Norway

The EU targets 10 Mt of green hydrogen production by 2030 but has not committed to targets for 2040. Green hydrogen competes with carbon capture and storage biomass and imports as well as direct electrification in reaching emissions reductions; earlier studies have demonstrated the great uncertainty in future costoptimal development of green hydrogen. In spite of this we show that Europe risks little by setting green hydrogen production targets at around 25 Mt by 2040. Employing an extensive scenario analysis combined with novel near-optimal techniques we find that this target results in systems that are within 10% of cost-optimal in all considered scenarios with current-day biomass availability and baseline transportation electrification. Setting concrete targets is important in order to resolve significant uncertainty that hampers investments. Targeting green hydrogen reduces the dependence on carbon capture and storage and green fuel imports making for a more robust European climate strategy.

Europe’s transition toward a low-carbon energy system relies on the deployment of hydrogen produced with minimized carbon emissions; however regulatory requirements increase system costs and create financial barriers. This study investigates the financial implications of enforcing European Commission rules for renewable hydrogen production from 2024 to 2048. Using a scenario-based modeling approach that draws on European power system investments in renewable energy the results show that immediate compliance leads to an additional cost of approximately eighty billion euros over twenty-four years corresponding to a 3.6 percent increase in total system costs. To address this investment gap the study employs a segmentation analysis of support mechanisms based on existing policies and market practices identifying seven categories that range from investment incentives and production subsidies to infrastructure and financial instruments. Among these hydrogen offtake support and infrastructure funding are identified as the most effective measures for reducing risk and enabling private investment. These findings provide strategic insights for policymakers seeking to align their regulatory ambitions with financially viable pathways for integrating renewable energy.