Launched in early 2021, ERCST's Hydrogen Workstream was established in recognition of hydrogen's growing significance in decarbonising the EU's major emitting sectors. As we progress into 2024, our focus will be on leveraging the extensive knowledge and networks cultivated over the past years. This will enable us to both enhance the foundation laid in 2021 and delve into new, pertinent topics. The workstream will predominantly concentrate on two key areas:

  1. 2024 State of the European Hydrogen Market Report
  2. Financing the EU Hydrogen Market
  3. Incentivising Hydrogen Demand

Aiming to provide a comprehensive analysis of the EU's hydrogen economy, this report will serve as a yearly benchmark, evaluating the sector's expansion and effectiveness. It will be structured to reflect against established legislative targets and key policy frameworks.

The inaugural edition of the Report is a collaborative effort involving ERCST, the Oxford Institute for Energy Studies, and BloombergNEF. It is scheduled for release in May.

The Report functions as a retrospective overview, and it is designed as an independent contribution to inform policymakers and stakeholders about the latest developments in the EU and UK hydrogen markets, based on data from the previous year.

The project also seeks to foster engagement among key stakeholders in hydrogen discussions. This will be achieved through consultations leading to the finalisation of the Report’s Key Performance Indicators (KPIs).

As the EU positions itself at the forefront of clean hydrogen development and innovation, the market is expected to soon transform into a globally competitive commodity. The decentralisation potential of hydrogen production places the EU's market in a fiercely competitive international arena. In this context, the EU's attractiveness to investors becomes crucial, especially considering recent overseas subsidization policies like the US Inflation Reduction Act.

This segment of our work aims to investigate the key factors, challenges, and trends that influence investment in the EU hydrogen market. Our research will encompass both public and private funding avenues and will translate into two main outputs:

  • Roundtable event: “European Hydrogen Bank: A Game Changer?” In recent consultations conducted by the ERCST, stakeholders expressed concerns about the suitability of the EU's regulatory and financial framework for hydrogen. This event hence aims to shed light on potential areas for improvement of the EU Hydrogen Bank financing structure. They include the inclusion of CCS retrofitting, amending the requirements for Off-take Agreements, and evaluating the potential for joint purchasing efforts.
  • Paper: “Funding the EU Hydrogen Economy” This paper aims to provide insights into the structuring of hydrogen funding, its challenges, and the potential impact on market development. In doing so, it examines the evolution of the EU hydrogen vision, its impact on the Fit for 55 regulations, and the financial and non-financial incentives supporting the hydrogen economy in the EU. Lastly, the paper analyzes EU and Member States' funding, highlighting the complexities and strategic implications of the current financial support mechanisms.

This initiative delves into the complexities of building a robust demand for hydrogen, a crucial component for the ramp-up of the hydrogen economy. Our focus is on generating and informing discussions that shape policy frameworks and market strategies. To this end, ERCST has partnered with the Oxford Institute for Energy Studies (OIES) and the Research Institute for Sustainability (RIFS Potsdam) to organise a one-day seminar with high-level policymakers and industrial stakeholders. The seminar, titled "Incentivising Hydrogen Demand: Critical Challenges and Opportunities" focuses on developing demand for hydrogen to decarbonise hard-to-abate sectors, designing effective market regulations, and establishing bankable hydrogen projects. It includes discussions on creating initial hydrogen demand in key sectors, comparing hydrogen with alternatives like CCUS, and addressing the design of long-term hydrogen contracts. The seminar also explores the role of local demand in international hydrogen markets and lessons learned from existing demand creation mechanisms. This comprehensive agenda aims to address crucial aspects of hydrogen demand creation and market development.


Chiara Cavallera (ccavallera@ercst.org)



The Use of CBAM Revenues