EU Hydrogen Policies Drive PEM Growth in Europe Amid Global Competition

As the European Union (EU) accelerates its push towards a climate-neutral economy, hydrogen has emerged as a central pillar of its energy transition strategy. The EU’s Hydrogen Strategy, launched in 2020, sets ambitious goals to establish Europe as a global leader in renewable hydrogen production. Among the technologies poised to benefit most from this policy framework is Proton Exchange Membrane (PEM) electrolysis, a versatile and efficient method for producing green hydrogen. However, the implications of these policies extend far beyond Europe’s borders, shaping the strategies of equipment manufacturers globally and driving significant economic and industrial shifts.

Europe's ludicrous hydrogen bet

The EU’s target to produce 10 million tonnes of renewable hydrogen annually by 2030 is backed by substantial financial support, including the €1 trillion European Green Deal, Horizon Europe funding, and the Innovation Fund. These initiatives specifically prioritize green hydrogen technologies, creating a fertile environment for PEM development. PEM electrolyzers, with their ability to integrate seamlessly with renewable energy sources such as wind and solar, are seen as a critical enabler of the EU’s decarbonization goals. Subsidies for research, development, and deployment (RD&D) have accelerated technological advancements and reduced production costs, making PEM systems increasingly competitive. Simultaneously, investments in hydrogen infrastructure, such as pipelines, storage facilities, and refueling stations, are laying the groundwork for a robust hydrogen economy that directly supports PEM adoption.

Yet, the EU’s policies are not limited to fostering domestic innovation. The Carbon Border Adjustment Mechanism (CBAM), set to be fully implemented by 2026, is designed to impose tariffs on carbon-intensive imports, effectively leveling the playing field for European manufacturers. For PEM technology, this means a dual advantage: incentivizing the adoption of low-carbon hydrogen production methods within Europe while discouraging the import of cheaper, carbon-intensive hydrogen from regions with less stringent climate policies. This regulatory framework has spurred European equipment manufacturers to ramp up production capacity while encouraging international players to establish local operations to remain competitive.

The impact of these policies is already evident in a series of high-profile projects across Europe. One notable example is the NortH2 project in the Netherlands, which aims to develop a fully integrated green hydrogen value chain powered by offshore wind. The project, leveraging PEM electrolyzers, is expected to produce hundreds of thousands of tonnes of hydrogen annually by the end of the decade. Similar initiatives, such as the HySynergy project in Denmark and the REFHYNE project in Germany, highlight the economic benefits of EU-backed hydrogen projects. These ventures not only reduce Europe’s reliance on fossil fuels but also create jobs, stimulate local economies, and position the continent as a global hub for hydrogen innovation.

Mounting of Venturi roof on the hydrogen production building at the Shell refinery in Wesseling

However, the EU’s hydrogen strategy also presents challenges for equipment manufacturers outside Europe. Companies in Asia and North America, where hydrogen policies are less aggressive or fragmented, face the dual pressure of competing with subsidized European firms and adapting to the EU’s regulatory requirements. In response, some international manufacturers are pursuing joint ventures with European firms or establishing production facilities within the EU to mitigate the impact of trade barriers like CBAM. Others are focusing on advancing their technologies to differentiate themselves in an increasingly competitive market.

Domestically, European manufacturers are scaling up quickly to meet rising demand. Companies such as Siemens Energy, ITM Power, and Nel ASA are expanding production capacities and forming strategic partnerships to strengthen their market positions. Meanwhile, smaller firms specializing in PEM technology are benefiting from EU funding, allowing them to compete with larger players and contribute to the region’s growing hydrogen ecosystem.

The economic ripple effects of these policies are significant. By fostering a domestic hydrogen economy centered on PEM technology, the EU is not only addressing its climate goals but also reducing its reliance on imported fossil fuels, enhancing energy security, and creating new industrial opportunities. As the global hydrogen race intensifies, Europe’s policy-driven approach offers a compelling model for balancing climate ambitions with economic growth.

While the EU’s hydrogen policies have undoubtedly catalyzed the development of PEM technology, the long-term success of these initiatives will depend on continued investment, regulatory stability, and international cooperation. As Europe moves closer to its 2030 targets, the next few years will be critical in determining whether the continent can maintain its leadership in the burgeoning global hydrogen economy. For now, the EU’s commitment to hydrogen and PEM development stands as a testament to the transformative power of policy-driven innovation.