August 1, 2025
The Future of Green Hydrogen Is Out of Reach
A number of hurdles prevent widespread adoption of this potentially game-changing technology.
By: Ronan Wordsworth
A recent Reuters investigation shed some light on the current state of green hydrogen, a potentially game-changing technology that, in theory, is renewable and gives off no emissions. The report notes that at least a fifth of announced projects in Europe were canceled by the end of last year due to large cost overruns and the inability to compete with cheap natural gas. An additional fifth of planned hydrogen projects across the EU won’t be operational by the end of the decade. These delays will hinder Europe’s attempt to become carbon-neutral by 2050 and have geopolitical ramifications as fossil fuel and natural gas dependencies endure.
But first – an explanation of green hydrogen. “Green” refers to the source of the power required to produce the hydrogen – wind, solar and hydropower, which should not produce greenhouse gases. That power is used to split water molecules into hydrogen and oxygen gas. (The process takes place in a device known as an electrolyzer.) When burned, green hydrogen’s primary byproduct is water vapor. It can also be consumed in a fuel cell that generates electricity by electrochemically combining hydrogen in the anode and oxygen in the cathode. This stands in stark contrast to natural gas, which is primarily made up of methane and which, when burned, gives off heat and combines with atmospheric oxygen to produce water and carbon dioxide.
Green hydrogen’s potential as a fuel source has attracted increased public subsidies and private investment, especially as the technology has matured. And the war in Ukraine, which sent much of the world into an energy shock, accelerated Europe’s efforts to diversify away from Russian hydrocarbons. Meanwhile, the cost of producing renewable electricity, especially solar and wind, has dropped sharply.
Experts believed green hydrogen was particularly well-suited to power industries that are difficult to transition to other energy sources: heavy industry, steelmaking, long-distance transport, power storage and so on. Hydrogen fuel cells for use in vehicles, trains, power stations and aviation are in their infancy. China’s first hydrogen-powered locomotive for commercial use began trial operations on May 10. It has a range of about 800 kilometers (500 miles) and a refueling time of about 15 minutes. The advantage of hydrogen fuel cells over electric batteries is that they don’t need a large-scale infrastructure network to run. So-called “green steel” is made by bombarding iron with hydrogen, removing oxygen atoms from the product and refining without using coal. Provided the hydrogen is made this way, there should be no or very low carbon emissions.
Other countries are getting in on the action. Australia, the United Kingdom and Japan have also invested heavily in projects meant to scale green hydrogen and bring down its costs. (Chinese investment into electrolyzers and the U.S. Inflation Reduction Act are honorable mentions – though the U.S. has been invested in the technology since the 2000s, when a trial conversion of a diesel locomotive to a hydrail train, powered by hydrogen fuel cells, was successful.) The ultimate objective is to create a green hydrogen industry that can stand up without government help.
Still, Europe is the de facto leader in this nascent urgency for green power. Europe’s goal is to use hydrogen to produce 40 gigawatts of power by 2030. And Africa seems to be the key to its ambitions. Several countries have already made large investments into green hydrogen studies and have signed multiple multi-billion euro memorandums of understanding to develop green hydrogen plants throughout Africa, including in Morocco, Mauritania, Egypt and Namibia – all of which are trying to position themselves as major energy suppliers for Europe by the end of the decade.
In March, Morocco approved several green hydrogen projects worth $32.5 billion meant to produce ammonia, steel and industrial hydrogen fuel and has proposed a 5,600-kilometer pipeline connecting 11 West African nations to supply the fuel to Europe via Spain. The U.S., Spain, Germany, the United Arab Emirates, Saudi Arabia and China have all submitted proposals under the framework. Last year, Morocco announced it would allocate 300,000 hectares to energy projects, from renewable energy and electrolysis to the conversion of green hydrogen into ammonia, methanol and synthetic fuel. In October, TotalEnergies signed a deal with the government in Rabat to develop green hydrogen, while Engie also agreed to a deal with Moroccan phosphates and fertilizer giant OCP to produce ammonia from green hydrogen.
