Countries in the region are raising production goals and establishing stronger regulations, but commitments to stimulate demand remain a key challenge
Northwest Europe is at the forefront of low-emissions hydrogen development - though meeting the targets that countries in the region have set for 2030 will require further efforts from policy makers on a tight timeline, according to the latest edition of the IEA's Northwest European Hydrogen Monitor.
The second edition of the Monitor, published today, finds that Northwest Europe - a region that includes Austria, Belgium, Denmark, France, Germany, Luxemburg, the Netherlands, Norway, Switzerland and the United Kingdom - has vast potential to scale up its low-emissions hydrogen market and has made recent strides in advancing important regulations. If all planned projects begin commercial operations, Northwest Europe could produce roughly 7 million tonnes (Mt) of low-emissions hydrogen per year by the end of this decade, meeting about 2% of the region's primary energy demand.
However, most low-emissions hydrogen projects in Northwest Europe are still in the early stages of development. In fact, the new report finds that less than 4% of projects that could provide low-emissions hydrogen supply by 2030 are in operation, are under construction, or have reached final investment decisions. This is well below rates in the United States and China.
Quickly boosting supply will require stronger backing from policy makers, according to the report. It recommends that support mechanisms are deployed across the value chain, from research and development to production, transport and consumption. Stimulating demand is particularly important, given the need to send clear signals to investors considering production projects.
"Countries in Northwest Europe are leaders on low-emissions hydrogen, with many continuing to raise their ambitions for production this decade," said Keisuke Sadamori, the IEA's Director of Energy Markets and Security. "However, meeting these targets will require bolder action from policy makers, and soon, given the long lead times necessary for many hydrogen projects."
Low-emissions hydrogen - which here refers to hydrogen that is produced via electrolysis with electricity generated from either renewable sources or nuclear power, or hydrogen produced from fossil fuels in combination with carbon capture, utilisation and storage - is a key technology for advancing clean energy transitions globally. In the IEA's net zero pathway, global production of low-emissions hydrogen reaches 70 Mt by 2030.
Since Russia's invasion of Ukraine in 2022, several Northwest European countries have doubled their overall hydrogen production targets, and others are currently considering increases. The region now aims to develop more than 40 gigawatts of electrolyser capacity by 2030.
But the market still faces significant uncertainty in light of recent market developments, cost increases and inflation, and greater efforts are needed to make the price of low-emissions hydrogen competitive with hydrogen produced from fossil fuels. The Northwest European Hydrogen Monitor includes recommendations for policy makers to tackle these challenges, while providing an in-depth look at the existing subsidy schemes and support mechanisms available in the region.
The report is the result of a collaboration among the countries involved in the Hydrogen Initiative of the Clean Energy Ministerial (CEM-H2I) workstream entitled "Roundtable on the North-West European Region" and the hydrogen working group of the Pentalateral Energy Forum.
