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Home Home - Analysis
Hydrogen

Hydrogen’s Strategic Role in EU Decarbonization

Anela DoksoBy Anela Dokso05/03/20253 Mins Read
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The European Union (EU) stands at a critical juncture in its pursuit of decarbonizing the energy-intensive industries that underpin its economy.

Hydrogen, particularly clean hydrogen, is frequently highlighted as a pivotal element in achieving this transition. As of 2023, hydrogen consumption in the EU totals 7.3 million tonnes per year (Mt/y), with industrial applications such as refining and ammonia production accounting for 84% of this consumption. This concentration in industry underlines the importance of targeting future hydrogen strategies towards sectors that can most effectively leverage hydrogen for decarbonisation.

The EU’s hydrogen production capacity currently stands at approximately 10.3 Mt/y. However, this capacity does not fully align with best utilization practices, given that dedicated hydrogen production accounts for about 70% of this capacity with the remainder coming from byproducts of other chemical processes. A notable 0.4% of hydrogen consumption comes from renewables-based electrolytic hydrogen, primarily supporting sectors like mobility and natural gas blending. This statistic indicates a significant underutilization of clean hydrogen, particularly in heavy industrial applications where it could replace existing carbon-intensive hydrogen production.

Hydrogen production in the EU is heavily reliant on natural gas, which poses a strategic vulnerability due to market volatility and associated carbon emission penalties. The production process, mainly driven by catalytic reforming, results in substantial CO₂ emissions, estimated at around 50 Mt/y. As carbon costs continue to rise, smaller and technologically outdated refineries will face increased competitiveness challenges. This is compounded by a forecasted decrease in demand for transportation fuels which further threatens refinery operations—a sector that is currently the largest consumer of hydrogen in the EU.

Hydrogen in Decarbonization

Despite these challenges, hydrogen presents vital opportunities for decarbonising EU industries. The EU’s focus on co-locating clean hydrogen production near existing facilities is crucial for facilitating integration into industrial operations while minimizing infrastructure disruptions. A strategic shift to electrolytic hydrogen combined with biogenic carbon sources for processes like methanol production offers a pathway to decarbonise industrial supply chains. Yet, these projects face scalability issues due to biomass constraints, suggesting the need for innovative resource management strategies.

The EU hydrogen landscape is geographically concentrated, with 75% of production capacity across seven member states, notably Germany, the Netherlands, and Poland. This geographic distribution necessitates targeted policy interventions to maximize regional strengths and existing infrastructural advantages. Additionally, other critical hydrogen-consuming chemical processes, such as urea and methanol productions, require careful strategic planning to transition efficiently to low-carbon methodologies.

For the EU to successfully transition its hydrogen sector towards more sustainable practices, a series of coordinated actions must be pursued. These include enhancing the capacity for clean hydrogen production, strategically allocating resources to high-impact industrial sectors, and fostering innovation in hydrogen technology deployment. Policies that incentivize the adoption of greener methodologies in hydrogen production and consumption will be crucial in lowering the overall carbon footprint of key industrial activities.


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