The EU in the Global Hydrogen Race: Bringing together Climate Action, Energy Security, and Industrial Policy

The European Union has identified clean hydrogen as essential to its climate targets, technology leadership and energy security in the decarbonizing world. The bloc is developing a comprehensive regulatory framework for a hydrogen economy, complete with supply-side policies and binding demand-side targets. In addition to boosting domestic production, the EU is planning to import large volumes of hydrogen and derivatives from third countries. Hydrogen is thus beginning to play a more prominent role in the EU’s bilateral partnerships. The EU is also actively participating in multilateral hydrogen governance with the goal of creating a functioning international hydrogen market featuring strong sustainability standards. At the same time, aligning the diverging interests of Member States and various hydrogen stakeholders has been a challenge. As the global hydrogen race accelerates, the bloc has struggled to keep up with powerful players like the United States, which are offering massive subsidies to the hydrogen industry. This discussion paper examines the domestic and external dimensions of the EU's hydrogen vision, situating it within the bloc's wider climate and energy policy and recent geopolitical developments. It discusses key policies, regulations, and funding schemes for hydrogen in the EU, highlighting existing points of contention and the interplay between the EU and Member State level. It then goes on to analyze the EU's evolving international engagement on hydrogen and the challenges of fostering mutually beneficial green industrial partnerships that go beyond securing hydrogen supplies. It remains to be seen whether the EU succeeds in drawing on its early mover advantage and potential synergies to remain an attractive investment destination and build resilient clean hydrogen supply chains.