The European Union and Austria’s Hydrogen Push: Strict Rules, But New Momentum

The EU hydrogen market is at a crossroads. Policymakers have set ambitious targets for renewable hydrogen as a key player in the EU’s green energy goals, yet the regulatory framework designed to ensure “green hydrogen”¹ is among the most complex in the world, and investment has been slower than anticipated. Renewable hydrogen under the EU RFNBO framework remains one of the more complex and cost-sensitive “green hydrogen” products globally. Simple Guarantees of Origin are not sufficient by far. In recent weeks, however, policy signals from the European Union and Austria suggest that Europe is recalibrating—seeking to maintain environmental rigour while making the hydrogen ramp-up more bankable. 

Background: What Are RFNBOs and Why Do They Matter? 

Under the EU’s Renewable Energy Directive (RED),² hydrogen produced from renewable electricity is classified as a Renewable Fuel of Non-Biological Origin (RFNBO). Unlike conventional “grey hydrogen” made from natural gas via steam methane reforming, RFNBOs must satisfy detailed production criteria, such as sourcing renewable power via a power purchase agreement (PPA) from a new plant (so-called additionality) the geographical correlation of the renewable electricity used, as well as greenhouse-gas savings thresholds. Unless the average share of renewable energy in the relevant bidding zone exceeds 90%, simple Guarantees of Origin – certificates showing that an equivalent amount of green power was generated somewhere on the grid–are not sufficient to qualify hydrogen as an RFNBO.  

These rules, which are consolidated in Delegated Acts under RED,³ are intended to ensure that the EU’s hydrogen economy contributes to emission reductions. However, they have also introduced considerable compliance complexity. Uncertainty surrounding the implementation of the EU’s Union Database (UDB) – the central registry for tracing liquid and gaseous transport fuels applications⁴ – has compounded the challenge. 

A Targeted Review of RFNBO Production Criteria 

Under its AccelerateEU initiative,⁵ the EU Commission has publicly acknowledged the slower than expected ramp-up of the hydrogen market. In an official statement, the EU Commission confirmed: “Given the slower than expected ramp up of the hydrogen market, we will propose a targeted review of the production criteria for renewable hydrogen, while safeguarding existing investments.”⁶ 

This statement not only indicates that the EU Commission is aware of the slow adoption, but that it is prepared to adjust the technical requirements for RFNBO qualification – potentially easing additionality or correlation rules – while protecting projects already planned or financed under the current framework. A proposal for a revised RED and amended RFNBO Delegated Act could be tabled before the end of 2026. 

Financial Support: EU Hydrogen Bank Auctions and Austrian Programmes 

Alongside regulatory reform, both the EU and Austria are making public funding available to bridge the cost gap between renewable and conventional hydrogen: Austria is planning to participate in the fourth EU Hydrogen Bank auction through the “Auction-as-a-Service” mechanism, which allows Member States to channel national funds through the EU’s competitive auction platform. The draft terms and conditions for this auction round (IF26 Hydrogen Auction) are currently open for public consultation until 24 August 2026. ⁷ At the same time, Austria’s Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology (BMWET) is running an online consultation on RFNBO project pipelines and expected funding needs, open until 25 August 2026.⁸ 

Eligible industrial offtakers in Austria may also benefit from the “Transformation der Industrie” programme, which supports industrial decarbonization – including through green hydrogen use – via investment and transformation grants.⁹ Together, these instruments offer multiple pathways for projects to secure co-funding. 

It should also be noted that Austria exceeded the 90% renewables threshold for the first time in 2024, making the Austrian RFNBO market probably the first one in the EU to be relieved from the strict rules on additionally as well as temporal and geographical correlation at least for a period of 5 years. 

Infrastructure: The TEN-E Call for Hydrogen and CO₂ Projects 

Even with favourable production economics and adequate funding, hydrogen will only reach end-users if the necessary transport and storage infrastructure is in place. The EU has opened a new call under the Trans-European Networks for Energy (TEN-E) regulation for Projects of Common Interest (PCI) and Projects of Mutual Interest (PMI) in the hydrogen, electrolyser, and CO₂ infrastructure categories. The call is open until 30 September 2026.¹⁰ 

Projects ultimately included on the Union list stand to benefit from accelerated permit-granting procedures – a critical advantage in a sector where lengthy permitting timelines have historically been a significant bottleneck. 

Learnings from other countries 

As the EU and its member states seek to push its green hydrogen strategy, they can take some lessons from other countries that have already heavily invested in green hydrogen. Australia and Japan are two interesting green hydrogen economies to note.  

