Europe Nearly Doubles Hydrogen Investments from $376 million to $712 million

The figures encompass a broad spectrum of technologies, including hydrogen generation, transport, and storage, and in some cases the use of clean hydrogen.

Daniel Marhewka, Co-Head of Fieldfisher's Energy, Natural Resources and Sustainability Group: "Hydrogen, especially green hydrogen, ticks many of the boxes in terms of the green agenda; it is important to get the use cases for green hydrogen right, scale the business to bring the price down and to help the demand side with regulatory incentives. As many developing industries the green hydrogen market will need regulatory support at the beginning to foster growth in this innovative hydrogen sector, which is currently not the case as it should be in the light of the necessary transformation."

Start-ups with promising hydrogen technologies face hurdles in commercialisation due to substantial R&D costs, unlike larger corporations.

Philip Abbott, Co-Head of the Financial Markets and Products Group at Fieldfisher: "Hydrogen is a nascent industry, posing challenges for management without extensive sector experience and unproven business models. Significant R&D investments are required to achieve profitable production scales."

Europe Takes Centre Stage

Europe is an important player in the hydrogen sector, with the market projected to reach USD 42.2 billion by 2033, growing at a robust CAGR of 5.12% from 2024 onwards. The continent secured the world's largest deal this year, as German-based electrolyser manufacturer Sunfire attracted €315 million in financing from private investors and the European Investment Bank (EIB).

Recently, the European Council adopted a regulatory package establishing market rules for renewable gas, natural gas, and hydrogen, signalling a decisive move towards renewable and low-carbon energy sources. This reinforces hydrogen's pivotal role in both the energy transition and security amidst global conflicts.

Policymakers are committed to an 'orderly' transition to mitigate potential spikes in energy costs for households and businesses. Upgrading gas networks will be crucial for integrating hydrogen seamlessly. The EU’s first hydrogen subsidy auction awarded €720 million to projects aimed at producing renewable hydrogen, underscoring the sector's demand for financial support amid production cost challenges.

David Haverbeke, Energy and Infrastructure Partner and Head of EU Regulatory at Fieldfisher added: "It can be expected  that hydrogen will play a central role not just in the energy transition but also in energy security. Geopolitical tensions near the EU highlight hydrogen's strategic importance. Europe will continue to lead in integrating hydrogen into its sustainable energy mix, with policymakers driving private investments towards a climate-neutral, resilient economy."

UK to recharge its Hydrogen power

The UK government sees Hydrogen as a low carbon solution which can help the country to achieve net zero by 2050. The country's first Hydrogen Strategy in 2021 articulated that hydrogen will be an essential part of the UK’s future energy independence and security – a requirement that has come into acute focus with the recent turn of events.

In addition to a rise in investment by 6%, the largest deal size in the UK grew from $78 million in H1 2023 to $83 million in H1 2024.

Essar Energy Transition (EET) recently announced setting up of Europe's first hydrogen-ready combined heat and power plant (CHP) at its Stanlow refinery in Ellesmere Port in the UK – with planned completed aimed at 2027.

Anna Crosby, Banking Partner and energy sector specialist at Fieldfisher said: "More can and needs to be done to empower the industry. The enthusiasm for clean energy targets and the phasing out of non-renewable fuel use cases needs to be matched with enabling legislation, a supportive ecosystem and a sustained funding or support model. Green Hydrogen is a nascent industry and it needs the right support now from government and business to drive innovation and technical learning which, both of which will help to bring down long term costs currently associated with Green Hydrogen production."

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*Data has not been reviewed by PitchBook analysts.