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17 July 2026Press Release
Brussels, 17 July
The European Commission today published its revision of the EU Emissions Trading System (EU ETS) as well as its Electrification Action Plan (EAP). Both files carry important implications for hydrogen.
EU ETS
The ETS is the main scheme underpinning Europe’s carbon market. The proposal aims to ensure that the revenues from carbon costs provide tangible results for Europe’s decarbonising industry.
The revision introduces a conditional allowance scheme that ties part of the free allocation to investment in clean processes rather than granting it unconditionally; helping decarbonisation technologies like hydrogen reach final investment decisions faster. The proposal also tightens rules to ensure more revenues go to industrial decarbonisation on the Member State level.
Hydrogen Europe welcomes that the proposal also extends the “conditional allowance” logic to its aviation and maritime segments, creating a strong market for made-in-Europe sustainable aviation fuel (SAF) and e-SAF, while mirroring this model for the maritime sector.
Hydrogen Europe nevertheless regrets seeing the loosening of the overall ambition of the EU ETS (through the scheme’s linear reduction factor). A strong and robust carbon price, underpinned by an ambitious ETS is essential to achieving financially viable industrial decarbonisation in Europe.
Jorgo Chatzimarkakis, Hydrogen Europe’s CEO, commented on the ETS revision: “This is a strong signal that Europe is moving from climate ambition to delivery. Hydrogen Europe commends the introduction of investment allowances, as well as the new SMAP mechanism for maritime, which reflects our long-standing proposal to accelerate the uptake of sustainable maritime fuels through targeted ETS support. The proposal also rightly reinforces the principle that ETS revenues should be reinvested into Europe’s industrial transformation, helping maintain competitiveness, strengthen resilience and secure quality jobs.”
Industrial Decarbonisation Bank (IDB)
As part of the ETS revision, the Commission also proposed the legal basis for a €100 billion Industrial Decarbonisation Bank. The IDB will focus on energy intensive industries, addressing the funding gap linked to commercial risks of mature projects to enable large-scale deployment and market uptake of decarbonisation solutions. Hydrogen Europe is pleased to see a focus on supporting mature projects and the new funding for commercial (rather than technological) risk.
The proposal now moves to co-decision between the European Parliament and Council, with negotiations expected through 2026 and 2027 and implementation targeted for 2028. For investment certainty and for a predictable and robust carbon price, a swift legislative process is advised.
Electrification Action Plan
Today, the European Commission also published its Electrification Action Plan, which aims to accelerate the shift from fossil fuels to electricity across end-use sectors: industry, transport and buildings.
The Plan proposes a new electrification target for final energy consumption by 2040 of 46%, subject to an impact assessment by the Commission as part of the Energy Union Package.
The Plan also recognises the need to bring a lot more flexibility into a renewables-dominated system; setting targets to develop storage, and industrial demand flexibility, where hydrogen is identified as key contributor. The EC commits to a revision of the EU Hydrogen Strategy in 2026/2027 to reflect this role. The EAP is accompanied by a new Proposal for a Regulation amending Regulation (EU/2019/943) for future-proof network charges.
Daniel Fraile, Chief Market & Regulation Officer at Hydrogen Europe, added: “Europe’s Electrification Action Plan rightly recognises that moving away from fossil fuel dependency is the route to competitiveness, security of supply and lower energy prices. Hydrogen and Power-to-X are part of that story, not an afterthought. Grid-connected electrolysis is both an electric consumer and enabler of electrification through flexibility and long-duration energy storage.”
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