The European Hydrogen Market Landscape

This report aims to summarise the status of the European hydrogen market landscape. It is based on the information available at the European Hydrogen Observatory (EHO) platform, the leading source of data and information on hydrogen in Europe (EU27, EFTA and the UK), providing a full overview of the hydrogen market and the deployment of clean hydrogen technologies. As of the end of 2022, a total of 476 operational hydrogen production facilities across Europe, boasting a cumulative hydrogen production capacity of approximately 11.30 Mt were identified. Notably, the largest share of this capacity is contributed by key European countries, including Germany, the Netherlands, Poland, Italy, and France, which collectively account for 56% of the total hydrogen capacity. The hydrogen consumption in Europe has been estimated at approximately 8.23 Mt, reflecting an average capacity utilisation rate of 73%. It's worth highlighting that conventional hydrogen production methods, encompassing reforming, by-product production from ethylene and styrene, and by-product electrolysis, collectively yield 11.28 Mt of hydrogen capacity. These conventional processes are distributed across 376 production facilities, constituting 99.9% of the total production capacity in 2022. Throughout the year 2022, there were no newly commissioned hydrogen production facilities that integrated carbon capture technology into their operations. Additionally, a notable presence of water electrolysis-based hydrogen production projects in Europe was identified. There was a total of 97 water electrolysis projects, with 67 of them having a minimum capacity of 0.5 MW, resulting in a cumulative production capacity of 174.28 MW. Furthermore, 46 such projects were found to be under construction and are anticipated to contribute an additional 1,199.07 MW of water electrolysis capacity upon becoming operational, with the estimated timeframe ranging from January 2023 to 2025. A significant 87% of the total hydrogen production capacity in Europe is dedicated to onsite captive consumption, indicating that it is primarily produced and used within the facility. The remaining 13% of capacity is specifically allocated for external distribution and sale, characterizing what's known as merchant consumption. Despite the prevailing dominance of captive hydrogen production within Europe, it's noteworthy that thousands of metric tonnes of hydrogen are already being traded and distributed across the continent. These transfers often occur through dedicated hydrogen pipelines or transportation via trucks. In 2022, an example of this growing trend was the hydrogen export from Belgium to the Netherlands, which emerged as the single most significant hydrogen flow between European countries, constituting a substantial 75% of all hydrogen traded in Europe. Belgium earned distinction as Europe's leading hydrogen exporter, with 78% of the hydrogen that flowed between European countries originating 6 from its facilities. Conversely, the Netherlands played a pivotal role as Europe's primary hydrogen importer, accounting for an impressive 76% of the hydrogen imported into the continent. The rise of the clean hydrogen market in Europe, coupled with the European Union's ambition to import 10 Mt of renewable hydrogen from non-EU sources by 2030, is expected to drive an increase in hydrogen flows, both exports and imports, among European countries. In 2022, the total demand for hydrogen in Europe was estimated to be 8.19 Mt. The biggest share of hydrogen demand comes from refineries, which were responsible for 57% of total hydrogen use (4.6 Mt), followed by the ammonia industry with 24% (2.0 Mt). Together these two sectors consumed 81% of the total hydrogen consumption in Europe. Clean hydrogen demand, while currently making up less than 0.1% of the overall hydrogen demand, is notably driven by the mobility sector. Forecasts project an impressive growth trajectory in total hydrogen demand for Europe over the coming decades. Projections show a remarkable 127% surge from 2030 to 2040, followed by a substantial 63% increase from 2040 to 2050. Considering the current hydrogen demand, there is a projected 51% increase until 2030. Throughout the three decades under examination, the industrial sector is anticipated to maintain its predominant position, consistently demonstrating the highest demand for hydrogen. However, this conclusion refers to average values and variations that may exist. The total number of Hydrogen Fuel Cell Electric Vehicles (FCEV) registrations in Europe in 2022 was estimated at 1,537 units. In comparison to the previous year, the number of registrations increased by 31%. This surge in registrations has had a pronounced impact on the overall FCEV fleet's evolution in Europe, which increased from 4,050 units to 5,570 (+38%). Notably, passenger cars dominated the landscape, constituting 86% of the total FCEV fleet. Exploring the latest advancements in hydrogen infrastructure across Europe, in 2022, the hydrogen distribution network comprised spanning a total length of 1,569 km. Within Europe, the largest networks are situated in Belgium and Germany, at 600 km and 400 km, respectively. Of particular importance is the cross-border network of France, Belgium, and the Netherlands spanning a total of 964 km. To keep pace with the rising number of Fuel Cell Electric Vehicles (FCEVs) on European roads and promote their wider integration, it is key to ensure sufficient accessibility to refuelling infrastructure. Consequently, many countries are endorsing the establishment of hydrogen refuelling stations (HRS) so that they are publicly accessible on a nationwide scale. More recharging and refuelling stations for alternative fuels will be deployed in the coming years across Europe enabling the transport sector to significantly reduce its carbon footprint following the adoption of the alternative fuel infrastructure regulation (AFIR). Part of the regulation's main target is that hydrogen refuelling stations serving both cars and lorries must be deployed from 7 2030 onwards in all urban nodes and every 200 km along the TEN-T core network. Since 2015, the total number of operational and publicly accessible HRS in Europe has grown at an accelerated pace from 38 to 178 by the summer of 2023. Germany takes the lead having the largest share at approximately 54% of the total number of HRS, with 96 stations currently operational. The majority of the HRS (89%) are equipped with 700 bar car dispensers. In 2022, the levelized production costs of hydrogen generated through Steam Methane Reforming (SMR) in Europe averaged approximately 6.23 €/kg H2. When incorporating a carbon capture system, the average cost of hydrogen production via SMR in Europe increased to 6.38 €/kg H2. Additionally, the production costs of hydrogen in Europe for 2022, utilizing grid electricity, averaged 9.85 €/kg H2. Hydrogen production costs through electrolysis with a direct connection to a renewable energy source had an average estimated cost of 6.86 €/kg. As of May 2023, Europe's operational water electrolyser manufacturing capacity stands at 3.11 GW/year, with an additional 2.64 GW planned by the end of 2023. Alkaline technologies make up 53% of the total capacity. Looking ahead to 2025, ongoing projects are expected to raise the total capacity to 7.65 GW/year. Fuel cell deployment in Europe has showed an increasing trend over the past decade. The total number of shipped fuel cells were forecasted on around 11,200 units in 2021 and a total capacity of 190 MW. The most significant increase in capacity occurred between 2018 and the forecast of 2021 (+148.8 MW).