Europe's hydrogen plans snag on strict rules and slow progress

In Brussels, policymakers once touted Europe's rigorous standards for green hydrogen as a point of pride – now those same rules are under fire for holding back the industry. The European Union's definition of renewable hydrogen (so-called RFNBO rules) demands tight coupling between electrolyzers and new renewable energy, plus detailed accounting of carbon footprint.

The intentions were noble, but the effect, critics say, has been to "stall projects and drive costs upward"[17]. In June, the European Parliament took the extraordinary step of passing a resolution urging the EU Commission to revise its delegated act on RFNBOs – essentially pleading for more flexibility[17]. The non-binding call, supported by twelve member states, reflects mounting frustration that Europe's green tape might be strangling its green hydrogen baby in the crib.

Recent project setbacks illustrate the problem. In northern Germany, utility EWE canceled a 50 MW electrolyzer plan in Bremen after its partner, ArcelorMittal, withdrew from a green steel venture – this despite €1.3 billion in subsidies on the table[27].

EWE pointed to "complex EU and national regulations" among the reasons, echoing a broader industry chorus for simpler rules[16]. The company publicly urged urgent reforms: lower electricity prices, clearer regulations, easier funding, and better infrastructure to "restore investor confidence"[16].

Meanwhile, in the UK (now outside the EU but emulating its hydrogen ambitions), Air Products put on hold a £2 billion green hydrogen/ammonia import terminal at Immingham. It had even secured permits to produce 75,000 tons a year, but ultimately insisted it would not proceed without either a UK government subsidy contract or direct public investment – neither of which materialized[28]. If even a global hydrogen player like Air Products can't justify a project in the absence of guarantees, smaller European developers are even more skittish.

Regulatory complexity is compounded by uneven national implementation of EU goals. Under the bloc's "Fit for 55" climate package, countries are supposed to use a certain percentage of renewable hydrogen in transport fuel by 2030 (at least 1% under the RED III directive).

But as of mid-2025, no EU country had fully translated that mandate into national law[29]. Some governments are dragging their feet, and those moving forward (like Romania and Czechia) are focusing on modest transport targets while largely neglecting industrial hydrogen use[29].

Industry group Hydrogen Europe has warned that without enforcement – for instance, penalties on fuel suppliers who don't buy green hydrogen – the targets will remain toothless[30]. They even urge penalties to make compliance "more attractive"[30]. In short, Europe has ambitious hydrogen goals on paper but lacks the carrots and sticks to make them real.

The European Commission is aware of the grumbling. It hired consultancy ICF to conduct a "neutral" study of the contentious RFNBO rules[31]. Officially, this feeds into a scheduled 2028 review, but Brussels hinted that interim findings could prompt earlier tweaks – if changes can be made without undermining investor stability[31].

It's a delicate balance: too lax, and Europe's climate credibility suffers; too strict, and projects won't get off the ground. In the meantime, Europe is trying to entice hydrogen investment through its new Hydrogen Bank – essentially auctions that pay producers a premium.

A second EU auction round in May 2025 awarded €992 million to 15 projects across the continent[32]. That will help, but even some winning projects have since wavered, citing cost pressures; Brussels recently had to reallocate funds after three major auction winners withdrew[33].

As Europe refines its strategy, consolidation is underway. Electrolyzer manufacturers are merging or exiting: Germany's Thyssenkrupp Nucera snapped up assets from bankrupt Green Hydrogen Systems of Denmark[34], and France's McPhy – once a rising star – entered insolvency, with bidders like John Cockerill lining up to acquire its technology[35].

Such shake-ups may ultimately create stronger players, but they also reflect the current growing pains of an over-hyped sector adjusting to reality. Europe's vision of 10 million tonnes of domestic renewable hydrogen by 2030 still looks distant.

To get there, policymakers may need to swallow some pride and simplify the rulebook, even as they bolster demand with robust incentives. Otherwise, the EU risks watching its hydrogen leadership evaporate, as projects stall and developers seek friendlier shores[17][16].