European Energy Industry Warns EU Hydrogen Regulation Could Undermine Clean Energy Goals

by | Jun 25, 2025

Brussels, June 2025 – A coalition of major players in the European energy industry is urging the European Commission to reconsider key provisions in its draft Delegated Act establishing the greenhouse gas (GHG) accounting methodology for low-carbon hydrogen and its derivatives.

Industry leaders argue that the current version of the regulation risks stalling critical projects, derailing investment plans, and jeopardizing the EU’s broader ambitions for a sustainable hydrogen economy.

The draft Delegated Act, intended to clarify what constitutes “low-carbon” hydrogen under the EU’s Renewable Energy Directive (RED II and III), sets stringent criteria for lifecycle GHG emissions. These thresholds are seen by industry representatives as so restrictive that they could render most low-carbon hydrogen production projects in Europe economically unviable, or even technically infeasible.

Concerns from Industry Stakeholders

The regulation mandates a very low emissions cap per unit of hydrogen produced, combining tight upstream electricity sourcing rules with full lifecycle emissions tracking. Energy producers, infrastructure developers, and hydrogen technology firms argue this could exclude hydrogen made from natural gas with carbon capture (blue hydrogen), and even some electrolysis projects powered by grid electricity, even when partially sourced from renewables.

In a joint letter to the Commission, energy companies emphasized three core concerns:

  • 1. Regulatory Overreach and Lack of Flexibility:

    The draft rules offer little leeway for transitional or mixed energy systems, which are crucial in the early stages of hydrogen market development. By imposing near-immediate compliance with strict GHG accounting, they may disqualify projects before they even begin operation.

  • 2. Investment Risk and Project Viability:

    Existing low-carbon hydrogen projects, some already under construction, are now facing regulatory uncertainty. Developers who based business models on prior EU guidance may be forced to shelve or revise projects at significant cost, undermining investor confidence in the sector.

  • 3. Obstacles to Infrastructure Rollout and Imports:

    By placing tough conditions on imported hydrogen and its derivatives, the draft act risks creating barriers for countries looking to export to the EU. This could hinder planned hydrogen corridors from North Africa, the Middle East, or Norway, impeding supply diversification and delaying the development of import terminals, pipelines, and storage facilities.

Broader Implications for the Hydrogen Economy

If adopted in its current form, the regulation could set back the EU’s efforts to position itself as a global leader in clean hydrogen. The bloc has committed to ambitious decarbonisation goals under the European Green Deal, with hydrogen seen as critical to decarbonising hard-to-abate sectors like heavy industry, aviation, and shipping.
“The hydrogen economy is at a tipping point,” said a representative from a major European utility. “We need a regulatory framework that supports growth and innovation, not one that introduces bottlenecks and legal uncertainty.”
The Delegated Act, while well-intentioned, may end up favouring an idealised version of hydrogen production that doesn’t reflect today’s technological or market realities. Analysts warn that unless the Commission adjusts the framework to be more pragmatic, particularly in allowing transitional pathways such as blue hydrogen or hybrid electrolyser projects, the EU risks falling behind in the global hydrogen race.

What the Industry Is Asking For

Industry stakeholders are calling for:

  • A phased approach to GHG thresholds, allowing for gradual tightening as technology improves and the grid decarbonises.
  • Recognition of the role of low-carbon hydrogen (including blue hydrogen with high capture rates) in early deployment.
  • Flexible mechanisms for imports, with mutual recognition of equivalent sustainability standards from trading partners.

Clear transition rules for existing and planned projects to protect investments made under previous EU policy signals.

Next Steps

The European Commission is expected to review the feedback received during the consultation period before finalising the Delegated Act later this year. However, the mounting pressure from across the hydrogen value chain may force policymakers to reconsider the balance between environmental integrity and economic feasibility.

 

With the EU’s climate targets looming and geopolitical instability affecting energy supply chains, the regulatory framework for hydrogen could prove pivotal. Whether Brussels chooses to recalibrate the Delegated Act could determine not only the future of Europe’s hydrogen economy but also its credibility as a global leader in climate policy.

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