Europe bets €50 billion on hydrogen corridors

On 20 May, the EU Commission approved a €1.3 billion German state aid programme for renewable hydrogen (Brusselstimes, Politiken). Dutch and German grid operators signed a joint development agreement for a cross-border corridor operational by 2031. Across northern, southern, and central Europe, tens of billions are flowing into a continent-wide green hydrogen network. But green hydrogen still costs three to five times more than the fossil-based alternative, and projects are being cancelled faster than new ones reach construction.

Four pipelines, one customer

Denmark plans to pipe green hydrogen south through the Danish Hydrogen Backbone. The SoutH2 corridor would move supply from North Africa through Italy to Austria and Germany. Spain's BarMar submarine pipeline between Barcelona and Marseille targets a 2032 start. The Netherlands is positioning Rotterdam as the import hub for northwest Europe.

All four corridors converge on the same customer: German heavy industry. Germany expects to need 2.6 to 3.6 million tonnes of hydrogen per year by 2030 for steelmaking, chemicals, and refining, and acknowledges it will have to import 50 to 70 percent of that. Denmark's planned supply of 78,000 tonnes per year would cover roughly 2-3% of that demand.

Who absorbs the cost gap

Green hydrogen (produced by splitting water using renewable electricity) costs €4.50 to €8.50 per kilogram in Europe today, depending on location and power prices. Grey hydrogen (made from natural gas) costs around €1.50/kg. This gap isn't temporary. Electricity accounts for up to 60% of green hydrogen's production cost, and European power prices remain structurally higher than what competitiveness requires.

Governments are filling the gap with subsidies. Germany's programme pays producers a fixed amount per kilogram, between €0.44 and €3.49, for up to ten years. But the deeper fiscal exposure sits in the pipes themselves. Germany's hydrogen core network carries a total system cost that could reach nearly €50 billion once financing and operations are included, ultimately guaranteed by grid fees and public funds. If pipeline use stays low, the state has promised to cover at least 76% of the shortfall through 2055, potentially leaving taxpayers with a €34.7 billion bill.

The Netherlands faces the same pattern at smaller scale: network cost estimates jumped from €1.5 billion to €3.8 billion in two years. Spain has committed €2.8 billion in public support but has only 30 MW of electrolysis running against a 12 GW target for 2030.

Buyers and developers are already backing out

Around 60 major green hydrogen projects were cancelled globally in 2025, with a combined capacity of 4.9 million tonnes per year. Iberdrola cut its 2030 hydrogen targets by two-thirds. Shell and Equinor both cancelled Norwegian projects. The bottleneck has shifted from supply to demand: Europe can manufacture 13.1 GW of electrolysers per year, but can't find enough buyers willing to pay three to five times the fossil price.

Germany's own numbers show how far reality lags behind the targets. The national goal is 10 GW of electrolyser capacity by 2030. Today, only 955 MW is installed, under 10 percent.

An EU rule change will widen the cost gap further. From 2030, green hydrogen producers must match their electricity consumption with renewable generation on an hourly basis rather than monthly. CE Delft estimates this will raise production costs by roughly 27.5%. The rule exists for good reason: without it, electrolysers would consume existing green power and push the grid back toward fossil fuels. But it makes the economics harder, not easier.

Europe is building hydrogen pipelines on the assumption that costs will fall and buyers will actually show up. Both might happen. But if the learning curve for hydrogen follows a slower path than solar panels did, the question becomes how long taxpayers underwrite the difference.