Mauritania was the first country in the world to pass legislation providing a framework to regulate green hydrogen development in the hopes of attracting investment. The government has already started production on two massive projects – AMAN (which has a capacity of 30GW and will cost $40 billion) and Project Nour (which has a capacity of 10GW and will cost $3.5 billion). The initiatives are supported by energy giants such as Total and by investments from the Middle East. Mauritania has ample solar and wind resources to see these projects through.
There are also signs that Namibia is starting to take green hydrogen seriously. Marked by vast deserts that are already home to solar farms, wind turbines and hydrogen plants, the country sees itself as a future green energy hub. Germany has invested in the Namibian industry, and the first plant is producing 25 megawatts of electricity, powering electrolyzers to produce the first fully green iron. The government has toured European capitals such as Berlin, Paris and Brussels to secure additional investment. Some governments have committed to building a plant that could produce 10 million-15 million metric tons of hydrogen per year.
However, several factors could stifle green hydrogen’s potential. The first and most important is the cost. Even in European markets, the cost of green hydrogen is still largely uncompetitive. It’s true that some studies suggest green hydrogen could be 18 percent cheaper than natural gas by the end of the decade, but these predictions are likely overly optimistic, predicated on decreases in the price of renewables, electrolyzers and other equipment. In 2023, the average natural gas price for non-household consumers was 0.0624 euros per kilowatt-hour. The average price for green hydrogen was roughly three times as much. Capital expenditure still accounts for around 60 percent of production.
Second is the lack of suitable infrastructure. Unlike conventional fuels, green hydrogen requires an entirely new infrastructure ecosystem for transport, storage and end-use – much of which does not currently exist at commercial scale. Pipelines designed for natural gas often require costly retrofitting or replacement because hydrogen has unique chemical properties, including its tendency to embrittle steel. Meanwhile, storage is limited and expensive, particularly for long-term or high-volume use. Long-term storage may require underground caverns, high-pressure tanks and cryogenic liquefaction. Transporting hydrogen over long distances is possible but needs dedicated infrastructure or conversion to derivatives such as ammonia to be economically feasible. On the demand side, industrial facilities, power plants and heavy transport systems must also be reconfigured or replaced to allow for hydrogen usage.
A final challenge is demand. In Spain and Portugal, for example, producers have scaled back the development of new plants despite having more than 400 million euros ($456 million) in subsidies to spend. Spain is looking to build a 2,600-kilometer hydrogen network by 2030, which will connect the Iberian Peninsula to northwest Europe. Though the government expects its portion of the project to be finished on time, the rest of Europe will likely be delayed. Demand is notably growing in Germany, the leading European consumer, but it is not growing fast enough to bring down prices.
Faced with these issues, the timelines for a full-scale transition are being lengthened. There was hope for larger-scale adoption by the end of the decade to help with the EU’s 2035 emissions targets (en route to the 2050 zero emissions goal). In practical terms, this means Europe will fail to ease itself off fossil fuels as quickly as it would like – and will still be beholden to energy exporters like Russia in the meantime. Indeed, the slow transition to green hydrogen will likely entrench new or existing dependencies on natural gas and oil imports from states such as Azerbaijan, Qatar, Algeria and the United States – a point exemplified by the recent U.S.-EU trade deal – which also undermines Brussels’ ability to meet its climate goals. And so long as it fails to diversify its suppliers, it will continue to be vulnerable to supply chain disruptions. In this sense, the transition to green energy is as much a facet of national security as energy preference.
Green hydrogen holds real promise as a tool for decarbonization, energy independence and economic opportunity across Europe and the Global South. Yet the pace of progress remains too slow to meet critical climate goals or reduce strategic energy vulnerabilities. Cost, infrastructure gaps and insufficient demand are stalling momentum just as geopolitical conditions make the transition more urgent. To keep its hydrogen vision alive, Europe will likely continue to issue targeted subsidies, accelerate infrastructure investment and build resilient, equitable supply chains with trusted partners. Without that, the promised fuel of the future remains just out of reach.