the Commission president 
announced that the Commission would relaunch a one-stop shop solution to guide 
project developers on EU funding (see paragraphs 83-90). 

132 In the years to come, large amounts of investments will be required all along 
the hydrogen value chain, the bulk of which will have to be provided by the private 
sector. In an emerging market like hydrogen, there is a case to incentivise and support 
industry in making these investments, be it through national and EU public funding or 
through public authorities that build the essential infrastructure.  

o 

o 

The Commission amended certain state aid rules to ease the provision of state aid 
and support the green transition. However, long approval times for state aid, 
which was the case for some notifications, can negatively affect projects’ planned 
costs and start dates (see paragraphs 69-77). 

Furthermore, even when the Commission allows state aid to be provided, it does 
not mean that member states actually have to deliver it (see paragraphs 76 and 
103). 

o  Member states set their own priorities on how to use some of the most important 
EU funding sources for hydrogen, namely the Recovery and Resilience Facility and 
cohesion policy funding. Given their specific situation and the importance they 
attach to renewable hydrogen, some member states use the Facility significantly 
more than others (see paragraphs 93-94, 101-102 and 104). 

o  While the eastern and central EU member states (plus Portugal and Greece) can 

use the Modernisation Fund, so far only two member states have put 
multi-technology grant schemes in place, which can include hydrogen projects 
(see paragraph 104). 

 
 
66 

133 So far, planned projects (at an advanced and in the feasibility study stage) for 
renewable hydrogen (production and networks) have been concentrated in a limited 
number of member states, in particular those where hard-to-decarbonise industries 
are primarily located. The same applies to the bulk of the EU funding allocated. 
However, not all of the member states which are currently more advanced with regard 
to renewable hydrogen have sufficient potential for renewable energy production and 
consequently renewable hydrogen production. As yet, there is therefore no guarantee 
that available public funding allows the EU to (i) fully harness member states’ 
hydrogen production potential and (ii) transport hydrogen across the EU 
(see paragraphs 98-106). 

134 The Commission took steps to coordinate the ramp-up of the hydrogen value 
chain, but coordination within the Commission and between the Commission and 
member states does not yet ensure that all parties are moving in the same direction. 
Numerous Commission directorates-general are responsible for specific aspects of the 
hydrogen value chain and pursue objectives which are not always aligned. The 
Commission has not yet used the existing fora to discuss key strategic issues on the 
future of the hydrogen value chain in the EU with member states. Moreover, the 
Commission did not provide guidance or support to member states about how to 
establish their national hydrogen strategies. With regard to coordination with industry, 
the Commission set up the European Clean Hydrogen Alliance, but after a promising 
start, momentum slowed (see paragraphs 107-119). 

 
 
67 

Recommendation 1 – Following a reality check, make strategic 
choices on the way ahead without creating new strategic 
dependencies 

In close collaboration with the member states, the Commission should decide on the 
strategic way forward towards decarbonisation without altering the competitive 
situation of key EU industries, which could potentially result in further 
deindustrialisation. In particular, the Commission should  

(a)  update its Hydrogen Strategy based on a careful assessment of the following 

aspects:  

(i)  how to calibrate market incentives for renewable and low-carbon hydrogen 

production and use, taking recent legislative changes into account, 

(ii) 

 how to prioritise scarce EU funding (e.g. focusing on which parts of the value 
chain),  

(iii)  the geopolitical implications of EU production compared to imports from 
non-EU countries (i.e. which industries does the EU want to keep and at 
what price), 

(b)  update the renewable hydrogen production and import targets set by the 

REPowerEU plan so that they are ambitious but realistic. In so doing, it should 
consider regional and industrial sector specificities and the role of low-carbon 
hydrogen. 

Target implementation date: end-2025 

 
 
68 

Recommendation 2 – Set out an EU roadmap and monitor 
progress 

In close collaboration with the member states, the Commission should 

(a)  set out and publish an EU roadmap for the development of a hydrogen value 

chain towards 2030 and beyond, based on its assessment of the national energy 
and climate plans and its updated Hydrogen Strategy, 

(b)  monitor the EU’s and member states’ progress in achieving binding and 

non-binding targets by means of a scoreboard. 

Target implementation date: mid-2026 

Recommendation 3 – Obtain reliable national funding data and 
assess the appropriateness of EU funding arrangements 
accordingly 

The Commission should do the following. 

(a)  Work in close cooperation with member states and if necessary, propose 

reporting obligations to obtain information on investment plans and on planned 
and actual national public funding for the market ramp-up – at least for the 
industries to be identified under Recommendation 1. It should report on this 
overview, for example in the reports on the state of the Energy Union. The 
overview should cover all parts of the hydrogen value chain. 

(b)  Assess whether the current EU funding arrangements are appropriate for the 

future development of the hydrogen value chain across the EU.  

Target implementation date: end-2025 

 
 
 
69 

Recommendation 4 – Monitor permitting processes in the 
member states 

The Commission should monitor permitting processes in the member states and check 
whether they adhere to the timelines set in various legal acts, potentially including this 
aspect in the European Semester process. 

Target implementation date: end-2025 (or later if the relevant legal acts set 
deadlines for transposing the legislation into national law that are after the end of 
2025) 

Recommendation 5 – Take a clear decision on support and 
coordination actions with and for the hydrogen industry 

The Commission should do the following. 

(a)  Create a one-stop shop solution for stakeholders under the European Hydrogen 

Bank and guide hydrogen project developers on available EU funding. 

(b)  Decide on the future of the Clean Hydrogen Alliance in terms of its scope and 

number of roundtables and adopt a clear and time-bound mandate for its future 
work. 

Target implementation date: mid-2025 

This report was adopted by Chamber II, headed by Mrs Annemie Turtelboom, Member 
of the Court of Auditors, in Luxembourg at its meeting of 5 June 2024. 

For the Court of Auditors 

Tony Murphy 
President 

 
 
 
 
 
 
70 

Annexes 

Annex I – Support for renewable hydrogen in the United States 
The US adopted two legal acts which are particularly relevant to renewable hydrogen:  

— 

— 

the Bipartisan Infrastructure Law (2021) includes $9.5 billion for clean hydrogen 
initiatives, of which $8 billion is for regional clean hydrogen hubs and $1 billion is 
for a clean hydrogen electrolysis programme; 

the Inflation Reduction Act (2022) provides for a hydrogen production and 
investment tax credit. 

The Inflation Reduction Act provides the following relating to hydrogen production. 

—  A tax credit60 for the production of clean hydrogen, which is uncapped and 
available for 10 years from the moment a production facility comes into 
operation, but construction must start before 1 January 2033. 

