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green hydrogen

Green Hydrogen Reality Check: Why 80% of EU Projects Face Cancellation This Decade

Arnes BiogradlijaBy Arnes Biogradlija04/08/20253 Mins Read
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A stark gap is emerging between European green hydrogen ambitions and tangible progress. New analysis from Westwood Global Energy projects that a mere 12 gigawatts (GW) of the European Union’s targeted 40 GW of electrolyser capacity will likely be operational by 2030. This represents just one-fifth of the planned projects materializing this decade, fundamentally undermining a cornerstone of the bloc’s decarbonisation strategy. “As things stand, I don’t expect the EU 2030 target to be met,” states Jun Sasamura, Hydrogen Manager at Westwood, capturing a growing industry consensus.

The initial euphoria positioning green hydrogen as a panacea for hard-to-abate sectors like steel and heavy transport is rapidly dissipating. In its place, a complex web of economic and logistical barriers is forcing widespread project cancellations and investment cuts across the globe. This slowdown risks prolonging dependence on fossil fuels, complicating climate target achievement.

Cost Disparity Chokes Demand

The core obstacle remains stark economics. Green hydrogen, produced via electrolysis powered solely by renewable electricity, carries significantly higher production costs than fossil-based alternatives. Roman Diederichs, Managing Director of Germany’s Dirostahl forge, highlights the practical consequence: access to green hydrogen costs €150 per megawatt hour (MWh), versus €30-35/MWh for natural gas. “You might not want to call it economic suicide, but in practice, that’s exactly what it would be,” Diederichs states. Major energy players like Portugal’s EDP and Spain’s Iberdrola confirm putting projects on hold explicitly due to a lack of viable offtake agreements, despite available subsidies. “What’s missing is demand… We need someone to actually buy the hydrogen,” stresses EDP CEO Miguel Stilwell d’Andrade, describing the sector’s entry into a “valley of disappointment.” Analyst projections suggest cost-competitiveness may not arrive before 2035-2040 without drastic intervention.

Infrastructure Deficit Creates Chicken-and-Egg Dilemma

Compounding the demand issue is the near-total absence of dedicated hydrogen transport and storage infrastructure. Hydrogen’s physical properties demand specialised, high-pressure pipelines or cryogenic liquefaction facilities, presenting significant engineering and investment challenges. Existing natural gas pipelines are largely unsuitable without costly modifications due to hydrogen embrittlement and leakage risks. Arturo Gonzalo, CEO of Spanish gas grid operator Enagás, underscores the critical timing problem: “Infrastructure doesn’t emerge once the market is already up and running. It must emerge for the market to get going in the first place.” Enagás anticipates European infrastructure development could face delays of 2-3 years, further hampering project viability.

Governments Retreat from Targets

Faced with these market realities, national governments are quietly scaling back hydrogen ambitions. Italy redirected over €600 million in post-pandemic recovery funds from hydrogen to biomethane. France reduced its 2030 domestic electrolyser target by over 30%, Portugal by 45%. The Netherlands cut hydrogen funding, prioritising nuclear power instead. Australia witnessed project cancellations despite substantial government funding commitments. This collective retreat signals eroding confidence in rapid hydrogen deployment timelines.

Global Net-Zero Ambitions in Jeopardy

The implications extend far beyond Europe. Wood Mackenzie data reveals only 6 million tonnes of low-carbon hydrogen production capacity (including less-green “blue” hydrogen) operational or under construction globally. This figure stands in stark contrast to the estimated 450 million tonnes analysts deem necessary by 2050 to align with global net-zero emissions goals. The current project pipeline, plagued by cancellations and delays, is orders of magnitude below what’s required. The promise of green hydrogen as a ubiquitous clean fuel remains, but the path to commercial scalability and widespread industrial adoption is proving far steeper, costlier, and longer than initial policy frameworks anticipated. The energy transition now faces the tangible risk of a significant hydrogen shortfall precisely where it was deemed most essential.

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