Low-emissions hydrogen can play a significant role in decarbonising energy systems and is critical to many countries’ efforts to meet their energy and climate targets. It can also reduce reliance on fossil fuel imports over the longer-term, bolstering energy security.

Northwest Europe is at the forefront of low-emissions hydrogen development. The region accounts for around 40% of Europe’s total hydrogen demand. It has vast and untapped renewable energy potential in the North Sea, as well as substantial carbon storage capabilities. The region has a well-developed, interconnected gas network and underground storage sites that could be partially repurposed to facilitate the transmission, distribution and storage of low-emissions hydrogen. Despite the region’s significant potential, the development of low-emissions hydrogen has faced challenges. These include limited progress on demand creation, relatively high production costs, complex logistics and remaining technological hurdles.

Low-emissions hydrogen is defined here as hydrogen produced via electrolysis where the electricity is generated from a low-emissions source (renewables or nuclear), biomass, or fossil fuels with carbon capture, utilisation and storage (CCUS). A detailed overview of the terminology is provided in Annex I. 

Setting hydrogen strategies, including the establishment of medium- and long-term targets, is considered essential to provide the necessary impetus and guidance for the development of hydrogen markets.

To date, the majority of the countries in Northwest Europe have adopted production targets for electrolytic hydrogen, while Norway has opted for a technology-neutral approach. In April 2025, France published a revised National Hydrogen Strategy. While recognising progress made in the hydrogen sector, the Strategy lowered the installed electrolyser capacity target for 2030 to 4.5 GW (from 6.5 GW previously) and added a 2035 target of 8 GW. In July 2024, Germany adopted its hydrogen import strategy, following the update of the country’s National Hydrogen Strategy in 2023. In December 2024, Switzerland released its long-awaited National Hydrogen Strategy, highlighting the importance of developing its hydrogen market so that it is closely integrated with neighbouring markets.

Altogether, Northwest European countries have ambition to develop as much as 30 to 35 GW of electrolyser capacity by 2030. However, recent market developments, inflation and cost increases could drive countries to further adjust their targets and/or delay the implementation of low-emissions hydrogen projects.

Hydrogen demand in Northwest European currently stands at around 3 million tonnes (Mt) per year, making up 3% of total global demand. Unabated natural gas is the primary source of hydrogen supply in Northwest Europe, with demand largely concentrated in the refining and chemicals subsectors.

Creating demand for low-emissions hydrogen, including via quotas, fuel standards and public procurement rules, is a key instrument to stimulate investment in supply. Meanwhile, demand security is essential for the conclusion of long-term offtake agreements, which in turn can help to de-risk investment and improve the economic feasibility of low-emissions hydrogen projects.

In the European Union, the revised Renewable Energy Directive (RED III) came into force in November 2023, with a deadline for member states to transpose its stipulations into national law by May 2025. RED III establishes binding targets for the share of renewable hydrogen in industry and transport. Though the transposition process is moving ahead, it is understood that its implementation is lagging behind in several member states.

In addition, Northwest European countries are promoting hydrogen-derived fuels for use in the maritime sector, primarily driven by new international regulations. This year’s Monitor provides a special focus on the potential use of hydrogen-derivatives as a marine fuel.

Based on the latest IEA analysis, Northwest Europe’s production of low-emissions hydrogen (and derivatives) could reach close to 8 Mt per year by 2030 if all planned projects become commercially operational (taking into account assumptions on efficiency and utilisation factors). This could cover approximately 2% of the region’s total primary energy demand.

Based on the project pipeline, electrolytic hydrogen supply would account for almost 60% of total low-emissions hydrogen production, while fossil fuel-based hydrogen projects equipped with CCUS would account for around 40%. Based on announced projects, Denmark, Germany, the Netherlands and the United Kingdom are expected to account for three-quarters of Northwest Europe’s low-emissions hydrogen production by 2030.

According to the Hydrogen Production Projects Database, less than 8% of the projects that could provide low-emissions hydrogen supply by 2030 have been committed, meaning they are in operation, have reached a final investment decision (FID) or are under construction. More than 90% are currently undergoing feasibility studies or are in the concept phase.