—  Technology-neutral support, which is based on carbon intensity, meaning that the 
higher the carbon intensity, the lower the support. The highest carbon intensity 
for which support can be obtained is 4 kilogrammes (kg) of CO₂ equivalent per 
kilogramme of hydrogen. The amount of support ranges from $0.6 to $3 per kg of 
hydrogen produced. According to a study 61 by the Institut der deutschen 
Wirtschaft, the defined carbon intensity is such that (i) hydrogen produced using 
the current electricity mix in the grid is not within the carbon intensity range for 
which support can be obtained, and (ii) the highest support is currently only 
possible by operating using exclusively renewable electricity. 

—  A tax credit for carbon oxide sequestration62. 

—  Local content requirements: a 10 % increase in the tax credit is possible where an 

electrolyser is manufactured with US materials. 

60  See Article 45V of the Internal Revenue Code. 

61  Küper, Malte, 2023, Wasserstoff im Inflation Reduction Act. Was ist drin für Deutschland 

und die EU?, IW-Kurzbericht, Nr. 8, Köln. 

62  See Article 45Q of the Internal Revenue Code. 

 
 
 
71 

Annex II – Renewable Energy Directive (RED III): targets 
The Directive sets targets for the use of renewable fuels of non-biological origin 
(RFNBOs) (including renewable hydrogen) in industry and in the transport sector, as 
shown in the following table. 

2030 and 2035 targets  

Sector 

Overall 

Targets 

Increase the share of renewable energy in the EU’s overall energy 
consumption to 42.5 % by 2030, with an additional 2.5 % indicative 
top-up so that the 45 % target can be achieved. 

Industry will need to annually increase its use of renewable energy 
by 1.6 %.  
42 % of the hydrogen used in industry should come from RFNBOs 
by 2030 and 60 % from this source by 2035. 

Member states will be able to discount the RFNBOs’ contribution for 
industrial use by 20 % if: 

Industry 

o 

o 

the member state’s national contribution to the binding overall 
EU target tallies with their expected contribution; 

the share of hydrogen from fossil fuels consumed in the member 
state does not exceed 23 % in 2030 and 20 % in 2035. 

Member states will have the possibility to choose between: 

o 

o 

a binding target of a 14.5 % cut in greenhouse gas intensity from 
transport by using renewables (by 2030); or 

a binding share of at least 29 % from renewables in the transport 
sector’s final energy consumption (by 2030). 

Transport 

The new rules establish a binding combined sub-target of 5.5 % for 
advanced biofuels (generally derived from non-food-based feedstocks) 
and RFNBOs (mostly renewable hydrogen and hydrogen-based 
synthetic fuels) in the share of renewable energies supplied to the 
transport sector.  

Within this target, there is a minimum requirement of 1 % from 
RFNBOs in the share of renewable energy supplied to the transport 
sector in 2030. 

Source: EU legal acts. 

 
 
 
Annex III – Information on the member states we visited 

72 

Germany 

Spain 

Netherlands 

Poland 

YES, June 2020 

YES, October 2020 

YES, April 2020 

YES, January 2021 

Strategic vision 
o 

Hydrogen strategy (initial 
document) 
Other document establishing 
targets  

o 

o 

Update of the document 

YES, July 2023 

NO, but expected after the 
approval of the NECP 

Not applicable 

Updated NECP 

Targets for production: electrolyser 
installed capacity by 2030 in GW 
Projects to increase the hydrogen 
production capacity in GW1 and 
estimated to be in operation by 2030 
Final investment decision 
o 
adopted or under construction 
Projects under feasibility study, 
final investment decision 
adopted or under construction 

o 

o 

All projects announced 

Import 

o 

Targets for import of hydrogen 
or 

10 

0.5 

5.7 

11.7 

NO 

4 

0.1 

12.6 

45.9 

NO 

Updated NECP; 
Letters to Parliament 

NO 

4 GW 
(8 GW in 2032)3 

0.2 

8.8 

13.1 

NO 

NO 

NO 

2 

0.01 

0.3 

1.3 

NO 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Spain 

Netherlands 

Poland 

73 

o 

Estimation of amount of 
hydrogen to be imported  
Import strategy exists 

o 
Partnerships with non-EU countries to 
prepare possible hydrogen imports 
Demand-side measures exist 
Targets based on an estimation of the 
needs/usage assumptions 
Needs for additional renewable 
electricity generation capacity 
(solar/wind) estimated/taken into 
account 
Network planning started at national 
level (beyond the process for 
identifying PCIs) 
o 
o 
o 

integrating IPCEIs 
integrating PCIs 
integrating cross-border 
connections 
integrating import points (such 
as harbours) 
integrating storage 

o 

o 
Use of EU funds 
o 

Recovery and Resilience Facility 

Germany 

YES 

No, but planned 

YES 

YES 

YES 

YES 

YES 

YES 
YES 

YES 

YES 

YES 

YES 

NO 

NO 

NO 

YES 

YES 

YES 

YES 

Not applicable 
YES 

YES 

YES 

YES 

YES 

o 

Cohesion policy 

The 2021-2027 programmes include the possibility of using 
funding for hydrogen. However, there is no or limited 
information on the amounts earmarked. 

NO 

NO 

YES 

YES 

NO  

YES 

YES 

YES 
YES 

YES 

YES 

YES 

YES 

NO 

NO 

NO 

NO 

NO 

NO 

Unknown 

NO 

NO 
NO 

NO 

NO 

NO 

YES 
The 2021-2027 
programmes include the 
possibility of using funding 
for hydrogen. However, 
there is no or limited 
information on the 
amounts earmarked. 

 
 
 
 
 
 
 
o 

Innovation Fund 

National subsidy schemes exist 

o 
o 
o 

Covering the whole value chain 
Covering capital expenditure 
Covering operational 
expenditure 

Use of the TCTF state aid regime 
(cut-off date: 31.12.2023) 

Projects approved as PCIs 
Projects included in IPCEIs 
o 
o 
o 

Hy2Tech 
Hy2Use 
Hy2Infra2 

Germany 

YES 

YES 

YES 
YES 

YES 

Spain 

YES 
Only for R&D  
projects 
NO 
NO 

NO 

YES, 
including in the context of multi-
technology schemes 
YES 

YES,  
in the context of multi-
technology schemes 
YES 

YES 
NO 
YES 

YES 
YES 
NO 

1  ECA based on International Energy Agency data (as of October 2023). 

2  Pending approval. 

3  As specified in the Minister’s letter to Parliament of June 2023, the aim for 2032 is 8 GW. 

Source: ECA. 

