Abstract

The European Union’s REPowerEU strategy places green hydrogen at the center of its plan to eliminate fossil fuels and accelerate the green transition. The strategy targets 20 million tonnes (MTPA) of green hydrogen per year by 2030: 10 MTPA to be produced domestically and 10 MTPA imported. Achieving this requires scaling electrolysis capacity from the current 0.3 GW to 120 GW, a remarkably ambitious, if not unrealistic, target. Current green hydrogen production costs range from 100 to 200 €/MWh, several times higher than natural gas prices, which fluctuate between 20 and 40 €/MWh. In contrast, blue hydrogen, which is produced through natural gas reforming combined with carbon capture and storage (CCS), generally costs between 50 and 100 €/MWh. To bridge the cost gap between hydrogen and fossil fuels, the EU established the Hydrogen Bank with €3 billion to kick-start the market through competitive funding mechanisms. The REPowerEU hydrogen targets have drawn criticism due to limited availability of renewable electricity, underdeveloped infrastructure, and the slow pace of electrolysis deployment. Concerns also focus on the inefficiency of hydrogen use in sectors such as passenger transport, short sea shipping, residential and commercial heating, where direct electrification is significantly more effective. Nonetheless, the EU is advancing regulatory frameworks, developing over 40 Hydrogen Valley Projects, and establishing international import corridors to support market growth. This paper examines REPowerEU’s hydrogen ambitions, balancing its potential as a key decarbonization tool against economic, technical, and logistical challenges that may hinder its realization.