Hydrogen to Substitute Natural Gas in Europe in the Medium Term
Europe is accelerating its shift away from natural gas toward hydrogen as a cornerstone of its decarbonization strategy. Driven by the REPowerEU plan and the European Green Deal, the EU aims to produce 10 million tonnes (Mt) of renewable hydrogen domestically and import another 10 Mt by 2030. This ambition seeks to reduce dependence on fossil fuels, enhance energy security, and cut greenhouse gas emissions in hard-to-abate sectors.
Natural gas has long powered European industry, heating, and power generation. However, geopolitical tensions, particularly the reduction in Russian pipeline supplies since 2022, have exposed vulnerabilities. EU natural gas consumption has already declined significantly—by about 18% in 2023 compared to the 2017-2021 average—thanks to efficiency measures, milder weather, and a pivot to LNG and renewables. Hydrogen offers a cleaner alternative: it can be produced via electrolysis using renewable electricity (green hydrogen) or from natural gas with carbon capture (blue hydrogen as a bridge). In the medium term (2030-2040), hydrogen is expected to replace natural gas in industrial processes like steelmaking, chemicals, refining, and high-temperature heat where direct electrification is challenging.
A key enabler is the European Hydrogen Backbone initiative. This envisions a pan-European network of over 28,000 km of pipelines by 2030, expanding to more than 50,000 km by 2040. Much of this will come from repurposing existing natural gas infrastructure, which is cost-effective (repurposing can cost only 30% of new builds) and accelerates deployment. Countries like Germany have already advanced hundreds of kilometers of dedicated hydrogen pipelines, while projects such as H2Med aim to link Iberian production with Central Europe. Blending hydrogen into gas grids is being tested, but full conversion to pure hydrogen transport is the long-term goal.
Progress is uneven but promising. Northwest Europe leads with ambitions for 30-40 GW of electrolyser capacity by 2030. Industrial clusters in the Netherlands, Germany, and Belgium are prioritizing hydrogen for decarbonizing refineries and ammonia production. Imports from North Africa, the Middle East, and Norway via pipelines and ships will complement domestic efforts. National strategies vary: Austria focuses on renewable hydrogen and infrastructure repurposing, while Belgium positions itself as an import hub.
Challenges remain significant. Green hydrogen is currently 3-4 times more expensive than grey hydrogen from natural gas, though costs are expected to fall with cheaper renewables and scale. Infrastructure gaps, regulatory hurdles, and the need for massive renewable electricity expansion persist. Storage and seasonal balancing also require attention, as does ensuring a level playing field through certification and CO₂ pricing.
By 2035-2040, hydrogen could displace substantial volumes of natural gas, particularly in industry and heavy transport, supporting the EU's 2050 climate-neutrality target. While not a complete substitute in all applications—direct electrification and heat pumps will dominate buildings and light transport—hydrogen will provide flexibility and energy security. With coordinated investment in production, infrastructure, and imports, Europe is on track to make hydrogen a viable medium-term replacement for natural gas, fostering a resilient, low-carbon energy system.
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