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The long-term outlook for clean hydrogen and ammonia projects in Europe looks promising, but last year saw several setbacks around commercial viability and competition from oil and gas. However, the regulatory environment remains positive, writes Massimo Amoruso, Partner and energy law specialist at Mayer Brown.
Last year, 2025, was a challenging year for clean hydrogen and ammonia. The initial ambition of the post-pandemic years met the hard edge of commercial reality, infrastructure timing and standard-setting – and the geopolitics of a renewed focus on oil and gas from the US. The result is a market that, while still in its infancy, is slowly shifting from exuberance to execution.
Across 2025, a string of project cancellations and deferrals, and outright market exits, has exposed a wide and persistent gap between offer and demand – on both price and the flexibility of supply terms.
Even after accounting for incentives, many offtakers have struggled to accept the increased costs of clean hydrogen ('green' produced from renewable energy and electrolysis, and 'blue' produced from fossil gas with carbon capture), especially when coupled with supply terms which cannot match the degree of flexibility offered by traditional 'grey' hydrogen (produced from natural gas), piped gas and LNG.
Without significant changes in the market price of oil and gas or in the cost of clean hydrogen production, the gap is unlikely to narrow in the near future. The consequence is a market-wide attempt to reset risk sharing and delivery profiles, and to solve the infrastructure issues.
Despite these headwinds, the regulatory environment remains fundamentally favourable in both the UK and EU, with policy instruments that – on paper – support scale-up and cross-border trade, while the UK continues to advance a twin‑track approach for green and blue hydrogen. In the EU, hydrogen is embedded across the Green Deal, Fit for 55, and REPowerEU initiatives.
As well as this, auctions and import tenders are designed to reveal prices and close the green premium, while maintaining integrity through rules on renewable fuels of non‑biological origin (RFNBO), such as the ongoing Hintco tender in Germany.
Credibility of a project is first and foremost a function of a bankable offtake. In turn, this requires a sound commercial rationale for both seller and buyer alike.
Implementation slowed across 2025
Yet implementation has slowed across the board, in particular when it comes to enabling infrastructure. Many projects have been announced, but few funded and even fewer being delivered. Political shifts, administrative bottlenecks, permitting timelines and the complexity of aligning additionality rules and performance thresholds have all extended delivery schedules.
A second shift in 2025 was the explicit reframing of supply persification – from a decarbonisation side benefit to a strategic geopolitical necessity. For Europe, establishing resilient molecules-to-market pathways – via domestic production, cross‑border pipelines and import corridors from North Africa and the Gulf – is quickly becoming a core energy security objective as much as a climate measure.
Here, ammonia remains pivotal: it is a tradable commodity, a dense hydrogen carrier and a practical route to accelerate low‑carbon fertilisers and maritime bunkering while other applications continue to mature.
In this more cautious cycle, prioritisation matters even more. Hydrogen should first displace fossil inputs where electrification is impractical – for example, with high‑temperature industrial heat, certain chemicals and steel via direct reduced iron (DRI) – while heavy transport and shipping could potentially follow at a later stage when infrastructure is scaled and low‑value grid blending is avoided.
Credibility of a project is first and foremost a function of a bankable offtake. In turn, this requires a sound commercial rationale for both seller and buyer alike.
Long-term outlook is positive
The long‑run outlook remains promising but conditional. After the great culling of 2025, the most commercially and economically sound projects remain in development. If policymakers unblock delivery, and industry rebalances contracting to reflect real demand and operational flexibility, hydrogen and ammonia can transition from hype to habit, anchoring a cleaner and more secure European energy system.
The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.
- Further reading: 'Are ammonia-fuelled ships a viable alternative option for greener maritime operations?'. Discover more about the pros and cons of using ammonia as fuel for shipping operations.
- 'From models to markets: MIT maps ammonia pathways as Europe secures green supply from India'. A new US Massachusetts Institute of Technology study has quantified the cost and emissions trade-offs of global ammonia production and trade, just as Europe secures one of its first large-scale green ammonia supply corridors through a long-term offtake agreement between German energy major Uniper and India's AM Green.
Originally published by Energy Institute on the 4th of February, 2026.
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