In Australia, significant investments have been made into developing a green hydrogen industry. An Australian think tank, the Grattan Institute, spells out key recommendations when developing the green hydrogen economy: (1) be strategic about the hydrogen opportunity; (2) use neutral contracts-for difference to close the green premium gap; (3) deliver cheap, green, reliable electricity; (4) unblock construction constraints; (4) use carbon pricing appropriately; (5) remove barriers to hydrogen use in other sectors; and (5) rule out further government investment in uses that appear less likely to prove viable.¹¹   

Japan also has ambitious green hydrogen goals, aiming to use green hydrogen to meet its commitment for net-zero emissions by 2050.  The Japan External Trade Organisation (JETRO) has reported that “Japan plans to invest approximately 15 trillion yen from the public and private sectors over the next 15 years to build a hydrogen supply chain, marking one of the most significant financial commitments to hydrogen technology globally”.¹² Through such investment, Japan aims to bring down the costs of producing green hydrogen and create infrastructure hubs to make hydrogen distribution across Japan easier. In addition, Japan has actively encouraged Japanese companies to patent technologies on green hydrogen, accounting for one-fourth of hydrogen technology patents worldwide.¹⁴ The creation of a pro-green hydrogen ecosystem by the Japanese government provides useful lessons for the EU.  

What is important to note is that it does not end with green hydrogen: the production of hydrogen derivates such as e-methane, e-methanol, ammonia, sustainable aviation fuel, and e-kerosene, are also part of the wider green hydrogen picture. While Australia is positioning itself more as a green hydrogen and hydrogen derivatives producer and exporter, Japan pushes its market to have a strong supply chain and boost hydrogen technology. The EU could take some lessons from Australia and Japan when developing a green hydrogen ecosystem amongst EU member states, focusing less on regulation today and more on a long term green hydrogen strategy for tomorrow.  

Practical Implications for Stakeholders 

What does this mean for market participants and stakeholders in the EU today: 

• Consider regulatory change and contractual protection. The RFNBO production criteria are likely to evolve further. Project documentation should incorporate robust grandfathering provisions and change-in-law protections to manage the risk that the rules applicable at the time of final investment decision may differ from those in force when the project becomes operational. 
• Assess carefully funding opportunities and state aid compliance. While multiple support programmes are now available, market participants must carefully assess the interaction of EU and national funding streams. State aid stacking and cumulation rules impose limits on total public support; failure to manage this can result in clawback obligations or disqualification. 
• Certification and traceability are key. The complexity of RFNBO certification should not be underestimated. As experience with biogas has demonstrated, ensuring alignment between Guarantees of Origin, Proofs of Sustainability, and Union Database entries – combined with robust contractual warranties on green attributes – will be decisive in determining whether renewable hydrogen is tradable and its green credentials claimable by end-users. 

Taken together, these signals suggest that the EU is entering a new phase of its hydrogen strategy – one in which regulatory strictness is being balanced by pragmatic measures to support investment and build the infrastructure on which a functioning market depends. The consultations now under way will determine how far and how fast that rebalancing goes. 

^{[1] Green hydrogen refers to hydrogen that is produced using electrolysis, whereby the electrolysis process is powered using renewable energy course (e.g. wind, solar, or hydro). See also, Renewable hydrogen - European Commission.
[2] Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources.
[3] Commission Delegated Regulation (EU) 2023/1184 and Commission Delegated Regulation (EU) 2023/1185.
[4] See also, EU Commission - Union Database for liquid and gaseous renewable and recycled carbon fuels-
[5] AccelerateEU – Energy Union - affordable and secure energy through accelerated action - Energy
[6] Communication from the Commission – AccelerateEU – Energy Union, COM(2026) 370 final, 22.4.2026, p 11.
[7] Competitive bidding - Climate Action - European Commission.
[8] EU-Wasserstoffauktion: BMWET lädt zur Online-Konsultation: Hypa
[9] Transformation der Industrie Ausschreibung April 2026 – Transformationszuschuss | Umweltförderung
[10] Call for applications: candidate energy infrastructure Projects of Common and Mutual Interest - hydrogen, electrolyser and CO2 category - Energy
[11] Grattan Institute, Hydrogen: hype, hope, or hard work?
[12] Japan's Hydrogen Revolution Attracts Global Players | Japan Insight - Insights - Investing in Japan - Japan External Trade Organization - JETRO
[13] Ibid.}