Excitement surrounding green hydrogen is fading. A string of project cancellations and suspensions, particularly in the transport sector, has made 2025 an annus horribilis for many companies involved in the transition to hydrogen energy.
In February 2025, European aircraft manufacturer Airbus suspended its ZEROe programme, calling the development of the green hydrogen value chain “too big a challenge”. In June, ArcelorMittal, one of Europe's largest steel producers, scrapped plans to convert its plants in Bremen and Eisenhüttenstadt, which were set to use green hydrogen as a reducing agent for iron ore. Following the withdrawal of public funding, Alstom, a French multinational specialising in mobility, also announced in November that it was suspending the production of fuel cell trains. In 2024, the German Rhine-Main transport authority retired a fleet of 18 hydrogen trains due to persistent technical problems. “The technology is not yet mature enough for large-scale implementation,” said Alstom CEO Henri Poupart-Lafarge.
Unattainable targets
The worldwide list of unsuccessful projects is extensive, and the signs are concerning. Not only is the contribution of green hydrogen to European decarbonisation targets turning out to be overestimated, but the approximately 23 billion euros in subsidies allocated by the European Union for research, infrastructure and electrolysers is also raising a cloud of doubt.
Global hydrogen production currently stands at around 120 million tonnes, 99% of which comes from fossil sources. Green hydrogen, generated through water electrolysis – a process in which electricity from renewable sources splits H₂O molecules into hydrogen and oxygen without direct CO₂ emissions – accounts for less than 0.1% of the total.
According to a report by the EU Agency for the Cooperation of Energy Regulators (ACER), the cost of green hydrogen remains four times higher than fossil fuel technologies, and, despite a 50% increase in the installation of electrolysers in 2024, the 40 GW of capacity expected by 2030 remains a pipe dream. Little confidence is also expressed in the targets set by the Renewable Energy Directive, implemented so far by only two countries, which envisages a 42% share of renewable hydrogen in industrial consumption by 2030.
“I don’t believe the target will be achieved, as the price per kilo is still too steep and there isn’t any real demand,” Daniel Fraile, Chief Policy Officer at Hydrogen Europe, the European association representing the interests of the hydrogen industry, explains to Renewable Matter. “For example, imposing a green hydrogen quota on ammonia production, which accounts for half of industrial hydrogen demand, would cause European fertiliser costs to surge, rendering them less competitive than imported fertilisers. Unless we introduce market incentives to make the use of green fertilisers in food and beverages mandatory, it will be difficult to activate investments in green ammonia on the scale required.”
A more realistic goal, according to Fraile, is to achieve at least a 1% share of hydrogen and hydrogen-derived fuels in the transport sector within the next four years. Today, refineries use hydrogen from natural gas to remove sulphur and treat particularly heavy crude oils such as Venezuelan crude, on which Trump would like to get his hands. “Even if decarbonising the process were to cost three times as much, the price of petrol would only increase by 6/7 cents, and there would be no major market distortions.”
An analysis by the International Energy Agency appears cautiously optimistic, reporting significant difficulties in the sector but also clear progress. High production costs, uncertainty in demand and infrastructure gaps continue to be the biggest obstacles, especially in Europe and the United States. Nevertheless, China produces renewable hydrogen at prices 40-45% lower than elsewhere, thanks to its leadership in the manufacture of electrolysers and low electricity costs. The IEA also predicts that the reduction in plant costs, primarily electrolysers, will be more gradual than for other green technologies.
Scaling back on hype
Hydrogen has been used for decades as a key reagent in the chemical industry, in particular in the production of ammonia and in refinery and petrochemical processes, contributing indirectly to the synthesis of numerous nitrogen compounds. Following the Green Deal and the first decarbonisation strategies, H₂ began to gain political and industrial interest as a fuel and energy carrier capable of transporting and storing energy, ideally clean energy. According to some experts, however, this role should be reserved exclusively for electricity, a form of energy considered more efficient and economical, particularly in mobility.
“Using hydrogen as a fuel or energy carrier is a waste of capital, a distraction from real decarbonisation,” Paul Martin, a Canadian chemical engineer working as an independent consultant, tells Renewable Matter. “It's like running out of water to flush the toilet and using champagne. You know it would work, but you'd be crazy to do it. It's economically ridiculous.”
Martin is co-founder of the Hydrogen Science Coalition, a non-profit group of experts using scientific outreach to temper industry hype about green hydrogen. To justify his comparison, he refers to a principle of thermodynamics: exergy, which is the potential capacity of a unit of energy to do work. Compared to a joule of electricity, which can be converted into mechanical energy with nearly 100% efficiency, the exergy of heat is much lower. “The production of green hydrogen consists of taking pure exergy (electricity from renewable sources, editor’s note) and transforming it into a smaller amount of potential chemical energy, i.e. heat,” adds Martin, who finds it “obviously nonsensical” to heat homes or power vehicles with hydrogen when it would be more cost-effective to electrify everything that can be electrified.
According to the Hydrogen Science Coalition, hydrogen works well as a chemical reagent, which is where the industry should focus its efforts; meanwhile, the IEA describes traditional hydrogen applications as the most readily available decarbonisation solutions in the short term. “The idea that hydrogen can act as a Swiss Army knife to decarbonise everything from heating to transport, heavy industry to power generation, is dangerous,” stated Michael Liebreich, founder of Bloomberg New Energy Finance, at a conference in Rotterdam in 2022. Furthermore, in a recent interview on the Cleaning Up podcast (November 2025), Liebreich described hydrogen as a “horrible” fuel, with structural obstacles that cannot be overcome by simply improving the efficiency of fuel cells or electrolysers.
Even storage in tanks or special salt cave facilities is not free of challenges: in addition to high infrastructure costs, the production and subsequent conversion to electricity stages present problems similar to those of lithium-ion battery storage, in particular related to efficiency losses during charge and discharge cycles.
Lastly, concerns have also been raised at the institutional level. Four years after the launch of the Hydrogen Strategy and the REPowerEU plan, in 2024 the European Court of Auditors (ECA) asked the European Commission for a “reality check”, noting that Brussels had not carried out in-depth analyses before setting (overly ambitious) targets for renewable hydrogen production and importation and had only partially succeeded in creating the necessary market conditions.
Hydrogen when electricity is not an option
The city of Luleå was best known as the gateway to Swedish Lapland and as the home of Facebook's first data centre outside the United States. Only a few insiders knew that the capital of northern Sweden was also a major European hub for green hydrogen research. The turning point came in 2021, when Swedish giant SSAB announced the sale to Volvo of the first steel manufactured without the use of fossil fuels. Since then, the HYBRIT project has produced over 5,000 tonnes of steel using green hydrogen as a chemical agent.
By using electricity generated by wind in the Gulf of Bothnia, the plant breaks down water into hydrogen and oxygen; the hydrogen then removes oxygen from the iron ore, leaving only water as a by-product. Zero emissions per tonne make SSAB steel a very expensive but attractive product, even for the military industry (evidenced by the recent agreement with Germany's Rheinmetall). “The most promising projects are located in the Nordic countries and the Iberian Peninsula due to a number of conditions,” explains Daniel Fraile. “The availability of land, renewable sources, low electricity prices and the possibility of connecting directly to renewable resources, thereby avoiding network tariffs, represent a clear advantage.” When contacted by Renewable Matter, SSAB did not respond to queries about competitiveness: in the absence of an established market, green steel remains a niche product that is much more expensive than traditional steel.
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