This year’s Monitor provides a special focus on gas-based low-emissions hydrogen. Several major CCUS infrastructure projects in Northwest Europe reached FID in 2023 and 2024 that could support its development. These include the Porthos CO₂ transport and storage project in the Netherlands and the Northern Lights CO₂ transport and storage facility in Norway. Additionally, in April 2025, a financial close was reached for the Liverpool Bay CCS project in the United Kingdom.

Another focus of this year’s Monitor is the development of electrolyser production capacities. Northwest Europe is home to 85% of electrolyser manufacturing capacity in Europe, with France, Germany and Norway accounting for the majority of the region’s electrolyser plants.

Expanding electrolyser production capacity could support Northwest Europe’s ambition to scale up renewable hydrogen production over the medium-term while strengthening the region’s technological leadership along the emerging low-emissions hydrogen value chain. Total production capacity in Europe could increase eight-fold from 2023 levels if all announced projects are implemented, reaching more than 36 GW per year by 2030. Northwest Europe could account for around 70% of this capacity.

While several companies aim to expand their production capabilities, lack of electrolyser demand due to project delays and lower-than-expected orders have recently led some manufacturers to rationalise production rates, revise downward expansion plans and, in some cases, file for in-court restructuring. This year’s Monitor explores the development of electrolyser production capacities in Northwest Europe.

Initial price discovery suggests that renewable hydrogen prices in 2024 were almost two-and-a-half times the assessed levelised cost of hydrogen (LCOH) from unabated natural gas. This highlights the need to improve the cost-competitiveness of low-emissions hydrogen. Based on today’s policy settings, a carbon price of USD 140 per tonne of CO₂-equivalent could ensure that the levelised cost of gas-based low-emissions hydrogen could be comparable with the hydrogen from unabated gas in the region by the end of the decade.

The relatively low share of committed projects underscores the need for a comprehensive approach to support the nascent low-emissions hydrogen sector. Scaling it up will require an effective framework of support mechanisms along the entire value chain – including research and development, production, transportation and, in particular, demand creation.

The Monitor provides a detailed overview of the various subsidy schemes and support mechanisms available both at the European Union level and nationally in Northwest European countries.

Based on the announced projects that aim to trade hydrogen or hydrogen-based fuels and its derivatives, 8 million tonnes of hydrogen equivalent (Mt H₂-eq) could be moved around the globe by 2030. Almost half of the export-oriented projects by 2030 have defined a destination. Northwest European countries account for close to 60% of global import volume by 2030 for which a final destination has been identified.

Instruments like auctions (such as Germany’s H2Global auction-based mechanism) can be used to create competition for contracts and help close the gap between production costs and the prices consumers are willing to pay. In December 2024, the European Commission approved the second round of H2Global auctions with a budget of up to EUR 3 billion. In addition, the European Commission is planning to launch a hydrogen pilot mechanism by September 2025. The new mechanism will aim to connect international hydrogen producers with offtakers in Europe.

Achieving ambitious targets for low-emissions hydrogen deployment will require accelerating the development of hydrogen infrastructure for transport and storage. Based on the pipeline of project announcements, the length of the region’s hydrogen network could reach almost 13 000 kilometres (km) by the early 2030s. However, only 6% of projects announced (measured by length) have reached FID.

Almost half of hydrogen pipelines that could be operational by 2030 could be repurposed natural gas pipelines. Repurposing existing natural gas pipelines to serve hydrogen can result in substantial cost savings and shorter lead times compared with new-build hydrogen networks.

Developing underground storage capacity for hydrogen will be crucial for it to reach its full potential as an energy carrier and respond to the evolving flexibility requirements of a more complex energy system. According to IEA analysis of hydrogen infrastructure projects, Northwest Europe could develop almost 16 terawatt-hours (TWh) of hydrogen storage capacity by 2030. However, just 3% of the potential capacity by 2030 has reached FID and/or is under construction. Considering the relatively long lead times for new-build hydrogen pipelines and hydrogen storage projects, immediate action by all stakeholders is required to meet the targets set for 2030.