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The establishment of a binding Union renewable energy target for 2030 was aimed to continue encouraging the development of technologies which produce renewable energy (including hydrogen) and provide certainty for investors. The EU-wide target would leave greater flexibility for the member states to meet their greenhouse gas reduction targets in the most cost-effective manner in accordance with their specific circumstances, energy mix and capacity to produce renewable energy.
Background
Increased use of energy from renewable sources has a fundamental role to play in promoting the security of energy supply, sustainable energy at affordable prices, technological development and innovation as well as technological and industrial leadership. Renewables will provide environmental, social and health benefits as well as major opportunities for employment and regional development, especially in rural and isolated areas, in regions and/or territories with low population density or undergoing partial deindustrialization.
The Renewable Energy Directive of 2018 set out stringent renewable energy production criteria, such as renewable hydrogen, to ensure that their environmental impact is minimal and that they contribute to the deployment of renewable energy. Amongst others, emission savings of the end product must be at least 70% across the entire value chain. Amendments to the Renewable Energy Directive in 2023 increased the EU target for the share of renewable energy in the EU’s gross energy consumption to a minimum of 42.5% by 2030, with the aim of reaching 45%; and introduced a target that 42% of the hydrogen used in industry should be renewable by 2030, increasing to 60% by 2035.
More on the directive “on the promotion of the use of energy from renewable sources” (2018) in:
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32018L2001&from=EN
EU hydrogen policy
The European hydrogen policy framework was first proposed by the Commission in July 2021, as part of the “Fit-for-55 package”. It included binding targets for the uptake of renewable hydrogen in industry and transport by 2030 as part of the revised Renewable Energy Directive which entered into force in 2023; recent guidance supports the states’ actions in implementing these targets by 21 May 2025. It also includes the hydrogen and decarbonised gas market package (in force since 2024) to support the creation optimal and dedicated infrastructure for hydrogen, as well as an efficient hydrogen market.
The EU’s hydrogen strategy (coped with the REPowerEU plan) has already initiated a comprehensive framework to support the uptake of renewable and low-carbon hydrogen to help decarbonise the member states energy sectors. In 2022, hydrogen accounted for less than 2% of Europe’s energy consumption and was primarily used to produce chemical products, such as plastics and fertilizers; about 96 percent of hydrogen at that time was produced with natural gas, resulting in significant amounts of CO2 emissions.
Present EU’s priority is to develop renewable hydrogen: thus, the REPowerEU Strategy (2022) set out the aim of producing 10 million tons and importing 10 million tons by 2030. Already by 2050, renewable hydrogen is to cover around 10 percent of the EU’s energy needs, significantly decarbonising energy intensive industrial processes and the transport sector, as hydrogen stands as a key component in the EU’s strategy to the energy transition, net-zero, and sustainable development.
More in: https://energy.ec.europa.eu/topics/eus-energy-system/hydrogen_en#european-hydrogen-bank
There are three focal points in the EU’s strategy: a) renewable hydrogen, b) European Hydrogen Bank, and c) hydrogen energy network. The present hydrogen policy framework is based on the Commission’s EU hydrogen strategy (COM/2020/301) which outlined 20 key hydrogen actions across 5 areas.
On Communication COM/2020/301 in: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC0301
On “Key actions of the EU Hydrogen Strategy”, in: https://energy.ec.europa.eu/topics/eus-energy-system/hydrogen/key-actions-eu-hydrogen-strategy_en
EU’s hydrogen Bank
The European Hydrogen Bank is an initiative to facilitate EU-domestic production and imports of renewable hydrogen in and to Europe. Its objective is to close the investment gap and connect the future renewable hydrogen supply to consumers to meet the intended target of 20 million tons by 2030, contributing to the REPowerEU objectives and the transition to climate neutrality. Run by the Innovation Fund, the hydrogen auctions implement the EU-domestic leg of the European Hydrogen Bank and are financed through the EU Emissions Trading System revenues.
Under the concept of Auctions-as-a-Service, the EU member states may choose to use the EU-wide auction mechanism under the Innovation Fund to also allocate a pre-defined amount of national funding to renewable hydrogen production projects on their territory.
More in: https://energy.ec.europa.eu/topics/eus-energy-system/hydrogen_en#european-hydrogen-bank
The states’ projects will be assessed and ranked in the competitive auction procedure under the auction and can become eligible for national funding if the Innovation Fund budget is insufficient to cover those projects. Auctions-as-a-Service are aimed at harmonizing, and tying together national and European support schemes, increasing the comparability of subsidy levels, and saving on the administrative costs to the member states and project developers of developing and understanding different hydrogen support schemes.
Example
The European Commission has approved on 10 March 2025, under EU State aid rules, a €400 million Austrian State aid scheme, and a €36 million Lithuanian State aid scheme, to support the production of renewable hydrogen through the European Hydrogen Bank’s “Auctions-as-a-Service” tool for the auction closing in 2025.
The schemes will contribute to the objectives of the Clean Industrial Deal to accelerate the decarbonisation of EU industry while strengthening its competitiveness, of the REPowerEU Plan to reduce dependence on Russian fossil fuels and accelerate the green transition, as well as the EU Hydrogen Strategy.
The aid will be awarded through a competitive bidding process to be concluded in the first quarter of 2025. The bidding process will be supervised by the European Climate, Infrastructure, and Environment Executive Agency which will receive, assess and rank bids for projects in all EU states. The support provided under the schemes will be open to companies planning to construct new electrolysers in Austria and Lithuania.
Under the schemes, the aid will take the form of a direct grant per kilogram of renewable hydrogen produced: the aid will be granted for a maximum duration of ten years. Beneficiaries will have to prove compliance with EU criteria for the production of renewable fuels of non-biological origin: this includes contributing to the deployment or financing of the additional renewable electricity which is needed to produce the hydrogen supported under the scheme.
General source: Commission approves a €400 million Austrian State aid scheme, and a €36 million Lithuanian State aid scheme, to support renewable hydrogen production; in: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_718