Wood Mackenzie Highlights Growing Momentum Europe’s Green Hydrogen Market As Refinery Projects Lead Development

Seven months after the previous industry gathering, the atmosphere surrounding the hydrogen sector had changed noticeably. While the market is still characterised by a degree of caution, there is now a stronger sense that real progress is being made. For years, hydrogen has been viewed as an industry with enormous promise but limited large-scale execution.

Today, however, there are increasing signs that some of the projects and opportunities long discussed are beginning to move from concept to reality.Several developments have contributed to this shift in sentiment. Growing instability in the Middle East has once again highlighted the importance of energy security, pushing it back to the top of government and industry agendas. At the same time, the European Commission has surprised many stakeholders by accelerating its review of key hydrogen regulations.

The competitive landscape is also evolving rapidly, particularly in the electrolyser market, where technological advancements and increasing competition are influencing project economics, investment decisions, and long-term returns.One of the most significant discussions at the event centred on the success of refinery projects in driving the early growth of green hydrogen.

Currently, refinery projects account for around two-thirds of Europe’s green hydrogen capacity that has reached Final Investment Decision (FID). This level of success stands in sharp contrast to many other sectors, where projects continue to face delays and uncertainty.The reasons behind refining’s progress are relatively clear.

In many cases, refiners are effectively producing hydrogen for their own operations, reducing the need to secure third-party buyers and long-term offtake agreements. This greatly lowers commercial risk and simplifies project development. Refinery projects also benefit from having demand located directly on-site, which minimises the need for additional transport and storage infrastructure.

Furthermore, large refining companies often have the financial strength required to support major investments, making access to funding less challenging than in other industries.Regulation has also played a crucial role. Under the RED III framework, refiners face penalties if they fail to meet renewable fuel requirements.

For many companies, the cost of non-compliance can exceed the cost of investing in green hydrogen production. This creates a strong business case for moving ahead with projects and provides a level of certainty that is often absent elsewhere in the market.However, replicating these conditions across industries such as manufacturing, shipping, and aviation will be far more difficult.

These sectors often lack guaranteed demand, dedicated infrastructure, and strong regulatory incentives. As a result, investment decisions become significantly more complex and risky. Discussions throughout the event repeatedly highlighted the need for policies that create stronger demand-side incentives.

Industry participants pointed to mechanisms such as mandatory usage targets, penalty-backed regulations, lead market initiatives, and long-term contracts supported by public institutions as essential tools for encouraging broader adoption.The issue of infrastructure was also raised repeatedly. While refinery projects can often rely on co-located production and consumption, many future hydrogen developments will depend on pipelines, storage facilities, and transportation networks that are not yet available at scale.

Without these connections, both producers and potential consumers remain isolated, limiting the growth of a wider hydrogen economy. Several participants noted that the industry may have prioritised production capacity before developing the infrastructure required to support a fully functioning market.For investors, this creates a relatively clear distinction between near-term and long-term opportunities.

Projects with captive or nearby demand currently offer lower risk and greater certainty, while broader market growth remains dependent on policy support and infrastructure expansion that are still under development.Another major topic of debate focused on the European Commission’s decision to bring forward a review of certain RED III regulations.

In April 2026, the Commission announced plans to revisit aspects of the Renewable Fuels of Non-Biological Origin (RFNBO) framework, including rules related to additionality and temporal and geographical correlation requirements. Although many industry stakeholders had previously called for regulatory changes, the announcement has produced mixed reactions.

Much of the discussion centred on temporal correlation requirements and the possibility of moving from hourly matching to monthly matching between renewable electricity generation and hydrogen production. Supporters of this change argue that it could significantly improve project economics, reduce operational constraints, and help unlock projects that are already close to reaching final investment decisions.

Greater flexibility, they believe, would make projects more attractive to lenders and investors while accelerating market growth.Others, however, remain sceptical. Their concerns extend beyond the technical details of the regulation itself. Many argue that the primary challenge facing the hydrogen sector is not the complexity of production requirements but the lack of strong demand-side drivers. From this perspective, easing production regulations without addressing market demand risks solving the wrong problem.

If customers are not compelled or incentivised to purchase green hydrogen, projects may continue to struggle regardless of how flexible production rules become.The debate also raised important questions about regulatory certainty. Investors typically require stable and predictable policy frameworks when committing capital to long-term infrastructure projects. Some participants expressed concern that reopening regulations so soon after implementation could create uncertainty and weaken confidence in future policy stability.

Developers that based their investment strategies on existing rules may question whether future frameworks will remain consistent over time.The discussion reinforced the European Union’s position as a global leader in hydrogen regulation. Decisions made in Europe often influence policy development in other regions, meaning the outcome of this review will be closely watched by investors, governments, and developers around the world.

For many participants, the greatest concern is not necessarily what changes may eventually be introduced, but what the willingness to revise regulations ahead of schedule signals about the future predictability of hydrogen policy.Beyond these discussions, the event also explored several other themes with significant implications for project economics, competitive positioning, and investment returns.

Together, these conversations reflected an industry that is gradually moving beyond early-stage optimism and beginning to address the practical challenges that will determine the pace and scale of hydrogen adoption in the years ahead.