EU’s maths on costly ‘green’ hydrogen does not add up, says expert
The European Union’s hydrogen strategy is facing growing scrutiny as cost-efficiency concerns have mounted and deployment targets missed.
Despite political backing and multi-billion-euro commitments, experts warned the core assumptions behind renewable hydrogen — particularly its role in industrial decarbonisation — were not supported by the energy and economic realities.
In 2020, the European Commission presented its hydrogen strategy, targeting 10 million tonnes of annual “green” hydrogen production by 2030. Reaching this would require investments of up to €470 billion and a doubling of the EU’s electricity generation capacity. A significant portion of the bloc’s €1 trillion Green Deal package is earmarked to support this transition.
But four years later, progress is far behind schedule. As of early 2024, the EU had installed only 200 megawatts of electrolyser capacity, just 3 per cent of the 6 gigawatt interim goal for 2024.
Electrolysers use electricity to split water into hydrogen and oxygen through electrolysis. The process is crucial for producing green hydrogen.
Meanwhile, one in four European hydrogen projects has been delayed or cancelled.
Sweden’s Stegra project (formerly H2 Green Steel) exemplified both the ambition and the structural issues. Backed by SEK 75 billion (€6.5 billion) in financing — including SEK 4 billion (€360 million) in grants from the EU and Swedish Government, and SEK 18 billion (€1.61 billion) in state-backed loans — the company aimed to produce fossil-free steel using hydrogen instead of coal.
When operational, the facility in Boden would consume 10 terawatt-hours (TWh) of electricity annually, equivalent to about 7 per cent of Sweden’s total electricity use.
According to the Swedish Energy Agency, national electricity demand could double by 2045, largely due to hydrogen-related industry growth. The combined needs of Stegra, the Hybrit project, and mining giant LKAB’s electrification plans total more than 90 TWh — in excess of half of Sweden’s current electricity production.
Chemical engineer and hydrogen specialist Paul Martin told Swedish weekly economic magazine Affärsvärlden recently that the numbers did not add up.
Martin, said:
Green hydrogen retains only about 37 per cent of the original electricity input after electrolysis, compression, and conversion,
“You lose most of the energy before it can do any useful work.”
He added that hydrogen was not only energy-inefficient but also economically unsustainable under current conditions.
He, said:
Stegra, for example, required electricity prices below SEK 0.40/kWh (€0.03/kWh) to remain viable,
The projected cost of electricity from new nuclear reactors, though, a key part of Sweden’s long-term energy strategy, was SEK 0.80 to 1.10/kWh (€0.071 to €0.098/kWh), based on government and market estimates.
The International Energy Agency (IEA) estimated that green hydrogen currently cost $3-$8/kg (€2.6-7/kg) too produce, depending on electricity prices.
Fossil-based hydrogen remains at $1-$2/kg (€0.8-1.75/kg). In sectors such as transport, the gap was even larger.
In Q1 2025, only 39 hydrogen-powered vehicles were sold across the EU.
According to a speaker at an industry conference led by the Swedish Environmental Research Institute, hydrogen would only become viable for freight transport at SEK 50/kg (€4.4/kg). Today, Swedish hydrogen sells for approximately SEK 200/kg (€17.8/kg).
Jonas Nycander, professor of meteorology at Stockholm University told Affärsvärlden:
Today’s low electricity prices are based on the fact that the surplus is so large that exports to the south reach the capacity ceiling in the pipelines – something that a massive expansion of hydrogen production risks putting a stop to.
Martin, who co-founded the Hydrogen Science Coalition, said many proposed hydrogen-use cases, in heating, transport and storage, were technically feasible but not practical.
He, said:
When renewable electricity is limited, as it is in Europe, the question isn’t what hydrogen can do but what it does better than other options.
“And in most cases, the answer is: Nothing,”
Even in steelmaking, where hydrogen is one of few fossil-free options today, competing technologies have emerged.
US-based Boston Metal has been developing a fully electric method using molten oxide electrolysis, for example.
Meanwhile, more than 70 per cent of steel in the US is already made using recycled scrap in electric arc furnaces, with no hydrogen required.
Martin, warned:
Europe is heading into a dead end.
“We see huge amounts of public money being spent on hydrogen projects in infrastructure, transport, heating and energy storage.”
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EU’s maths on costly ‘green’ hydrogen does not add up, says expert, source
