The New Development of Hydrogen Energy in Europe: Cooperation Between Denmark and Germany
In recent years, hydrogen has faced significant credibility challenges. Not because the technology has become unreasonable, but simply because expectations have consistently outpaced reality. Countries have announced hydrogen strategies worth hundreds of billions of euros, while numerous companies have presented ambitious projects from Portugal to Poland. Analysts have predicted that a hydrogen economy would help reduce carbon emissions in industries such as steel, chemicals, shipping, and aviation.
However, this was followed by an inevitable adjustment. Costs remained higher than anticipated, and capital became more difficult to raise as interest rates increased. Many key projects have been delayed, scaled down, or quietly canceled. Investors have begun asking uncomfortable questions about whether hydrogen can ever achieve commercial viability without long-term government support.
The result is that hydrogen has gradually become one of the most questioned energy transition technologies. Not due to a lack of potential, but because many are beginning to wonder whether the market will ever move beyond announcements and PowerPoint presentations.
Noteworthy Cooperation Between Denmark and Germany
This is precisely why the latest development between Denmark and Germany is so significant. Three Danish hydrogen projects have received a total of 1.3 billion euros in support from Germany, with Everfuel receiving 244.9 million euros, European Energy receiving 228 million euros, and Copenhagen Infrastructure Partners (CIP) receiving approximately 777 million euros. These projects will supply green hydrogen to Germany through the Danish Hydrogen Network, expected to be operational before the end of this decade.
At first glance, this might appear to be just another support announcement in a field that has seen many similar announcements. In reality, it represents Europe's first serious attempt to build an international hydrogen market that actually functions.
Solving Hydrogen's "Chicken and Egg" Problem
The greatest challenge facing hydrogen is not the electrolyzers themselves, nor the availability of renewable energy. The real issue is that no one wants to be the first mover. Hydrogen producers hesitate due to uncertainty about demand. Industrial consumers also hesitate because they cannot guarantee future supply. Infrastructure developers wait for production projects, while project developers wait for pipelines.
The result is a classic "chicken and egg" problem that has slowed down countless industrial transitions throughout history.
Through this funding mechanism, Germany has reduced uncertainty across the entire value chain. Suddenly, producers can see a market. Industrial consumers can see future supply. Infrastructure developers can see future volumes. Investors can see future cash flows.
Denmark's Next Energy Success Story
What makes this announcement particularly interesting is the role Denmark is establishing. For decades, Denmark has maintained its position in energy markets. The country pioneered modern wind energy development before offshore wind became one of Europe's most important energy sectors.
Today, Denmark's expertise, companies, and supply chains are present across global renewable energy sectors. Hydrogen is increasingly becoming the next chapter in that story.
| Project | Company | Funding Amount (Million Euros) |
|---|---|---|
| Frigg | Everfuel | 244.9 |
| Kass | European Energy | 228 |
| Hst | CIP | 777 |
The projects receiving support are large and industrial-scale, not technology demonstration projects. This is crucial as it signals a shift from testing to deployment.
Germany's Industrial Realities
Germany's motivation is also noteworthy. The country is increasingly recognizing that electrification alone will not be sufficient to decarbonize its industrial base. Renewable electricity can address many issues, but sectors like steel, chemicals, refining, fertilizers, and high-temperature industrial processes need more than just electricity.
They need molecules. Hydrogen is increasingly being seen as one practical pathway to decarbonize these sectors while maintaining industrial competitiveness. However, Germany also realizes that domestic production will likely be unable to meet future demand.
The solution is increasingly resembling Europe's historical approach to importing energy from neighboring countries through dedicated infrastructure. The difference is that this time, the molecules are "green."
Thus, the Danish-German hydrogen corridor is emerging similarly to the early development of Europe's gas network a few decades ago. The difference is that the infrastructure will connect renewable energy sources with industrial demand, rather than connecting gas fields with industrial centers.
Infrastructure More Important Than Electrolyzers
Perhaps the most important aspect of the entire announcement is not the production facilities but the connecting infrastructure. Energy history has shown that technologies transform only when infrastructure develops alongside them.
Oil became dominant because pipelines, ports, refineries, and distribution networks emerged around it. Natural gas expanded because transmission systems connected producers and consumers across national borders.
Hydrogen will be no different. The Danish Hydrogen Network may prove more important than any individual project connected to it. When a pipeline exists, future projects become easier to finance. New industrial customers confidently convert their operations. Additional production facilities become less risky to develop.
Infrastructure creates choice, and choice attracts investment. That is why this announcement should be viewed as support for an entirely new industrial energy system.
Europe's Hydrogen Recovery
Over the past two years, many observers have questioned whether Europe's hydrogen ambitions are realistic. Some skepticism is well-founded. Implementation times have proven overly optimistic, costs remain stubborn, and the market needed a reality check after years of hype.
However, adjustments do not equal failure. The most powerful energy transitions rarely follow a straight line. They go through cycles of excitement, disappointment, consolidation, and finally maturity. Offshore wind followed this exact path. Solar energy did too.
Hydrogen increasingly appears to be entering its final phase. The latest agreement between Denmark and Germany does not mean Europe suddenly has a developed hydrogen economy. Costs remain challenging, infrastructure still needs to be built, and demand must continue to grow.
What it does mean is that Europe is finally beginning to address the practical challenges that have held back the sector. For years, hydrogen has been primarily a vision for the future. With 1.3 billion euros now committed, industrial projects moving forward, and cross-border infrastructure taking shape, it is beginning to look like a real industry. And when industries become investable, they often grow faster than anyone expects.
— Leon Stille for Oilprice.com