What could RED IV mean for Europe’s renewable hydrogen market?

Europe’s approach to supporting renewable hydrogen could change significantly after 2030. 

The European Commission is developing the fourth Renewable Energy Directive (RED IV), which will shape the EU’s post-2030 renewable energy framework. A draft impact assessment leaked in September 2026 suggests policymakers are considering a different approach to hydrogen from that established under RED III. 

The document is not adopted policy. The Commission is expected to publish its legislative proposal before the final framework is negotiated by the European Parliament and Council. 

But the direction under consideration raises an important question for the hydrogen industry: if binding EU-level targets become less prominent, what will drive demand after 2030? 

How could RED IV change renewable hydrogen requirements? 

The leaked assessment points towards a more flexible framework for renewable and low-carbon hydrogen. 

In transport, obligations on fuel suppliers could remain, but implementation would increasingly sit at member-state level rather than being driven by a standalone EU-wide quota. The proposals also contemplate broadening the types of hydrogen and electricity sources eligible for compliance. 

For industry and refining, the change could be greater still. Instead of continuing the current model of binding national RFNBO requirements, the draft considers moving towards an indicative EU-level hydrogen target for 2040. 

That distinction matters. A binding mandate creates a clearer compliance-driven source of demand. An indicative target may give governments and companies more flexibility, but it also puts greater emphasis on the policies, incentives and market mechanisms used to translate ambition into actual hydrogen consumption. 

Why is the EU considering a different approach? 

The proposals reflect a difficult reality for Europe’s emerging hydrogen market. 

Renewable hydrogen has faced persistent challenges around production economics, infrastructure development and demand creation. These conditions have made the pace of market development slower and more uncertain than earlier European ambitions implied. 

Broadening eligibility to include additional forms of low-carbon hydrogen could therefore give policymakers another way to support hydrogen deployment while maintaining decarbonisation objectives. 

For developers and producers, however, the important issue is not simply the size or structure of a future target. It is whether the framework creates sufficiently predictable demand to support projects and investment decisions. 

What would the changes mean for hydrogen producers and developers? 

If the framework develops along the lines set out in the leaked assessment, hydrogen producers could face a more varied European market after 2030. 

National implementation may become more important, while a broader range of hydrogen production pathways could compete to meet demand. That could create opportunities for some producers, including suppliers outside the EU, while changing the competitive environment for projects developed around the existing RFNBO framework. 

The assessment also considers mechanisms intended to connect hydrogen use across different sectors. Depending on their eventual design, these could give producers greater flexibility in how they participate in European compliance markets. 

Much will depend on the detail, however. The way targets are translated into national policy, the treatment of different hydrogen pathways and the interaction between industrial and transport demand could all materially affect project economics. 

Could removing binding quotas weaken hydrogen demand? 

This is arguably the central question raised by the draft. 

Replacing binding requirements with a more flexible framework could help address some of the challenges policymakers have encountered in scaling renewable hydrogen. But greater flexibility can also mean less certainty over where demand will emerge and how quickly. 

Parts of the hydrogen industry have already argued for continued binding RFNBO requirements beyond 2030, highlighting the tension facing policymakers: balancing achievable decarbonisation rules with enough long-term visibility to support investment. 

From Wood Mackenzie’s perspective, the crucial issue will therefore be how policy ambition translates into bankable demand. 

The headline targets matter, but so do the mechanisms beneath them: national implementation, incentives, compliance rules and the interaction between transport, industrial and refining demand.

Why does refinery hydrogen matter under RED IV? 

One area requiring particular clarification is the treatment of refineries. 

Under the existing framework, refinery hydrogen can interact with transport-fuel compliance requirements. The leaked proposals also bring refining into the scope of the future industrial framework. 

How policymakers reconcile those two routes will have implications for member states that have developed hydrogen strategies around refinery demand, as well as for producers assessing where future European demand could emerge. 

This illustrates a wider issue with the draft: the direction of travel may be becoming clearer, but many of the rules that will ultimately determine commercial outcomes are not. 

What should the hydrogen industry watch next? 

Three questions will be particularly important as RED IV develops: 

• How will Europe create durable hydrogen demand if binding EU-level mandates are reduced? 

• How will industrial, refining and transport demand interact under the new framework? 

• Will the eventual incentives and compliance mechanisms provide enough certainty to support project development? 

The Commission’s eventual proposal will be only the next step. The European Parliament and Council will then shape the legislation before the framework is finalised. 

For hydrogen producers, developers and buyers, the significance of RED IV will therefore extend beyond any single target. The bigger question is what type of European hydrogen market the post-2030 rules are designed to create, and whether that framework can provide the demand certainty needed for the sector to scale. 

Wood Mackenzie will continue to assess how the evolving RED IV framework could affect hydrogen demand, project economics and market development across Europe and the wider global hydrogen value chain.