Europe is entering a new phase of the energy transition, in which hydrogen is ceasing to be a promise made in strategies and is becoming the subject of concrete regulations, auctions and first commercial transactions. The third auction of the European Hydrogen Bank, which attracted 58 bids worth a total of 8.4 billion euros, more than six times the available funds, demonstrates that the appetite for green hydrogen is enormous, but real investments still face regulatory and infrastructural barriers. The hydrogen market will not be created in laboratories or in strategies. It will be created where regulation, infrastructure and capital meet in a single point.
Hydrogen has for years been the subject of strategic declarations and national strategies. Poland adopted the Polish Hydrogen Strategy until 2030 with a perspective until 2040, in which six goals were set: implementation of hydrogen technologies in power and heating, use of hydrogen as an alternative fuel in transport, support for industrial decarbonisation, production of hydrogen in new installations, efficient and safe transmission, distribution and storage, and creation of a stable regulatory environment. However, implementation of these plans proved more difficult than their definition. By 2025, the planned 32 hydrogen refuelling stations had not been opened, and information on achieving 50 MW of installed capacity for low-emission hydrogen production is not publicly available.
Europe at the EU level has also not kept to its original timelines. The average cost of producing green hydrogen in Europe is currently around 5-7 euros per kilogram, while the price of grey hydrogen from natural gas is around 1.5-2.5 euros per kilogram. This price gap, reaching 300-400 percent, is the main obstacle to the commercial development of the market. At the same time, the European Commission is working on a revision of the EU hydrogen strategy, due to be published in the third quarter of 2026, alongside the proposal for RED IV, a revision of the Renewable Energy Directive. These are the documents that are meant to define the framework in which the hydrogen market is to develop. Delays in their publication create uncertainty that is holding back investment decisions, and entrepreneurs who have been waiting for stable legal conditions for years are starting to lose patience. In some countries, voices are already emerging that it may be more cost-effective to wait for cheaper technologies from China than to invest in expensive green hydrogen in Europe, which poses a serious challenge to the entire strategy.
Another problem is access to the right infrastructure. To transport hydrogen over long distances, new pipelines are needed, most of which do not exist. Modernising existing gas networks for hydrogen transmission is costly and technically complex, and its pace is not keeping up with political declarations. Without physical infrastructure, even the greatest demand will not be met, and producers who have invested in electrolysers will have nowhere to sell their hydrogen. This is a vicious circle that is holding back the development of the entire sector. Lack of infrastructure deters producers, and lack of producers does not encourage investment in pipelines. Breaking this impasse requires decisive state intervention, but so far most governments remain in the declaration phase. For this reason, priority in building the market goes not to those with the greatest ambitions, but to those who can most quickly turn declarations into concrete action. They are the ones setting the pace of the entire race.
Auctions show appetite, but also structural problems
The third auction of the European Hydrogen Bank, the results of which were announced in May 2026, brought both reasons for optimism and warning signals. A total of 1.09 billion euros was awarded to nine projects, which will provide nearly 1.1 GW of electrolyser capacity and produce 1.3 million tonnes of hydrogen over the first ten years of operation. Bid prices ranged from 0.57 to 3.49 euros per kilogram, with five winning projects from Greece, Spain, Denmark and Austria receiving funding at prices from 0.57 to 0.98 euros per kilogram in the first basket, covering RFNBO projects. This means that in some cases producers are able to compete on price with grey hydrogen, although this requires significant public support. What is worrying, however, is that 58 projects applied for support, but only nine were selected. This means that a huge proportion of potential investments still cannot find financing.
The situation was quite different in the second auction, which took place in 2024 and whose results were announced in January 2026. Of the 61 bids that originally applied for support, contracts were ultimately concluded for only 380 MW of electrolyser capacity, a fraction of the planned 2.3 GW. The total subsidy amount was reduced from 1.2 billion euros to just 270.6 million euros. This means that many projects that seemed ready for implementation at the declaration stage did not survive confrontation with market realities. The reasons were complex. Overly restrictive additionality requirements, problems with obtaining permits and uncertainty about future energy prices meant that investors preferred to withdraw from projects rather than risk their future unprofitability. This shows just how uncertain the economic foundations of green hydrogen still are. This uncertainty favours countries that offer the most stable and predictable investment conditions, meaning those that can shorten administrative procedures and provide long-term contracts.