74 

Poland 

YES 

Only for R&D projects 

NO 
NO 

NO 

NO 

YES 

YES 
YES 
YES 

Netherlands 

YES 

YES 

YES 
YES 

YES 

NO 

YES 

YES 
YES 
YES 

 
 
 
 
 
 
 
75 

Annex IV – Information on the projects we analysed 
The following figure shows the location of the projects visited as well their industrial 
sector. The table provides detailed information on the projects visited (as of 
February 2024). 

Location of projects visited 

Holland Hydrogen
Hydrogen production
Rotterdam

Elygator
Hydrogen production
Terneuzen

H2 CIRCULAR DRI
Steel production
Gijón

Puertollano I and II/
Palos I and II
Hydrogen production
Puertollano and Palos de la Frontera 

Source: ECA. 

Hydrogen Eagle
Hydrogen production
Offshore Hub near Gdynia 

SALCOS
Steel production
Salzgitter

Hy4CHEM
Chemical industry
Ludwigshafen

 
 
 
Project 

HY4Chem 

SALCOS 

H2 CIRCULAR DRI 

PUERTOLLANO I and 
II/ 

PALOS I and II 

Holland Hydrogen 

ELYgator 

Hydrogen Eagle 

76 

Germany 

Spain 

Netherlands 

Poland 

Member 
state 

Short 
description 

Construction and 
installation of an 
electrolyser, 
amongst others to 
replace fossil-
based hydrogen in 
chemical 
production 
processes 

Construction and 
installation of a direct 
reduction plant and 
electric arc furnace to 
replace one blast 
furnace and substitute 
the use of carbon with 
hydrogen, amongst 
others 

Construction and 
installation of an 
electrolyser 

Migration of steel 
production from a 
carbon-intensive 
route to a direct 
reduction 
technology 

Construction of 
electrolysers in 
two different 
locations in four 
phases to produce 
renewable hydrogen 
(to be used initially 
mainly for the 
production of 
fertilisers) 

Construction of an 
electrolyser in the 
Port of Rotterdam, 
which will operate 
with renewable 
electricity from 
offshore wind 
farms in the North 
Sea  

The renewable 
hydrogen will be 
supplied to a 
refinery and later 
to the mobility 
sector 

Construction of an 
electrolyser to 
enable renewable 
hydrogen 
generation for 
industrial and 
mobility customers 

Construction of a 
comprehensive 
infrastructure for 
the production 
and distribution of 
low- and zero-
carbon hydrogen 
in Poland, 
including: 
hydrogen 
production 
facilities, 
electrolysers, 
hydrogen storage 
infrastructure and 
a network of 
refuelling stations  
Hydrogen 
production and 
distribution  

Industrial 
sector 

Chemical 

Steel 

Steel 

Hydrogen production 

Hydrogen 
production 

Hydrogen 
production 

 
 
Project 

HY4Chem 

SALCOS 

H2 CIRCULAR DRI 

Electrolyser  

54 MW 

100 MW 

Not applicable  

Started 

Started 

Awaiting final 
investment 
decision 

2025 

2026 

Unknown 

Project 
status 

Planned to 
be 
operational 
by 

77 

Holland Hydrogen 

ELYgator 

Hydrogen Eagle 

400 MW  
(2 phases with 
200 MW)  

200 MW 

110 MW 

Started (second 
phase awaiting 
final investment 
decision) 

Under 
development 

Awaiting final 
investment 
decision 

2027 

2026/2027 

2031 

PUERTOLLANO I and 
II/ 

PALOS I and II 

Total: 780 MW 

Phase 1: 
Puertollano I:  
20 MW 

Phase 2:  
Palos I: 200 MW 

Phase 3: 
Puertollano II: 
200 MW 

Phase 4: Palos II: 
360 MW 
Awaiting Final 
Investment Decision 
for phases 2, 3 and 4. 
Phase 1 operational 
and in final testing 
phase 
Phase 1: 2022 
Phase 2: 2026 
Phase 3: 2027 
Phase 4: 2028 

 
 
Project 

HY4Chem 

SALCOS 

H2 CIRCULAR DRI 

134.8 

1 592 

924 

78 

Holland Hydrogen 

ELYgator 

Hydrogen Eagle 

Data not public 

Data not public 

737 

PUERTOLLANO I and 
II/ 

PALOS I and II 

1 060 (eligible cost) 
Phase 1: 
Puertollano I: 37  

Phase 2:  
Palos I: 297  

Phase 3: 
Puertollano II: 275  

Phase 4: 
Palos II: 451  

CEEAG 

CEEAG 

CEEAG 

IPCEI Hy2Use 

IPCEI Hy2Use 

IPCEI Hy2Use 

IPCEI Hy2Use 

3.10.2022 

4.10.2022 

17.2.2023 

21.9.2022 

21.9.2022 

21.9.2022 

21.9.2022 

13 months1 

1 year1 

1.5 years1 

1 year1 

1 year1 

1 year1 

1 year1 

31.8.2023 

17.4.2023 

Not yet approved 

Not yet approved 

National grant: 
21.12.2022 

National grant: 
21.12.2022 

Innovation Fund 
grant: 1.12.2022 

Innovation Fund 
grant: 1.12.2022 

Not applicable 

Grant process not 
launched 

Project cost 
(in million 
euro) 

State aid 
regime 
State aid 
approval 
date 
(Commission) 
Time 
between pre-
notification 
and approval 
of state aid 

Grant 
approval 
date 

 
 
Project 

HY4Chem 

SALCOS 

H2 CIRCULAR DRI 

11 months 

6.5 months 

No grant yet 

Time 
between 
state aid 
approval and 
national 
grant 
approval 

Grant 
amount 
(in million 
euro) 

124.3 

999.7 

No grant yet 

No grant yet 

EU funding 
programme 

Recovery and 
Resilience Facility 

Recovery and Resilience 
Facility 

Not applicable as 
no grant yet 
(planned under 
Recovery and 
Resilience Facility) 

Not applicable as no 
grant yet 
(planned under 
Recovery and 
Resilience Facility) 

PUERTOLLANO I and 
II/ 

PALOS I and II 

No grant yet 
(as of end February 
2024) 

79 

Holland Hydrogen 

ELYgator 

Hydrogen Eagle 

3 months2 

3 months2 

No grant yet (as of 
end February 
2024) 

150 (approved so 
far) 
(national grant) 

89 
(Innovation Fund) 

150.8 
(national grant) 

99 
(Innovation Fund) 

No grant yet 

Innovation Fund 

Innovation Fund 

Not applicable 

Electrolyser 
built on 
existing 
industrial site  

YES 

YES 

YES 

YES 

On port land 

YES 

No information 

Studies are 
ongoing for 
hydrogen 
production 
installations 

 
 
