![\"\"](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/04\/hydrogen-1.png\" "\\"hydrogen")
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More recently, the European Union\u2019s 2022 response to the war in Ukraine \u2013 the REPowerEU Strategy<\/a> \u2013 called for producing 10 million metric tons of green hydrogen made from renewable electricity in the EU by 2030 and importing another 10 million to reduce dependence on Russian energy and nitrogen fertilizers. Prices of ammonia, a compound of hydrogen and nitrogen and the precursor for such fertilizers, more than tripled between July 2021 and April 2022. But BNEF expects Europe to meet just one-eighth of its REPowerEU production target.<\/p>\n \n\t\t\tThis time is no different\n\t\t\t<\/p>\n History is likely to repeat itself once again in the case of the Iran-war-induced energy shock \u2013 unless the affected governments put money on the table, as might be happening in China (more on that below).<\/p>\n The argument in favor of green hydrogen is typically that pricy natural gas makes gas-derived \u201cgray\u201d hydrogen and ammonia so costly that it would be cheaper to build green hydrogen projects. This was true in 2022 and is starting to happen right now.<\/p>\n The flaw in this argument is that an investor would have to believe gas prices will stay high for the entire 10- to 20-year economic life of their green hydrogen project. If past prices are any guide, that is unlikely.<\/p>\n This helps explain why the high ammonia prices in the wake of the Ukraine war have spurred few final investment decisions in green hydrogen projects. With ammonia prices well below their 2022 peaks, it\u2019s hard to see how 2026 would be any different, even if prices keep rising and stay high for many months.<\/p>\n \n\t\t\tEurope will not be an exception\n\t\t\t<\/p>\n One place that gets reminded<\/a> of its vulnerability each time there is an energy shock is Europe. European leaders have responded to the Iran war by emphasizing energy security and resilience, while some analysts and industry groups argue the crisis strengthens the case for alternatives such as hydrogen and synthetic fuels.<\/p>\n Calls for green hydrogen would be more believable if Europe were on track to meet its existing hydrogen targets. The biggest such target is the Renewable Energy Directive (RED III)<\/a>\u2019s mandate to use green hydrogen in industry and transport. It should create at least 2.1 million tons per year (Mt\/year) of green hydrogen demand in 2030 and 2.8Mt\/year in 2035, from near zero today \u2013 if met. However, only a few EU member states are on track to meet their 2030 quotas.<\/p>\n Europe is also considering loosening penalties<\/a> for missing the green hydrogen-based fuel quotas in the ReFuelEU Aviation Regulation, according to the newspaper Politico. The EU has denied<\/a> such plans in comments for newspaper Hydrogen Insight, but fuel suppliers and airlines are clearly worried about meeting the so-called \u201ce-SAF\u201d mandate.<\/p>\n If Europe is failing to meet its existing and legally binding quotas, it\u2019s hard to believe that it would meet any hypothetical new targets in response to the Iran war.<\/p>\n \n\t\t\tReplacing Middle East with Middle East\n\t\t\t<\/p>\n One last irony is that Europe plans to import some of its green ammonia from the Middle East, undermining the argument that using green ammonia reduces dependence on Middle Eastern energy imports.<\/p>\n The largest green ammonia project under development with export plans to Europe, Saudi Arabia\u2019s Neom, is not immune from Iranian attacks despite being on the Red Sea coast, on the other side of the Arabian Peninsula from the Strait of Hormuz. The Red Sea port of Yanbu, where an even larger export-oriented project is being planned, was attacked in March by a drone and a ballistic missile.<\/p>\n Relying on Middle Eastern clean ammonia and hydrogen may be one of the lower-cost routes to decarbonize Europe\u2019s fuel and fertilizer demand, but it is not a strongly diversified energy security strategy. Investors may notice that now more than before.<\/p>\n \n\t\t\tChina could be an exception\n\t\t\t<\/p>\n One place where a credible policy push may be underway is China. China is heavily reliant on oil and gas imports from the Middle East. It imports up to 75% of its oil and is the world\u2019s largest importer of natural gas. It also consumes 90% of Iran\u2019s oil exports. This month, the Chinese government announced plans for a low-carbon transition fund<\/a> to provide direct financial support for the development of domestic green hydrogen and derived fuels such as green ammonia and methanol. Large-scale green hydrogen use for coal substitution and green fuel production is also a pillar of China\u2019s 15th Five-Year Plan; see China\u2019s 15th Five-Year Plan: Pivot for Quality.<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/04\/hydrgoen-2.png\" "\\"hydrgoen")
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