The third auction brought a clear revival, but did not dispel all doubts. Interest was more than seven times higher than available funds, indicating that the market still believes in green hydrogen. At the same time, it reveals that the scale of public support is still insufficient to trigger mass production. Daniel Fraile of Hydrogen Europe noted that the adoption of the RED III directive in Germany creates clear opportunities for electrolysis projects targeting the German market, including projects in Denmark thanks to the planned hydrogen interconnector. This shows that national regulations, not just EU ones, are beginning to shape the geography of the first hydrogen market in Europe. The biggest beneficiary of the changes is therefore not so much the European Commission itself, but the countries that are quickest to adapt their laws to the new reality. In practice, this means that the hydrogen market will not be built top-down by Brussels, but bottom-up by countries that can create the most favourable conditions for investors.
It seems that the European Hydrogen Bank, although successfully stimulating demand, is struggling with a problem of scale. The budget allocated to the auctions is too small to satisfy the huge interest, meaning many valuable projects remain unsupported. The qualification procedures are complicated and time-consuming, discouraging smaller players. For the hydrogen market to develop in a sustainable way, not only further auctions are needed, but also simplification of procedures and an increase in available funds. Without this, the market will remain a niche rather than an engine of the energy transition. Further auction rounds in 2027 will show whether the European Commission has learned the lessons from past experience, or whether the hydrogen market will remain forever in the experimental phase, far from the commercial scale that could compete with fossil fuels. These are the decisions that will determine whether the first hydrogen market is created in Europe or whether other regions of the world, such as the Middle East and South-East Asia, take the lead.
Germany accelerates
Germany is currently the most advanced European country in building the regulatory framework for the hydrogen market. In March 2026, the German government adopted an amendment to the Energy Industry Act (EnWG) and additional regulations aimed at implementing EU rules on the gas market and the future hydrogen market. The new regulations cover certification and unbundling rules for hydrogen network operators and labelling of renewable and low-carbon gases. Network operators will be able to plan on the basis of actual demand, and network planning decisions will be taken regionally or locally. This is a departure from the centralised model that previously held back infrastructure development, in favour of a more flexible approach that better responds to local needs. This allows Germany to respond more quickly to changing market conditions and avoid the delays that in other countries result from excessive bureaucracy.
The German hydrogen network, which is to form the backbone of the future market, began the capacity reservation process in 2026. The German hydrogen network operators announced capacity reservation rules for 2026, allowing market participants to make binding reservations for entry and exit points within defined network clusters. This provides greater planning certainty and supports the expansion of hydrogen infrastructure across the country. Previously, investors had no certainty that the infrastructure they built would find customers. Now, thanks to the reservation system, they can count on guaranteed transmission, which significantly reduces investment risk. At the same time, the German parliament passed a law to accelerate hydrogen availability and remove some of the regulatory barriers that had previously hampered project development, including shortening permitting procedures for electrolyser construction. In practice, this means that Germany could be ready to receive hydrogen on an industrial scale as early as 2028, while other countries will still be finalising their legislation.
The most spectacular manifestation of German ambitions, however, are the international H2Global auctions. In January 2026, the European Commission approved a joint Canadian-German auction worth 400 million euros. In June 2026, Germany and Australia signed a declaration of intent on a joint H2Global auction, under which up to 400 million euros of green hydrogen produced in Australia is to be sold in Germany. The total budget of the H2Global programme under the German budget plan for 2026 is approaching 3 billion euros, covering four regional and one global tender. Germany is therefore building the market not only from the supply side, but above all from the demand side, creating guaranteed demand for green hydrogen that is intended to attract investment. This approach, in which the state acts as a guarantee of offtake, is far more effective than simply subsidising production, as it creates a stable framework for long-term contracts. This allows investors to count on a steady stream of revenue, which is crucial for projects requiring billion-euro outlays.
Germany is not, however, limiting itself to creating demand. The country is also investing in developing its own production capacity, although it is aware that it will not be able to meet all its needs from domestic resources. This is why it is so actively seeking international partners, especially in countries with huge renewable energy potential, such as Australia, Canada and North African countries. The German strategy assumes that by 2030 around 70 percent of hydrogen will be imported, with only 30 percent produced locally. This makes Germany the central hub of the European hydrogen market, both as the largest off-taker and as the coordinator of international supply chains. Whether this model will work remains to be seen in the coming years, but for now Berlin is dictating the pace and direction of change across Europe. In practice, this means that other countries, including Poland, will have to adapt their strategies to German demand if they want to become part of the European hydrogen market. This gives Germany not only a regulatory advantage, but also a geopolitical one. It can choose from whom it will import hydrogen, giving it enormous bargaining power.
