Rather than one silver bullet,mitigating climate change will require a patchwork solution of energy sources and climate technologies.
And while the historical development of hydrogen-based energy solutions has been far from straightforward,hydrogen is still slated to be a hugely important weapon on the road to net zero.
According to the International Energy Agency,low-emissions hydrogen and hydrogen-based fuels can play a vital role in decarbonising energy-intensive and industries and transport,where abating emissions has long been considered the hardest challenge.
Energy companies like the renewables-focused RWE are already working hard to get hydrogen solutions to a level of commercial maturity.
The German firm has launched several pilot projects involving hydrogen applications including in heavy-duty transport,in the chemical and steel industries and for replacing grey hydrogen in refineries.
Initial investment decisions,such as the supply contract between RWE and TotalEnergies–covering 30,000 tonnes per year of green hydrogen from Lingen to Leuna–illustrate how industrial partnerships are beginning to solidify Europe’s hydrogen network.
What is grey hydrogen?
Grey hydrogen is the most common type,made from natural gas(methane)via steam methane reforming(SMR)where the significant CO₂byproduct is released into the atmosphere,making it carbon-intensive and a contributor to climate change,unlike cleaner blue or green hydrogen.
It's cost-effective and widely used in industries like refining due to established technology,but its high emissions make it an unsustainable,short-term option,with the goal being a transition to low-carbon alternatives.
Building hydrogen energy infrastructure
RWE says progress is being made to expand the infrastructure required for a functioning hydrogen economy,including the conversion of gas networks to transport hydrogen.
The first sections of Germany’s national hydrogen core network have already switched from natural gas to hydrogen–a clear signal that the energy transition is moving from concept to implementation.
However,bridging the cost gap between renewable hydrogen and its fossil-based counterpart remains a challenge for energy markets.
Without targeted action,the phasing out of support mechanisms such as grid fee exemptions for electrolysers could hinder scalability by 2030.
The company warns that changing regulation adds urgency:policymakers must act quickly to preserve momentum and deliver a cost-effective hydrogen market that strengthens Europe’s energy security.
“Hydrogen is a key technology for decarbonisation,especially in industry and the transport sector,”writes Markus Krebber,CEO of RWE,on LinkedIn.
“As with any new technology,the cost gap between renewable and low-carbon hydrogen and the currently used grey hydrogen remains large.”
Addressing the price imbalance
RWE estimates that,under the current European framework,green hydrogen could cost around€11/kg H₂(US$13/kg H₂)by 2030–even after factoring in technical improvements.
By contrast,grey hydrogen,generally made from natural gas without carbon capture,remains much cheaper at roughly€3/kg H₂(US$3.50/kg H₂).
At the EU level,RWE argues that relying on the European Emissions Trading Scheme and simplifying hydrogen legislation could unlock greater cost reductions.
Revisions to the‘green hydrogen’Delegated Act for RFNBOs,combined with more flexible electricity supply rules,might cut production costs by€2/kg H₂(US$2.40/kg H₂).
Extended compensation for electricity pricing beyond 2030 could reduce another€1–2/kg H₂,potentially lowering total costs below€6/kg H₂(US$7/kg H₂)by the end of the decade.
What is green hydrogen?
Green hydrogen is hydrogen produced by splitting water into hydrogen and oxygen using electricity from renewable sources like solar,wind or hydro power,a process called electrolysis,resulting in near-zero carbon emissions.
It's a crucial clean energy carrier for decarbonising heavy industry,transport and power grids,offering a sustainable alternative to fossil-fuel-derived hydrogen.
Balancing supply with demand
While cost competitiveness is essential,equally critical is a steady rise in customer demand.
“Demand,particularly in the transport sector including refineries,can be boosted significantly with the forthcoming national implementation of RED III in the transport sector,”RWE says.
Stronger renewable fuel quotas and national greenhouse gas goals through 2040 could help ensure hydrogen becomes a stable energy carrier within Europe’s power and transport systems.
New electrolyser technologies promise further efficiency benefits,though these are not yet commercially ready.
Tobias Bartz,Group CEO of Rhenus Logistics,highlights the importance of consistent energy policy.
“The national hydrogen strategy needs to pick up the pace,"he explains.
"If true sustainability is the goal,we can't afford inconsistent regulations and technology biases."
Investing in energy innovation
RWE maintains that sustained public funding in hydrogen research will be essential to strengthen Europe’s manufacturing base and energy independence.
"A research and development programme,supported by the government and directed towards European plant manufacturers,would firstly mitigate the risk associated with technology development,"RWE states,"thereby supporting market introduction and subsequent cost reductions for hydrogen."
"Secondly,it would strengthen independence from technology imports."
A unified regulatory and investment framework could enable hydrogen not just to decarbonise industries,but to stabilise future power grids,underpin renewable integration and redefine the continent’s energy landscape.
