The Future of Renewable Hydrogen in the European Union: Market and Geopolitical Implications

Abstract

As countries around the world pledge to remove nearly all carbon emissions from their economies within the next forty years, the spotlight has moved to the deep decarbonization of all energy sectors. This aggressive push to decarbonize has sparked renewed interest in clean hydrogen—defined as hydrogen produced from water electrolysis with zero-carbon electricity. While hydrogen has been a staple in the energy and chemical industries for decades, renewable hydrogen is now enjoying unprecedented political and business momentum as a versatile and sustainable energy carrier that could be the missing piece in the carbon-free energy puzzle. While success is possible, this transformational effort will require close coordination between policy, technology, capital, and society to avoid falling into the traps and inefficiencies of the past.

This report focuses on the market and geopolitical implications of renewable hydrogen adoption at scale in the European Union (EU) and presents long-term strategies based on three reference scenarios. Each scenario focuses on one key strategic variable: energy independence, cost (optimization), or energy security.

Our analysis shows that only by working together can the EU become a global leader in clean hydrogen innovation and simultaneously contribute to the EU’s climate and energy security goals, a more robust economy, and a more integrated union.

What would it require to become hydrogen independent? Where should production be located for cost-competitive supplies? What is the enabling infrastructure that needs to be developed and deployed at scale? How could supply risks be mitigated? Only a thorough analysis of future scenarios can provide policymakers and investors with answers to these key questions, as well as a deep understanding of the associated market and geopolitical implications.