 
Project 

HY4Chem 

SALCOS 

H2 CIRCULAR DRI 

PUERTOLLANO I and 
II/ 

PALOS I and II 

Holland Hydrogen 

ELYgator 

Hydrogen Eagle 

80 

Specific 
issues 

Long period of 
time to obtain the 
national grant 
award (see above) 

In April 2023, the 
national authority 
launched a specific call 
for this project  

The project developer 
applied but made the 
execution of the project 
conditional on the 
successful subscription 
of energy supply 
contracts (renewable 
electricity and 
renewable hydrogen)  

Since these contracts 
have not yet been 
agreed, the grant has 
not yet been awarded 

-- 

No decision by the 
national authorities 
to award the grant 
yet although the 
company already 
applied for it in June 
2020 

The project 
developers have 
reportedly faced 
some difficulties 
with the increased 
price of electricity 
and due to the 
impact of the 
introduction of 
electrical grid fees 
at national level 

Higher cost due to 
price increases; 
sharp increase in 
tariffs for 
electricity 
transmission, 
absence of an 
incentivising 
regulatory 
framework 

National 
authorities have 
not yet launched a 
call for projects  

See also 
paragraph 94 on 
the rule of law 
issues 

1  Pre-notification took place under IPCEI Hy2Use in September 2021. 

2  This is the time between IPCEI approval and the national grant approval. In addition, the two Dutch projects (Holland Hydrogen and Elygator) received a grant from the 

Innovation Fund. 

Source: ECA. 

 
 
 
 
 
 
81 

Annex V – Member states’ hydrogen strategies 
18 member states have hydrogen strategies (or in the case of Finland, a roadmap 
which is attached to the NECP). Based on our analysis of these documents, we found 
the following. 

o  Definition of hydrogen: six member states refer exclusively to renewable 
hydrogen, some take both renewable and low-carbon hydrogen into 
consideration, and others mainly refer to low-carbon hydrogen. 

o 

Production: with the exception of five member states, all have targets for the 
installed electrolyser capacity (see Table below). The targets were expressed 
in GW; no member state set production targets for renewable hydrogen in terms 
of Mt. 

o  Demand-side measures: most strategies refer to different types of use, but barely 
include any estimates of needs. Moreover, with the exception of one strategy, 
none includes a clear set of instruments to support demand for renewable 
hydrogen. 

o 

o 

o 

Import: hardly any targets have been set for import. Most strategies, however, 
indicate whether the country aims to be a main importer, exporter, or solely to 
produce for its own consumption. 

Transport and storage infrastructure: most strategies refer to the need for 
infrastructure, but most only include few or no further details, with the exception 
of Belgium, Denmark, Germany and the Netherlands. 

Investment needs: none of the strategies includes an estimate of the funding 
needs for the demand side, in particular the funding required to adapt industrial 
processes. 

 
 
 
 
82 

Targets for renewable hydrogen in member states’ strategies 

Member state 

Belgium 
Bulgaria 
Czechia 
Denmark 
Germany 

Estonia 
Ireland 
Spain 
France 
Croatia 
Luxembourg 
Hungary 
Netherlands 

Austria 
Poland 
Portugal 
Slovakia 
Finland 

Date of 
strategy 

Oct-22 
May-23 
Sep-21 
Mar-22 
Jun-20 
updated 
in May-
23 
Feb-23 
Jun-23 
Oct-20 
Sep-20 
Mar-22 
Sep-21 
May-21 

Apr-20 

Jun-22 
Jan-21 
Aug-20 
Jun-21 
Sep-22 

Targets for 2030  
Electrolyser capacity in GW  

none  
none  
none  
4-6 

10 
(strategy targets updated in July 2023) 

0.15 
0.2-0.5 
4 
6.5 
0.07-1.3 
None 
0.24 
3-4 GW 
Ambition (“streefdoel”) for 2032 increased to 
8 GW 
1 
2 
1.5-2.5 
None 
1 

Note: Those adopted following the Commission’s REPowerEU Communication are marked in light blue. 

Source: ECA own analysis, based on publicly available information. 

 
 
 
 
83 

Annex VI – Project announcements by member state 
The following figure presents data on project announcements regarding electrolysers 
for hydrogen production. 

o 

o 

For advanced stage projects (i.e. projects under construction or for which an 
investment decision has been taken): the overall capacity of advanced projects is 
only above 100 MW in the following seven member states, namely Sweden, 
Germany, France, the Netherlands, Denmark, Portugal and Spain. 

For advanced stage projects and projects for which feasibility studies are being 
carried out: the planned installed capacity of projects in 11 member states 
represents 97 % of the EU’s total projected installed capacity. These member 
states are Spain, the Netherlands, France, Germany, Finland, Denmark, Ireland, 
Greece, Sweden, Portugal and Belgium. 

Projects announced (i) as operational, (ii) as advanced stage, (iii) for 
which feasibility studies are being carried out (for installed capacity, GW) 
(as of October 2023) 

Feasibility
studies

Investment decision
or construction

Operational

1.38

0.02

8.56

5.16

12.48

0.21

0.49

0.26

0.08

0.04

12.48

Feasibility
studies

Investment
decision or
construction

Operational

1.4

0.08

0.1

1

2

3

4

5

6

7

8

9

10

11

12

13

(GW)

Source: ECA, based on data from the International Energy Agency. 

 
 
 
84 

Annex VII – Legal provisions for the hydrogen network 
The following figure shows the location of the projects of common and mutual interest 
and the projects planned under IPCEI Hy2Infra (mainly including pipelines, but also 
other types of projects). 

Projects of common 
and mutual Interest 
pipeline

IPCEI Pipeline

Projects of common 
and mutual Interest 
pipeline and 
IPCEI Pipeline

Source: ECA, based on the 2023 list of projects of common and mutual interest and on data from the 
IPCEI Hy2Infra. 

The gas package sets out rules for the hydrogen network.  

Network development plans for hydrogen 

At EU level. 

o  Development of a non-binding, EU-wide 10-year network development plan for 
hydrogen by a new entity, the European Network of Network Operators for 
Hydrogen (ENNOH). However, the first such plan, due by 2026, will be developed 
by the European Network of Transmission System Operators (ENTSO) for Gas, but 
will involve hydrogen transmission network operators as well as ENNOH as soon 
as it is established. 

 
 
 
85 

o 

The EU-wide 10-year network development plan should build on the national 
hydrogen network developments. 

At national level (transmission network). 

o  Development of a 10-year network development plan (every 2 years) for 

hydrogen, including: detailed information on the main infrastructure that needs 
to be built or upgraded and investments already decided. It must also identify 
new investments and provide detailed information on infrastructure that can or 
will be repurposed. 

o 

It must take into account cross-border exchanges, including with third countries, 
the role of hydrogen storage and the integration of hydrogen terminals. 

