Europe Faces Competitive Threat in Green Hydrogen Industry

The European green hydrogen industry is advocating for the European Union (EU) to implement "made in Europe" requirements for public spending in the sector. Industry leaders warn that without swift support to scale operations, domestic producers risk being outpaced by Chinese competitors. In 2025, the industry faced significant challenges, with numerous projects canceled or delayed due to high energy costs in Europe and the availability of cheaper fossil fuel-based hydrogen. Currently, over 90% of hydrogen utilized in European industries is derived from fossil fuels.

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Kim Hedegaard, CEO of Power-to-X at Danish engineering firm Topsoe, emphasized the urgency of these measures, citing the decline of European solar panel production in the 2000s as a cautionary example. He stated, "You can use that as an example of what will happen to the European electrolyser industry if we don't do something different." The European Commission is expected to propose legislation prioritizing European manufacturers in public procurement, aiming to leverage the €2.5 trillion that EU public authorities spend annually on goods and services. However, the proposal faces resistance from various governments and firms, with ongoing discussions about which technologies should be included and whether "made in Europe" should extend to non-EU countries like Turkey.

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Hakon Volldal, CEO of Norwegian electrolyser manufacturer Nel Hydrogen, voiced concerns that European firms are missing out on significant projects that are advancing in China. He noted, "We have technology leadership, but unless we're able to deploy that technology and also learn with that technology, the Chinese will catch up, and they will race past us." European Investment Bank President Nadia Calvino identified electrolysers and wind energy as sectors where Europe can maintain a competitive edge, provided there is sustained investment in EU value chains.

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Despite the challenges, European firms still dominate their home market, supplying over 80% of sales to European projects since 2022, according to the Oxford Institute for Energy Studies. However, there are indications that Chinese companies are gaining ground. In 2024, Brussels tightened access for Chinese-supplied projects to the EU's primary hydrogen support fund after discovering that many previous beneficiaries intended to utilize less expensive foreign equipment.

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The future of Europe's green hydrogen industry hinges on the implementation of supportive policies and investment strategies. As the EU prepares to propose new regulations, the balance between fostering domestic production and navigating international competition will be crucial for the sector's growth and sustainability.

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