Press Release | Report: EU Should Replace Hydrogen-Volume Targets With Industrial Decarbonization Targets
Brussels, 05 October 2026 – The EU should replace overarching hydrogen production and import targets with sector-specific decarbonization targets, according to a Standpoint published today by climate innovation think tank Future Cleantech Architects (FCA). The report offers an alternative approach as the European Commission develops a new hydrogen strategy, expected by the end of 2026.
The report, “The EU Hydrogen Strategy Review: A Sectoral Approach,” recommends prioritizing direct electrification where feasible, concentrating clean hydrogen in applications with few viable alternatives, and aligning infrastructure and imports with industrial demand.
“Europe needs strong, low-carbon industries. The next phase of hydrogen policy should set clear decarbonization goals for each sector and allow different technologies to compete,” said Sophie Deijkers, cleantech policy officer at FCA and lead author of the report. “Clean hydrogen is likely to remain costly and scarce. The EU should prioritize its use where industries have few viable alternatives, while supporting direct electrification and other innovative pathways where they can deliver emissions reductions more efficiently.”
Gap Between Hydrogen Ambition and Deployment
The EU’s 2020 Hydrogen Strategy set ambitious targets, but deployment has remained far below expectations:
- Electrolytic hydrogen capacity reached approximately 0.57 GW by mid-2025, well below the EU’s 6 GW target for 2024.
- Cost reductions and deployment have been slower than expected. Renewable hydrogen (green hydrogen) remains expensive, and high electricity, financing, and infrastructure costs make projects difficult to develop.
- Demand and investment have stalled. Clean hydrogen projects have faced delayed investment decisions, limited offtake, and uncertainty across the value chain.
- Hydrogen infrastructure risks being built ahead of demand. Pipelines, storage, and import facilities require substantial investment and could become underused or stranded if projected demand does not materialize.
- The strategy did not fully account for energy losses and system costs. Converting electricity into hydrogen and then into usable energy can be significantly less efficient than direct electrification.
- Industrial realities and national differences were underweighted. High energy costs, global competition, existing infrastructure, and different electricity systems affect whether hydrogen projects are viable across sectors and member states.
“Companies like ours want to move away from fossil fuels, but the alternatives need to work commercially,” said Roman Diederichs, joint managing director of the German open-die steel forger Dirostahl, which continues to partially rely on fossil gas. “Electrifying gas-fired furnaces is currently a topic of R&D. A substation of gas by green hydrogen would raise costs sharply, so it is no viable option for our operations. To avoid decarbonization that leads to deindustrialization, EU policy should recognize that different industrial processes need different decarbonization pathways. Essential for decarbonization is the availability of a renewable alternative for an affordable price in global comparison.”
The Way Forward: A Sectoral Approach
FCA makes the following recommendations:
- Set sector-specific decarbonization targets and create demand for low-carbon industrial products, allowing competing production pathways.
- Prioritize efficient electricity use and reserve clean hydrogen for applications with few viable alternatives, subject to robust lifecycle emissions accounting.
- Reassess imports and infrastructure, considering hydrogen-derived products and requiring credible demand for pipelines, storage, and terminals.
- Support industrial innovation, including emerging technologies that could reduce future hydrogen requirements.
Last year, at the request of the European Parliament’s ITRE committee, FCA prepared a technical report of the proposed Delegated Act on low-carbon fuels. The analysis informed MEPs ahead of the Parliament’s scrutiny vote. Adopted in July 2025, the Act sets the methodology for calculating emissions savings from low-carbon fuels, including hydrogen.
FCA calls on the European Commission to incorporate this approach into its reassessment of EU hydrogen policy.
Notes to editors:
- Read the full Standpoint here.
- Find graphs for reproduction in media stories here.
- Sophie Deijkers is available for policy interviews in English and Dutch. Magnolia Tovar, director of technologies and impact, is available for technical interviews in English, Spanish, and Dutch, subject to scheduling.
- Roman Dietrich, Managing Director of Dirostahl in Remscheid, Germany, is available for interviews in German and English.
Contact:
Tal Harris, Head of Communications, +41-782530550, tal.harris@fcarchitects.org
About Future Cleantech Architects
Future Cleantech Architects is an independent, non-profit, and non-partisan climate think tank focused on effectively accelerating innovation in critical industries to close the gap to net-zero by 2050.