Blending 

Injecting hydrogen into existing gas pipelines (blending) could theoretically be an 
option in the scaling up of the EU’s hydrogen production capacity and would facilitate 
the transport of hydrogen. It could also be used as transitional tool for 
decarbonisation. However, it comes with challenges for the network and for users. The 
2024 gas package regulation (adopted, but not yet published as of the date our report 
was adopted) states that the blending of hydrogen into the natural gas system should 
be a last resort solution, because: 

o 

o 

it is less efficient compared to using hydrogen in its pure form and diminishes the 
value of hydrogen; 

it also affects the operation of natural gas infrastructure, end-user applications, 
and the interoperability of cross-border systems. 

To limit the risk of market segmentation, the Regulation set the percentage of blending 
at 2 % for cross-border interconnection points between member states. This means 
that transmission system operators have to accept natural gas with a blended 
hydrogen level below this authorised EU-wide cap. 

 
 
 
 
86 

Annex VIII – Low-carbon hydrogen, carbon capture and storage 
and carbon capture and utilisation 
The EU recognised the following in legal acts. 

o 

o 

In a transitional phase, low-carbon hydrogen is needed to more rapidly 
decarbonise existing hydrogen production. This allows the focus to be on a range 
of clean technologies, and would enable economies of scale. One way of 
producing low-carbon hydrogen is to use natural gas along with carbon capture. 

The capture, storage and utilisation of CO2 will inevitably be part of the EU’s 
decarbonised future. This particularly concerns any CO2 emissions which cannot 
be reduced through technical means, or where it is not economically viable to 
reduce those emissions. A mechanism should be in place to ensure that they can 
be captured and either stored or utilised, avoiding delayed emissions. 

With its Communication on industrial carbon management for the EU, published 
in February 2024, the Commission gave this subject new impetus. The Commission 
expects significant amounts of CO2 to be captured and stored by 2030, 2040 and 
thereafter. However, it is important to note the following points. 

o 

o 

o 

In November 2022, in a proposal for Regulation establishing an EU certification 
framework for carbon removals, the Commission concluded that there were no 
significant industrial carbon removals in the EU. Moreover, while a network is 
required to transport the captured CO2 to storage sites, the Commission 
identified significant barriers that made it difficult for investors to move ahead 
with CO2 transport projects. 

A framework to govern the market does not yet exist. 

The estimated average lead-time of projects is 6 to 8 years (from concept to 
operation)63. 

Among the actions that the Commission announced in its Communication on industrial 
carbon management for the EU (2024) are the following:  

o  work together with member states to develop and put in place a policy 

framework across the entire value chain, which is needed to increase certainty for 
investors; 

63  Scaling up the CCS Market to Deliver Net-Zero Emissions, Alex Townsend and Angus 

Gillespie, Global CCS Institute, 2020. 

 
 
 
87 

o 

o 

o 

consider setting specific objectives for carbon removals; 

assess if and how the CO2 removed from the atmosphere, which is then safely and 
permanently stored, could be accounted for and covered by emissions trading; 

prepare a delegated act to specify the conditions under which permanent storage 
can be recognised, with a view to putting permanent carbon capture and 
utilisation, and carbon capture and storage on an equal footing within the 
emissions trading system; 

o 

support member states in designing a possible IPCEI. 

The Commission’s Joint Research Centre estimated that the CO2 transport 
infrastructure could span up to 7 300 km and that deployment could cost up to 
€12.2 billion by 2030, rising to around 19 000 km and €16 billion in 2040. 

Cross-border carbon dioxide network development (infrastructure for transport and 
storage) is included as a thematic area under the TEN-E Regulation. Under the Net Zero 
Industry Act64 both carbon capture and storage as well as CO₂ transport and utilisation 
technologies are considered as net zero technologies. 

64  Regulation (EU)2024/1735. 

 
 
 
 
 
88 

Annex IX – Legislative measures to accelerate national 
permitting processes 
The following table presents the legislative measures taken by the Commission and 
adopted by the co-legislators to accelerate national permitting processes for 
renewable energy production and renewable hydrogen production projects. 

Legislative measures to accelerate national permitting processes 

Area/legal act 

Date of 
adoption 

Short description 

Renewable energy production (renewable energy projects and their related 
infrastructure, such as storage and grid connection) 

Council 
Regulation (EU) 
2022/2577 

22.12.2022 

Renewable 
Energy Directive 
EU/2023/2413 
(RED III) 

18.10.2023 

This was meant to bridge the gap until the Renewable 
Energy Directive (RED III) came into force and was 
applicable for 18 months. Among other things, it 
allowed member states to exempt certain renewable 
energy, energy storage and electricity grid projects from 
environmental assessment procedures. 

Timelines: the permitting process must not exceed 2 
years, or 3 years in the case of offshore renewable 
energy projects. Deadline for transposing this provision: 
21.5.2025. 

These timelines are reduced by 1 year for projects in 
“renewables acceleration areas”, which member states 
will designate. Deadline for transposing the provision 
(shorter timelines): 1.7.2024. 

Renewable energy deployment will also be presumed to 
be of “overriding public interest”, which will limit the 
grounds for legal objections to new installations. 

Commission 
Recommendation 
C/2022/3219 

18.5.2022 

Recommendations for improving several aspects of the 
procedure. 

 
 
Area/legal act 

Date of 
adoption 

Short description 

Projects of common interest and projects of mutual interest 

89 

TEN-E Regulation 
(EU) 2022/869 

30.5.2022 

Timelines for projects of common interest and projects 
of mutual interest: the permitting process must not 
exceed 42 months. The process consists of:  

o 

o 

the pre-application procedure with an indicative 
period of 24 months; 

the statutory permit granting procedure which 
shall not exceed 18 months. 

Extension of up to 9 months is possible. 

Member states must streamline environmental 
assessment procedures and must identify and take 
steps to do so: 

o 

o 

they should have taken the non-legislative 
measures identified by 24 March 2023; 

they should have taken the legislative measures 
identified by 24 June 2023. 

At the end of December 2023, the Commission 
launched a survey to monitor whether member states 
acted accordingly. At the time of writing, the 
Commission had received 13 replies. Twelve member 
states either reported that they had adopted measures 
or were in the process of doing so. 

 
 
Area/legal act 

Date of 
adoption 

Short description 

Net zero technology manufacturing projects 

90 

Timelines for net zero technology manufacturing 
projects (including (i) hydrogen technologies: 
electrolysers and fuel cells, (ii) solar photovoltaic, solar 
thermal electric and solar thermal technologies; and (iii) 
onshore wind and offshore renewable technologies), 
where the permitting process must not exceed: 

o 

o 

12 months for the construction or expansion of 
net zero strategic projects with a yearly 
manufacturing capacity of less than 1 GW;  

18 months for the construction or expansion of 
net zero strategic projects, with (i) a yearly 
manufacturing capacity of 1 GW or more or (ii) 
where the capacity is not measured in GW. 

