Despite growing political support and billions in subsidies, Europe’s green hydrogen ambitions face major obstacles. At the World Hydrogen Summit 2025 in Rotterdam, energy experts and government leaders expressed optimism, but the International Energy Agency (IEA) delivered a more sobering view.
According to the IEA’s Northwest European Hydrogen Monitor 2025, presented by gas analyst Greg Molnar, Europe’s green hydrogen sector is far from meeting its targets. Northwest Europe accounts for 40% of total EU hydrogen demand and holds large renewable energy and carbon storage potential—especially in the North Sea. However, real-world progress is slow. Of the many green hydrogen projects announced, only 6% are under construction, and just 9% have reached a final investment decision (FID).
The European Union, along with national governments like Germany and the Netherlands, is promoting green hydrogen through subsidies and market mechanisms. Plans are in place to install up to 35 gigawatts of electrolyzer capacity by 2030 across countries including Belgium, Denmark, and the UK. Yet demand remains low, prices are high, and the financial viability of most projects is uncertain.
A core issue is the absence of a functioning commodity market for green hydrogen. Without a clear price benchmark, projects struggle to attract private investment. Unlike oil or gas, which have well-established trading systems and price points, green hydrogen lacks a mature financial structure. Long-term contracts backed by subsidies may provide short-term stability, but experts warn this is not a sustainable model.
Some voices at the summit questioned whether green hydrogen is the right focus at all. Alternatives like green ammonia or methanol may offer more practical and less expensive paths to low-emission energy. Ammonia, for example, is easier to store and transport, and poses fewer environmental risks. Yet political and financial backing continues to favor hydrogen.
Critics argue that many decisions are driven by political ambition rather than technical or commercial realities. Current green hydrogen prices are too high to compete with fossil fuels, and experts don’t expect them to become competitive until 2040 at the earliest. For now, efforts to enforce hydrogen use through emission penalties or regulatory pressure risk burdening already strained industrial sectors in the EU and UK.
Still, governments are moving forward. The EU has earmarked nearly €1 billion to fund 15 green hydrogen projects across five countries, aiming to produce 2.2 million tons over the next decade. The funding comes from the EU Emissions Trading System. A second auction through the European Hydrogen Bank, worth up to €1 billion, is planned for the end of 2025.
The Netherlands and Germany have also committed €600 million to stimulate green hydrogen trade via H2 Global’s Hintco platform. This will support 10-year purchase agreements for green hydrogen, ammonia, or methanol.
Despite these efforts, the IEA stresses that investment and demand are not keeping pace. Subsidies continue to distort market signals, and private capital remains cautious. For Europe’s green hydrogen strategy to succeed, a more realistic approach is needed—one that prioritizes financial sustainability and market structure.
In the long term, green hydrogen may still play a role in the energy mix, especially by 2050. But it will not replace hydrocarbons or nuclear energy in the near future. Experts urge policymakers to adjust expectations and align strategies with market realities before momentum is lost.