Poland sets the standard. Gaz-System first operator in Europe
While Germany focuses on creating demand, Poland has made a breakthrough in transmission infrastructure. On 30 March 2026, the European Commission issued a positive opinion on the certification of Gaz-System as a hydrogen transmission system operator. The company was the first in Europe to undergo this procedure, obtaining confirmation of compliance with EU regulations. The Commission confirmed that the Polish operator meets the independence criteria under EU rules, sharing the positive assessment of the Agency for the Cooperation of Energy Regulators (ACER) of 24 February 2026. This event is groundbreaking not only for Poland but for the whole of Europe, as it sets the standards against which subsequent operators will be certified. This gives Poland a first-mover advantage. Other countries will have to adapt their procedures to the standard developed by Gaz-System, which could give Polish companies extra time to prepare for competition.
As Gaz-System CEO Sławomir Hinc emphasised, obtaining a positive opinion from the European Commission is an important step towards building a hydrogen market in Poland and Europe. The government’s plenipotentiary for strategic energy infrastructure, Wojciech Wrochna, assessed that the procedure demonstrates efficient cooperation between Poland, the European Commission and ACER, strengthening the country’s position in the European Union. Poland, which just a few years ago was seen as a country still finding its feet in hydrogen, has overtaken countries that considered themselves leaders in the transition. This is proof that in the race for hydrogen, it is not only production potential that counts, but also the ability to create institutional and regulatory frameworks. The certification of Gaz-System opens the way to attracting foreign investors who will be able to count on stable and predictable hydrogen transmission conditions in Poland.
Importantly, the European Commission noted that the lack of physical transmission infrastructure at this stage does not close the door to certification. This approach allows operators to start preparing investments, plan networks and construction schedules now, which is crucial for market development. Gaz-System has already started work on the National Ten-Year Development Plan for 2026-2035, which will set out the main directions for hydrogen transmission network development in Poland and plans for connecting it to the emerging hydrogen infrastructure in Europe. The plan is due to be completed by the end of 2026 and will form the basis for further investments. Poland intends to include not only connections with Germany and the Czech Republic, but also with the Baltic states and Scandinavia, which could make it a central hydrogen hub in Central and Eastern Europe. Such a position would allow Poland not only to transmit hydrogen but also to store it in salt caverns in Pomerania, which is an additional competitive advantage over other countries in the region.
Gaz-System’s certification is, however, only the first step. By 12 June 2026, the President of the Energy Regulatory Office is to take the final decision on certification of the hydrogen transmission system operator. The next challenge will be the physical construction of the hydrogen network, which requires huge financial outlays and agreements with numerous stakeholders. Poland has experience in building gas infrastructure, but hydrogen poses new technical requirements. Pipelines must be made of materials resistant to hydrogen corrosion, and the entire system must be leak-tight to an extent unprecedented for natural gas. Despite these challenges, Poland appears to be on the right track to become one of the leaders of the European hydrogen market, at least in the area of transmission infrastructure. Success in this field could attract investors from across the continent who will want to benefit from a well-developed transmission network. In practice, this means that Poland could become a key link in the European hydrogen supply chain, even if it does not produce it on a large scale itself. It is this role of intermediary and integrator that could prove most profitable in the coming years.
Who wants to soften the rules and who wants to tighten them?
Although the regulatory framework is beginning to take shape, an intensive game is being played over its final form. Five EU member states have called on the European Commission to postpone additionality and hourly matching requirements until 2035. Producers argue that the strict requirements on the timing of renewable energy production to be used for hydrogen production cannot be met at the current stage of technological development and could stall the first commercial projects. Eight European electrolyser manufacturers, including Nucera, ITM Power and Siemens Energy, sent a joint letter to European Commission President Ursula von der Leyen, calling for greater flexibility on time-matching rules and recognition of subsidised renewable energy sources as additional. This shows that even the biggest market players fear that regulation could kill the market before it has a chance to develop. In practice, this means that countries that adapt their rules more quickly to investors’ needs could gain an advantage over those that strictly follow EU guidelines.