The timelines for the construction or expansion of net 
zero strategic projects are shorter: 9 months and 
12 months respectively.  

These timelines exclude the time required for the 
environmental assessment procedure.  

Environmental impact assessment: a reasoned opinion 
must be issued within 3 months of receiving all 
necessary information. The timeframes for consulting 
the public must not be longer than 90 days. 

Hydrogen production 

Timelines: for projects such as hydrogen production 
facilities and hydrogen system infrastructure, member 
states must grant authorisations (including permits) 
within 24 months. Extension by 12 months is possible 
on the grounds of extraordinary circumstances. 

The timeline is without prejudice to obligations under 
applicable EU environmental and energy law, judicial 
appeals and proceedings. 

Deadline for transposing the Directive: 2026.  

Net Zero Industry 
Act  

Regulation (EU) 
2024/1735 

27.5.2024 

2024 gas package 
directive 
(adopted, but not 
yet published as 
of the date our 
report was 
adopted) 

21.5.2024 

 
 
 
 
 
91 

Annex X – State aid approved for renewable hydrogen projects 
The following table provides data on (i) the approved amount of state aid to support 
renewable and low-carbon hydrogen projects, and (ii) the member states concerned. 
The submitted IPCEIs cover the whole value chain. 

State aid approved for hydrogen-related projects (as of 15.2.2024) 

State aid 
rules 

Number of 
projects 

IPCEI1 

Amount of 
authorised 
aid 
(in billion 
euro) 

o  Hy2Tech 

41 

5.4  

o  Hy2Use 

35 

5.3 

o  Hy2Infra 

33 

6.9 

Member states where 
projects are located 

Belgium, Czechia, 
Denmark, Germany, 
Estonia, Greece, Spain, 
France, Italy, Netherlands, 
Austria, Poland, Portugal, 
Slovakia, Finland 
(15 member states) 

Belgium, Denmark, 
Greece, Spain, France, 
Italy, Netherlands, Austria, 
Poland, Portugal, Sweden, 
Slovakia, Finland 
(13 member states) 

Germany, France, Italy, 
Netherlands, Poland, 
Portugal, Slovakia  
(7 member states) 

Planned 
installed 
electrolyser 
capacity 
(GW) 

Not 
applicable 

3.6 

3.2 

 
 
 
 
 
 
State aid 
rules 

Number of 
projects 

Amount of 
authorised 
aid 
(in billion 
euro) 

Member states where 
projects are located 

92 

Planned 
installed 
electrolyser 
capacity 
(GW) 

CEEAG 

9 

TCTF  

Not known 
(multi-
technology)2 

5 

Belgium, Germany, Spain, 
France, Poland 
(5 member states) 

0.4 

0.552 

Italy 

Not known 
(multi-
technology)2 

Czechia, Germany, Austria, 
Poland, Slovakia 
(6 member states) 

Not available 

1  A further IPCEI (Hy2Move) relates to transport. It is not included in the table as this report focuses 

on renewable hydrogen for use by industry. 

2  The amount of aid authorised for hydrogen in the table shows the amount related to two schemes, 

focusing only on hydrogen technologies.  
Five schemes are multi-technology schemes. Therefore, neither the number of projects nor the 
actual amount likely to be allocated to renewable hydrogen projects is known. 

Source: ECA, based on Commission data. 

 
 
 
 
93 

Annex XI – Recovery and resilience plans – data on funding 
earmarked for renewable and low-carbon hydrogen  
The following table presents the amounts earmarked for hydrogen (i) in the initially 
approved recovery and resilience plans by member state and (ii) in the updated plans 
taking into account the specific REPowerEU chapter.  

Amounts earmarked for hydrogen (in million euro) 

Member state 

Amount earmarked for 
hydrogen – initial plans 

Amounts earmarked for hydrogen 
– final plans  
(including REPowerEU)  

Belgium 
Bulgaria 
Czechia 
Denmark 
Germany 
Estonia 
Ireland 
Greece 
Spain 
France 
Croatia 
Italy 
Cyprus 
Latvia 
Lithuania 
Luxembourg 
Hungary 
Malta 
Netherlands 
Austria 
Poland 
Portugal 
Romania 
Slovenia 
Slovakia 
Finland 
Sweden 

Total 

Source: ECA. 

437 
35 
0 
0 
2 547 
50 
0 
0 
1 555 
2 425 
32 
3 653 
0 
0 
20 
0 
0 
0 
98 
248 
800 
90 
130 
0 
1 
100 
0 

350 
33 
0 
0 
2 547 
50 
0 
60 
3 155 
2 426 
104 
3 039 
0 
0 
20 
0 
250 
0 
98 
270 
800 
175 
130 
0 
11 
110 
0 

12 221 

13 628 

 
 
 
 
94 

Annex XII – Innovation Fund – data on EU hydrogen projects 
Twice a year the Commission organises a call for projects. Up until 2023, calls 
addressed either small-scale projects (i.e. with a total capital expenditure no greater 
than €7.5 million) or large-scale projects. In November 2023, the Commission launched 
a single call, including both types of projects, and additionally medium-scale projects 
(i.e. with a total capital expenditure between €20 million and €100 million). Moreover, 
on the same day, the Fund launched the first pilot auction under the European 
Hydrogen Bank. 

The following table provides data on EU hydrogen projects (renewable and low-carbon 
hydrogen as well as electrolyser manufacture) with a grant, and their location by 
member state. For renewable hydrogen production, it shows the following. 

o 

o 

o 

74 % of the total grant amount went to three member states (Sweden, the 
Netherlands and Spain (in decreasing order)). We note that the Swedish projects 
are cross-sector projects meaning that the grant amount will not solely be 
allocated to hydrogen production. A detailed breakdown is not available. 

The planned installed electrolyser capacity (in GW) for the projects in these three 
member states is 3.2 (or 85 % of the total). The Swedish projects represent 48 % 
of the total. 

There are only two projects in eastern European member states; the grant 
amount for these represents less than 1 % of the total. 

