Europe’s regulatory framework for hydrogen: What lies ahead for the industry?
The 2024 Gas and Hydrogen Package constitutes the largest legislative development in the European gas market in over a decade. Member States now have until mid-2026 to translate the provisions of the Hydrogen Package and its Directive into national law. Experts from Magnus Energy outline what the regulatory framework means for hydrogen producers, offtakers and network operators.
The Package builds on previous legislation promoting the European Union’s climate targets and its Hydrogen Strategy, with the objective of laying the regulatory foundation for decarbonizing the European gas sector and the build-up of an integrated hydrogen market.
Detailing provisions on market design and infrastructure development, the Gas and Hydrogen Package continues to prioritise energy security whilst promoting a competitive and innovative hydrogen sector in the interest of a cost-effective energy transition – including in those sectors where emissions are hard to abate.
Recognising the nascent nature of the hydrogen market, the Hydrogen Package intends to minimise administrative complexity in the early stages, delaying strict market governance obligations until 2033 and providing flexibility through derogations in the interim. The package also introduces necessary certainty for investors, offtakers and producers.
Following the July 2025 adoption by the European Commission and the forthcoming review of the Act by the European Parliament and Council until November 8, the implementation milestones on European and national level are:
What is the EU Gas and Hydrogen Decarbonisation Package?
The EU Gas and Hydrogen Decarbonisation Package, consisting of the revised Gas and Hydrogen Regulation and Directive, was adopted in August 2024. The Package updates the common rules for the internal market of natural gas. It introduces a new regulatory framework for hydrogen, aligning it with the Union’s decarbonisation objectives under the European Green Deal.
The introduction of EU-wide rules for the hydrogen market aims to facilitate the cost-effective development of hydrogen infrastructure and support the uptake of renewable and low-carbon gases, particularly hydrogen, across the EU.
What is new in EU hydrogen regulations in 2025?
Complementing the existing EU framework for renewable (RFNBO-qualified) hydrogen following the revised Renewable Energy Directive (REDIII) and its Delegated Acts, the Gas and Hydrogen Package introduces, for the first time, a legal definition of low-carbon hydrogen. A respective Delegated Act on low-carbon fuels, including hydrogen, was adopted by the Commission in July 2025.
What does the Gas and Hydrogen Package focus on?
Prioritising the integration of renewable and low-carbon gases, including hydrogen, in Europe’s gaseous energy mix, the Gas and Hydrogen Package introduces various measures to incentivise their market uptake, including provisions for unfettered market access and tariff discounts.
By 2033, European hydrogen networks are to be organised as an entry-exit system with a virtual trading hub, as is the case for natural gas. Accompanying the introduction of this access model is the requirement for harmonised tariff structures via a regulated third-party access regime by the same deadline.
Which (new) hydrogen actors and responsibilities are foreseen?
The revised Package introduces new actors in the hydrogen market and details their respective responsibilities. Akin to the natural gas sector, the regulatory framework differentiates between Hydrogen Network Operators at the transmission and distribution level, assigning them diverging roles and obligations, particularly in terms of unbundling, planning and operational requirements.
Further details, in areas such as capacity management or balancing rules, are yet to be formulated in subsequent network codes.
The European Network of Network Operators for Hydrogen (ENNOH) represents a key addition to the pan-European governance structure, next to ENTSO-G and ENTSO-E. To be established in 2025, the ENNOH will function as a forum for cooperation between Hydrogen Transmission Network Operators and oversee infrastructure development.
Importantly, the ENNOH will be responsible for developing and publishing the ten-year network development plan for hydrogen from 2028 onwards in cooperation with ENTSO-G and ENTSO-E.
What is foreseen for the physical hydrogen infrastructure?
Substantiating the objective of a cost-effective transition, the revised Package creates conditions conducive to the repurposing of natural gas infrastructure for hydrogen. Transparency requirements between gas and hydrogen network operators, joint network and decommissioning planning, and provisions for administrative streamlining are intended to facilitate the resource-efficient infrastructure buildout.
What is foreseen for the hydrogen network costs?
The Gas and Hydrogen Regulation introduces inter-temporal cost allocation as a financial mechanism for Hydrogen Network Operators to spread the recovery of network costs via access tariffs over time, intended to reduce the financial burden on first movers by ensuring the contribution of future users to initial network development costs.
