Europe Hydrogen Market Report - 2024

The EU aims to become the first climate-neutral continent by 2050. The production and use of renewable hydrogen is seen as a key lever for emission reduction within of hard-to-abate sectors. The EU has announced a bold production target of 10mtpa of low-carbon hydrogen capacity by 2030 and also plans to import a further 10mtpa in the same year, which would make it a major demand centre in the context of the global hydrogen market.

Europe currently contributes to almost 41% of global active capacity currently due to the bloc being a relatively early mover in terms of initial project development.

Going forward, Europe's market share of active capacity is expected to fall due to megaprojects in other regions coming online, with Europe currently accounting for 24% of upcoming projects. However, it has the highest regional share of post-feasibility projects globally, suggesting a secure pipeline.

Like many regions, transport remains the dominant end-use sector for low-carbon hydrogen, with just over 8mtpa of production capacity being expected to be allocated to transport based on current project announcements. However, the EU has also placed a strong emphasis on industrial decarbonization through mechanisms such as its emission trading system (ETS) and Industrial Emissions Directive (IED). Europe's steel sector currently contributes to approximately 6% of the region's emissions and has previously been a slow mover in terms of emission reduction. As a result, steel represents an important potential demand market through the use of low-carbon hydrogen for direct reduction of iron (HDRI). Europe has one of the most well-developed policy frameworks for accelerating the development of the low-carbon hydrogen market, including targets, initiatives and funding opportunities at both the bloc level as well as individual countries establishing their own hydrogen strategies and roadmaps. The Fit-for-55 package was important for establishing key actions for encouraging the market's development through the Renewable Energy Directive and Hydrogen and Decarbonised Gas Market Package. Europe's system of policies have previously been critiqued by industry players for being over regulated. However, the announcement of qualifying criteria for the US production tax credit have signalled a global shift towards ensuring low-carbon hydrogen projects actually achieve tangible emissions reduction, suggesting a wider trend of increasing regulation.

Scope

• Active capacity currently stands at just 0.7mtpa, compared to 1.8mtpa globally, giving Europe a 41% share of current active capacity and indicating how countries in the region were early movers in the space. However, while this is a high share, rapid growth will need to take place for the EU to achieve its 10mtpa by 2030 domestic production target.
• Despite its low active capacity, Europe currently accounts for 23% of post-feasibility projects, suggesting that a significant proportion of the region's projects are progressing to mature stages of development.
• Transportation, industrial, and iron & steel are the most commonly listed end-use sectors in the region. Despite hydrogen light vehicle's struggle to gain traction, transportation is the dominant end-use sector in Europe and globally due to the potential for decarbonizing heavy transport.
• Ammonia has long been a key chemical for fertilizer, cleaning products, and pharmaceuticals. In addition, ammonia is also emerging as an alternative fuel for heavy transport industries such as long-distance shipping due to its physical properties making it easier to handle than hydrogen. Europe's ammonia demand will undergo a moderate increase due to its traditional sectors in the short term, experiencing a CAGR of 1.5% between 2023 and 2030

Reasons to Buy

• Europe low-carbon hydrogen capacity outlook
• Key regional projects
• Key companies operating in Europe's hydrogen market
• Hydrogen end use sectors
• Hydrogen policy in Europe at both the national and regional level
• Deal activity related to hydrogen in Europe
• Company filings analysis of Europe headquartered companies