On the other hand, the RED III directive imposes obligations that leave little room for negotiation. By 2030, 42 percent of hydrogen used in industry must come from renewable sources, and in transport at least 1 percent of fuels must be renewable hydrogen. Germany has gone even further, introducing its own more ambitious targets. The transport hydrogen mandate starts at 0.1 percent in 2026, rising to around 1.2 percent in 2030 and 10 percent in 2040. This makes the German market a natural first destination for hydrogen producers across Europe. However, even in Germany there are voices that these targets are too ambitious and could lead to artificially inflated prices, hitting the competitiveness of industry. The debate on this issue is one of the most important questions to be decided in the coming months. Its outcome will determine whether the hydrogen market develops in a sustainable way or whether it will be driven by artificial demand that will collapse when subsidies are withdrawn.
Poland is also seeking to relax the regulations. Deputy Minister of Climate and Environment Krzysztof Bolesta assessed that the expected development of the hydrogen market in Europe is currently at a completely different level than intended and is rather modest. Poland is taking action at EU level to ease these regulations somewhat. At the same time, the ministry achieved a negotiating success in the form of accelerating the Commission’s work on the revision of the delegated act 2023/1184 to the REDIII directive, aimed at adapting the requirements for renewable fuels of non-biological origin to the current conditions of hydrogen market development. Poland argues that overly restrictive rules hit smaller countries hardest, which do not have the extensive support systems of Germany or France, potentially deepening inequalities in access to green technologies. This position is supported by countries in Central and Eastern Europe, which fear that the hydrogen market will be dominated by Western players, while they themselves will remain mere passive consumers of expensive technologies.
The battle over the shape of regulation, however, is being fought not only between countries, but also between different sectors of the economy. The chemical and steel industries, which are potentially the largest consumers of hydrogen, are pushing for its introduction as soon as possible, even if initially it is grey or blue hydrogen, arguing that every tonne of hydrogen replacing coal or gas is a step in the right direction. Environmental organisations, on the other hand, demand that public support should go only to green hydrogen produced from additional renewable sources, arguing otherwise the market will be flooded with cheap gas-based hydrogen that brings no climate benefits. A compromise between these positions will be difficult to achieve, but without it the hydrogen market cannot develop in a sustainable way. It is this compromise, or lack of it, that will determine which European hydrogen strategy proves effective and which remains merely a collection of pious wishes.
Why Germany and Poland are closest to the goal?
Among all European countries, Germany and Poland are currently in the best position to build the first functioning hydrogen market in Europe, though they are doing so in completely different ways. Germany is focusing on stimulating demand through ambitious national targets, international import auctions and expansion of the transmission network. Poland is concentrating on preparing transmission infrastructure and building a national ecosystem, gaining priority in system operator certification. Both countries have an advantage over the rest of Europe. Germany thanks to the scale of its market and purchasing power, Poland thanks to its strategic location and ability to rapidly create institutional frameworks. Spain, Denmark and Austria, despite their successes in the European Hydrogen Bank auctions, are still at an earlier stage of infrastructure and regulatory development.
The biggest challenge remains achieving economic viability. As long as the gap between green and grey hydrogen prices has not been closed, the market will need support mechanisms, whether in the form of auctions, contracts for difference or direct subsidies. The third European Hydrogen Bank auction showed, however, that in some projects bid prices are approaching competitive levels, raising hope that the first commercial hydrogen market could emerge in Europe within this decade. The key will be whether this pace can be maintained and whether future auctions will attract even more investors. It will be up to them, not politicians, whether the hydrogen market becomes a reality or remains a broken promise.
Daniel Fraile of Hydrogen Europe emphasised that he sees strong, continuous interest in the auctions, meaning that hydrogen is moving from the declaration phase to the regulatory phase, with the first transactions already on the horizon. However, enthusiasm alone is not enough. Stable legal frameworks, infrastructure and long-term contracts are needed to reduce investment risk. The country that can offer investors all these elements will win the race for the first functioning hydrogen market. For now, Germany is closest to this goal, but Poland, thanks to Gaz-System’s certification and the development of hydrogen valleys, has a chance to catch up with the leader. The final shape of the market will depend on whether European countries can agree on common rules of the game, or whether each goes its own way. Early signals suggest cooperation is possible, but competition between countries is equally strong, which could lead to the creation of barriers rather than their removal. It is this competition, rather than common goals, that may prove to be the greatest driver of the hydrogen market in the coming years.
Fot. Unsplash