Data on hydrogen projects in the EU with a grant (as of 31.12.2023) 

Date of 
call for 
projects 

Number 
of 
projects 

Member states where the 
selected projects are located 

EU grant 
amount 
(million 
euro) 

Planned 
installed 
electrolyser 
capacity (GW) 

Renewable hydrogen  

Spain, Italy, Poland, Finland, 
Sweden 

Czechia, Germany, Cyprus, 
Netherlands, Poland, Sweden 

Belgium, Germany, Spain, 
France, Netherlands, Austria, 
Sweden 

2020 

2021 

6 

9 

2022 

12 

TOTAL 

27 

249 

583 

1 051 

1 883 

0.6 

0.8 

2.4 

3.8 

 
 
 
95 

Date of 
call for 
projects 

Number 
of 
projects 

Member states where the 
selected projects are located 

EU grant 
amount 
(million 
euro) 

Planned 
installed 
electrolyser 
capacity (GW) 

Manufacture of electrolysers 

2022 

4 

Belgium, Denmark, Germany 

162 

Not applicable 

2022 

TOTAL 

2 

33 

Low-carbon hydrogen 

Greece, Netherlands 

157 

Not applicable 

2 202 

Source: ECA, based on Commission data. 

 
 
 
 
96 

Annex XIII – Analysis of projects for renewable hydrogen production (electrolysers) and related funding 

Member 
state1 

Emissions of greenhouse gas 
(Mt of CO2 equivalent) by 
hard-to-decarbonise industry  
(in % of total)2 

Projects in advanced 
stage and projects in 
feasibility study stage 
(above 0.5 GW)3 

Projects of 
common 
interest 
(list) 

IPCEI 
(Hy2Use)4 
(Annex X) 

IPCEI 
(Hy2Infra)5 
(Annex X) 

Innovation Fund6 
(Annex XII) 

RRF7 
(Annex XI) 
Funding 
earmarked 

Germany 

Italy 

France  

Spain 

Poland 

Netherlands 

Belgium 

Austria 

Czechia 

Romania 

Slovakia 

Greece 

Sweden 

Portugal  

Hungary 

Finland 

Bulgaria 

Ireland 

21 

12 

10 

10 

8 

7 

5 

4 

4 

4 

3 

2 

2 

2 

1 

1 

1 

1 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

Beneficiary 

Beneficiary 

Beneficiary 

Earmarked 

Earmarked 

Earmarked 

Major beneficiary 

Earmarked 

YES 

Beneficiary 

Earmarked 

Major beneficiary 

Earmarked 

Beneficiary 

Beneficiary 

Beneficiary 

Major beneficiary 

YES 

Beneficiary 

Earmarked 

Earmarked 

Earmarked 

Earmarked 

Earmarked 

Earmarked 

Earmarked 

Earmarked 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Member 
state1 

Emissions of greenhouse gas 
(Mt of CO2 equivalent) by 
hard-to-decarbonise industry  
(in % of total)2 

Projects in advanced 
stage and projects in 
feasibility study stage 
(above 0.5 GW)3 

Projects of 
common 
interest 
(list) 

IPCEI 
(Hy2Use)4 
(Annex X) 

IPCEI 
(Hy2Infra)5 
(Annex X) 

Innovation Fund6 
(Annex XII) 

Denmark 

Croatia 

Lithuania 

1 

1 

1 

All other member states (6 in 
total) with less than 1 % are 
not included in this table. 

YES 

YES 

YES 

97 

RRF7 
(Annex XI) 
Funding 
earmarked 

Earmarked 

Earmarked 

1 

In purple: the member states with high or good potential for renewable energy surplus that can be used to produce hydrogen, as extracted from a research paper, 
see paragraph 99. The research paper indicated the following: based on models, renewable energy potentials were estimated for individual European countries at costs 
of up to €60/MWh and contrasted with the sum of electricity demand required for direct use and for hydrogen production by electrolysis in 2050. 
The lighter the shade of purple, the lower the surplus (in absolute terms). 

2  Data from the European Environment Agency, 2021. 

3  Data from the International Energy Agency (as of October 2023).  

Member states for which the total of the projects exceeds 2 GW are marked in bold. 

4  Member states for which the reply is marked in bold (2) included projects representing 71 % of the total electrolyser capacity to be installed. 

5  Member states for which the reply is marked in bold (3) included projects representing 91 % of the total electrolyser capacity to be installed. 

6  Major beneficiaries marked in bold (3) represent 74 % of the total funding for hydrogen production. 

7  The amount of funding earmarked for hydrogen by those member states where “earmarked” is marked in bold (4) represents 82 % of the total funding. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex XIV – Analysis of projects for network development, storage, ports, and related funding 

98 

RRF6 
(Annex XI) 
Funding 
earmarked 

Earmarked 

Earmarked 

Earmarked 

Earmarked 

Member state1 

Emissions of greenhouse gas  
(Mt of CO₂ equivalent) by hard-to-
decarbonise industry2 

Projects in advanced stage 
(final investment decision or 
under construction)3 

Projects in 
feasibility study 
stage4 

Projects of 
common interest 
(list) 

IPCEI (Hy2Infra)5 
(Annex X) 

Germany 
Italy 
France  
Spain 
Poland 
Netherlands 

Belgium 
Austria 
Czechia 

Romania 
Slovakia 
Greece 
Sweden 
Portugal  
Hungary 
Finland 
Bulgaria 
Ireland 
Denmark 
Croatia 

21 
12 
10 
10 
8 
7 

5 
4 
4 

4 
3 
2 
2 
2 
1 
1 
1 
1 
1 
1 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Member state1 

Emissions of greenhouse gas  
(Mt of CO₂ equivalent) by hard-to-
decarbonise industry2 

Projects in advanced stage 
(final investment decision or 
under construction)3 

Projects in 
feasibility study 
stage4 

Projects of 
common interest 
(list) 

IPCEI (Hy2Infra)5 
(Annex X) 

Lithuania 

1 

YES 

All other member states (6 in total) 
with less than 1 % are not included 
in this table. 

99 

RRF6 
(Annex XI) 
Funding 
earmarked 

1 

In purple: the member states with high or good potential for renewable energy surplus that can be used to produce hydrogen, as extracted from a research paper, see 
paragraph 99. The research paper indicated the following: based on models, renewable energy potentials were estimated for individual European countries at costs of 
up to €60/MWh and contrasted with the sum of electricity demand required for direct use and for hydrogen production by electrolysis in 2050. 
The lighter the shade of purple, the lower the surplus (in absolute terms). 

2  Data from the European Environment Agency, 2021. 

3  Data from the International Energy Agency (as of October 2023). 

4  Data from the International Energy Agency (as of October 2023). 

Member states with the highest number of projects are marked in bold. 

5  Member states for which the reply is marked in bold (1) included projects representing close to 70 % of the aid amount approved. 

6  Based on an analysis of the Commission staff working documents on the national resilience plans of member states,  

we identified four which earmarked funding for the hydrogen network for a total amount of €1 202 million. 

