In 2024, the challenging macroeconomic environment and related budgetary constraints, coupled with more optimistic perspectives on heavy-duty electric mobility, have definitively shifted the European hydrogen sector into a phase of “rationalisation” of its development prospects. This rationalisation first manifests through a slowdown in the development of heavy-duty hydrogen mobility, with manufacturers prioritising batteries and delaying hydrogen offerings. Additionally, the total cost of ownership (TCO) for hydrogen remains too high for most users. This has also led to cancellations, delays, or suspensions of major decarbonised hydrogen projects, both industrial (e.g., Repsol in Spain, Orsted in Denmark, ArcelorMittal in France) and infrastructure-related (e.g., large H2 pipelines to Germany by Equinor or Denmark).
However, with around 2 GW of projects confirmed (FID) in the last twelve months and major industrial projects still under development, the hydrogen momentum in the industry continues, and recent developments offer some hope. For example, the German regulator’s approval of the development plan for the large-scale H2 transit network within Germany (~9000 km to be developed).
In this context, several questions are emerging for industry players and investors, and future regulatory, economic, and political developments will have a major impact on these questions. They are summarised below:
- Import Projects as a Potential Solution for Hydrogen Supply Given the limited development of hydrogen production projects in Europe, will import projects take the lead in supplying large industrial consumers? Maritime hydrogen import projects and associated infrastructure (NH3 terminals) have proliferated in Europe in recent months. While these projects aim to address the European fertiliser sector, can they also become the preferred option for direct hydrogen use? With competition between short-term maritime imports and potentially long-term pipeline projects from Southern Europe and North Africa (e.g., TotalEnergies or Hydeal), can European electrolysis production projects find a pathway to competitiveness, and if so, under what conditions?
- Can Hydrogen Production via Reforming (Blue and Green) Compete? Although European hydrogen strategy has explicitly prioritised green hydrogen production via electrolysis, could competitive reforming projects, such as those using blue hydrogen with CCS or green hydrogen with biomethane or biogas inputs, emerge? Especially considering the start-up of the CCS sector in Europe (see dedicated article). More innovative projects, like the one by Air Liquide and TotalEnergies in La Mède, which involves converting residual biogas from the bio-refinery into hydrogen (with long-term BECCS and capture prospects), might provide a partial alternative to RFNBOs. Will such projects become more widespread?
- Industrial Consumers as Growth Drivers for Medium-Sized Hydrogen Projects: With the slowdown in the heavy-duty mobility sector, could small or medium-sized existing industrial consumers (e.g., chemicals, metallurgy) — traditionally supplied by industrial gas companies (Air Liquide, Linde, etc.) — become growth drivers for medium-sized hydrogen production projects led by new entrants?
- Should Developers and Investors Shift Focus to Synthetic Fuels? Should project developers and investors redirect their efforts towards alternative uses, such as synthetic fuels, which benefit from a more incentivising regulatory framework? (see dedicated article).
- Regulatory Clarifications on Infrastructure Models: Will future regulatory clarifications, particularly regarding infrastructure models, change the competitive dynamics in the hydrogen market?
E-CUBE has developed strong expertise in hydrogen through its recent projects and the experience of its consultants. We would be delighted to discuss these market perspectives and opportunities with you. Feel free to contact our experts below to arrange a discussion on the topic.
