The EU Renewable Energy Directive (RED III), requires that 42% of hydrogen used in industry be sourced from renewables by 2030, increasing to 60% by 2035, with renewable fuels of non-biological origin (RFNBOs) accounting for at least 1% of transport sector energy. Member States had to transpose the directive by May 21, 2025.

Although on May 28, 2025 an analysis of member states’ energy and climate plans for the coming years emissions pointed to 54 percent emission reductions by 2030 compared to 1990, very close to its 55 percent target, the REDIII targets still seem to be crucial for reaching EU’s emission reduction goals as the EU Commission will start to take infringement action against EU member states that have not fully implemented the Renewable Energy Directive (RED III). Triggered by slowing investment decisions the EU Commission also announced new hydrogen supply demand support schemes by September 2025.

The Commission already initiated infringement packages against eight countries beginning 2025 for missing mid-2024 permitting deadlines, including Bulgaria, Spain, France, Italy, Cyprus, Slovakia, Sweden, and the Netherlands. Romania and Czechia are the only two Member States have fully transposed RED III quotas for both transport and industrial hydrogen use, with consultations ongoing in other member states, including the Netherlands and Germany.

Production costs in Germany are estimated at EUR8.13/kg ($9.31/kg) as of June 5, down from a peak of EUR14.50/kg ($16.62/kg) in mid-December.