 
 
 
 
 
 
 
 
 
 
 
 
100 

Abbreviations 

CEEAG: Climate, energy and environmental aid guidelines 

DG CLIMA: Directorate-General for Climate Action 

DG ECFIN: Directorate-General for Economic and Financial Affairs 

DG ENER: Directorate-General for Energy 

DG MOVE: Directorate-General for Mobility and Transport 

DG REGIO: Directorate-General for Regional and Urban Policy 

DG RTD: Directorate-General for Research and Innovation 

DG: Directorate-general 

ETS: Emissions trading system 

GBER: General Block Exemption Regulation 

GW: Gigawatt 

IEA: International Energy Agency 

IPCEI: Important projects of common European interest 

Mt: Million tonnes 

MW: Megawatt 

NECP: National energy and climate plan 

RED II: Renewable Energy Directive of 2018 

RED III: Renewable Energy Directive, as amended in 2023 

RRF: Recovery and Resilience Facility 

SG RECOVER: Recovery and Resilience Task Force within the Secretariat-General of the 
Commission 

TCTF: Temporary Crisis and Transition Framework 

TEN-E: Trans-European networks for energy 

 
 
 
 
101 

Glossary 

Bidding zone: Largest geographical area (usually a country) in which electricity can be 
traded in Europe without technical constraints. 

Carbon Border Adjustment Mechanism: EU system for putting a price on the carbon 
emitted during the production of carbon-intensive goods that enter the EU. 

Carbon capture and storage (CCS): Practice of taking the CO2 emitted by power 
stations or industry before it can enter the atmosphere, transporting it and storing it 
deep underground. 

Carbon capture and utilisation (CCU): Practice of taking the CO2 emitted by power 
stations or industry before it enters the atmosphere and using it to manufacture 
synthetic fuels, chemicals or other products. 

Delegated act: Legally binding act used by the Commission, if Parliament and the 
Council express no objection, to supplement or amend non-essential parts of EU 
legislation, for example by giving details of implementing measures. 

Direct management: Management of an EU fund or programme by the Commission 
alone, as opposed to shared management or indirect management. 

Emissions Trading System: Emission reduction scheme based on capping total 
emissions through the allocation of allowances to companies or other organisations 
emitting CO₂, which can buy and sell them according to their needs. 

European Green Deal: EU growth strategy adopted in 2019, aiming to make the EU 
climate-neutral by 2050. 

European Hydrogen Bank: EU instrument aimed at stimulating and supporting 
investment in sustainable hydrogen production. For example, it is meant to cover and 
lower the cost gap between renewable hydrogen and fossil fuels for early projects. 

Feedstock: Raw material used in industrial processes. 

Gigawatt: Unit of power equal to one billion watts. 

Greenhouse gas: Gas in the atmosphere – such as carbon dioxide or methane – that 
absorbs and emits radiation, trapping heat and so warming the Earth’s surface through 
what is known as the greenhouse effect. 

Hard-to-decarbonise industry: Industry in which reducing carbon emissions is 
particularly difficult or costly. 

 
 
102 

Hydrogen interconnector: Hydrogen pipeline linking the national networks of two EU 
member states, or the part of a network linking a member state and a non-EU country 
and located outside EU territory. 

Hydrogen: Hydrogen (H2) at standard conditions is a colourless, odourless, tasteless, 
non-toxic, and highly combustible gas. 

Indirect management: Method of implementing the EU budget whereby the 
Commission entrusts implementation tasks to other entities (such as non-EU countries 
and international organisations). 

Innovation Fund: EU programme that uses revenue from the EU’s emissions trading 
system to support innovative low-carbon technologies. 

National energy and climate plan: Ten-year document outlining a member state’s 
policies and measures to meet the EU’s climate objectives. 

(Pre-)notification of state aid: Procedure by which a member state gives the 
Commission advance notice of proposed state aid for informal feedback on its 
compatibility with EU law, prior to mandatory notification. 

Project of common interest: Cross-border infrastructure project between two or more 
EU countries in the context of a trans-European network. 

Projects of mutual interest: Cross-border infrastructure project between the EU and 
one or more non-EU country in the context of a trans-European network. 

REPowerEU chapter: Addition to a member state’s initial national recovery and 
resilience plan, setting out its REPowerEU reforms and investments. 

REPowerEU: EU initiative to end dependence on fossil fuels, diversify energy supplies 
and accelerate the clean energy transition. 

Shared management: Method of spending the EU budget in which, in contrast to 
direct management, the Commission delegates to the member state while retaining 
ultimate responsibility. 

Temporal correlation: Renewable electricity generation and hydrogen production 
should coincide temporally (for example hourly matching or monthly matching). 

 
 
 
 
103 

Replies of the Commission 

https://www.eca.europa.eu/en/publications/sr-2024-11 

Timeline 

https://www.eca.europa.eu/en/publications/sr-2024-11 

 
 
 
 
 
 
 
 
 
 
 
 
104 

Audit team 

The ECA’s special reports set out the results of its audits of EU policies and 
programmes, or of management-related topics from specific budgetary areas. The ECA 
selects and designs these audit tasks to be of maximum impact by considering the risks 
to performance or compliance, the level of income or spending involved, forthcoming 
developments and political and public interest. 

This performance audit was carried out by Audit Chamber II Investment for cohesion, 
growth and inclusion spending areas, headed by ECA Member Annemie Turtelboom. 
The audit was led by ECA Member Stef Blok, supported by Johan Adriaan Lok, Head of 
Private Office and Laurence Szwajkajzer, Private Office Attaché; Marion Colonerus, 
Principal Manager; María Domínguez, Head of Task; Juan Antonio Vázquez Rivera, 
Nils Westphal, Miłosz Aponowicz and Borja Martin Simón, Auditors.  

From left to right: Miłosz Aponowicz, Marion Colonerus, Laurence Szwajkajzer, 
Stef Blok, Borja Martin Simón, Johan Adriaan Lok, María Domínguez, Agnese Balode 
and Juan Antonio Vázquez Rivera. 

 
 
 
 
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The Commission set the course for creating a renewable hydrogen 
market in its Hydrogen Strategy and REPowerEU plan, which 
included EU targets for hydrogen production and import. 
Renewable hydrogen is one way to decarbonise, especially for the 
hard-to-decarbonise sectors of industry. For the 2021-2027 
period, total EU funding for hydrogen-related projects is currently 
estimated at €18.8 billion. We conclude that the Commission was 
partially successful in creating the right conditions for the 
emerging hydrogen market and associated value chain. The legal 
framework has mostly been adopted, but a number of challenges 
remain. One of our main recommendations is that future strategic 
choices should be based on a reality check – making strategic 
choices going forward without creating new strategic 
dependencies. 

ECA special report pursuant to Article 287(4), second 
subparagraph, TFEU. 

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