A Pipeline from Nowhere to Nowhere
The 400 km European hydrogen backbone segment with no suppliers and no offtakers—a pipeline from nowhere to nowhere—delivers a critical lesson: decarbonization succeeds or fails on demand realism, not technological aspiration.
The Grid Expansion That Never Happened
Europe knew by the late 2000s that deep electrification would sharply increase electricity demand. Conservative scenarios showed demand rising 40–70% by mid-century, with Germany alone projected to jump from 500 TWh to 650–750 TWh annually by 2035–2040. This demanded early, sustained transmission expansion to move renewable electricity from generation centers to industrial demand zones.
That expansion never materialized at the required pace. Germany added wind and solar far faster than transmission—onshore wind capacity rose from 27 GW in 2010 to over 60 GW by the early 2020s, while major north-south corridors lagged by a decade. The result: Germany curtailed more than 6 TWh of renewable electricity annually, with localized rates exceeding 10%. This was electricity already paid for through feed-in tariffs, electricity that could have displaced fossil generation, thrown away because the grid couldn't carry it.
Curtailment creates the illusion of surplus electricity, which hydrogen advocates pointed to as justification for large-scale electrolysis. In reality, curtailed electricity signals grid bottlenecks, not abundant cheap power. Building electrolyzers into constrained regions doesn't solve constraints—it adds competing load and pushes up local prices while still requiring transmission investment.
China and India Did the Opposite
Both countries built transmission ahead of demand, with visible results in lower curtailment and faster renewable integration.
China invested heavily in ultra-high-voltage transmission, building over 40,000 km of UHV lines to move wind and solar from western and northern regions to eastern industrial centers. While curtailment exceeded 10% in some provinces during the early 2010s, sustained grid expansion reduced national average curtailment to low single digits by the early 2020s, even as renewable capacity continued growing rapidly.
India followed similar logic through coordinated national planning, accelerating transmission alongside its 500 GW non-fossil capacity target by 2030. By prioritizing renewable evacuation corridors and interregional links, India reduced stranded asset risk and limited curtailment. Both countries treated periods of underused transmission as a feature rather than failure, enabling cleaner electricity to reach demand as electrification expanded.
Seven Critical Policy Lessons
Lesson 1: Infrastructure doesn't create markets
The hydrogen backbone assumed that if pipelines existed, users would follow. This ignores decades of energy system experience: demand follows price and reliability, not steel in the ground. Industrial users require long-term price certainty and competitive parity. Green hydrogen at $8–12 per kg cannot compete with fossil hydrogen at $1–2 per kg or direct electrification at $0.05–0.08 per kWh. No pipeline capacity changes that arithmetic. Building infrastructure without binding offtake agreements shifts risk from private investors to ratepayers and taxpayers.
Electricity transmission is fundamentally different. Broad, rising demand already exists across households, commerce, industry, and transport. Electric vehicles, heat pumps, data centers, and industrial motors connect to a system already serving hundreds of millions of customers. When transmission is built ahead of load, it enables lower-cost generation to reach existing customers immediately, reduces congestion, lowers wholesale prices, and improves reliability. Unlike hydrogen pipelines requiring entirely new markets at specific nodes, electricity transmission serves an established and expanding market from the moment it's energized.
Lesson 2: Material and conversion losses compound brutally
Policy models repeatedly used optimistic assumptions that compressed or ignored losses. Electrolysis efficiency was assumed at 75–80%, compression and storage losses minimized, pipeline losses dismissed, reconversion losses treated as secondary. When compounded, delivering 1 kWh of useful energy through hydrogen often requires 2.5–3.5 kWh at generation. Direct electrification typically requires 1.05–1.2 kWh. Policy treating these pathways as interchangeable misallocates scarce clean electricity and drives up system costs.
Lesson 3: Opportunity cost is staggering
Capital deployed into hydrogen pipelines, storage caverns, and underused electrolyzers is capital not deployed into grid reinforcement, distribution upgrades, and firmed renewable generation. The European hydrogen backbone is expected to cost $80–100 billion. For comparison, $100 billion invested in transmission and distribution can unlock hundreds of gigawatts of renewable capacity and support tens of millions of electric vehicles and heat pumps. The returns—measured in avoided fuel costs and emissions reductions per dollar invested—aren't close.
Lesson 4: Global competitiveness trumps regional aspiration
European green steel strategies assumed customers would pay a durable premium of $100–200 per ton for hydrogen-based steel. This conflicts with observed market behavior. Automotive and construction buyers operate in global markets with tight margins. Even a $100 per ton premium translates into tens of dollars per vehicle, material in competitive markets. Producers in regions with cheaper electricity, better transmission, and closer iron ore access will undercut European producers if policy relies on premiums rather than cost reduction.
Lesson 5: Institutional learning speed matters
Evidence against broad hydrogen-for-energy use accumulated steadily over the past decade. Battery costs fell from over $1,000 per kWh in 2010 to under $150 per kWh by the early 2020s. Heat pump performance improved while costs declined. Grid-scale storage scaled faster than projected. Hydrogen costs didn't follow comparable trajectories. Yet policy frameworks adjusted slowly because models, funding programs, and bureaucratic mandates were built around earlier assumptions. Effective climate policy requires mechanisms forcing periodic reassessment against observed data, with willingness to shut down underperforming programs.
Lesson 6: Sequencing determines success
Electrification increases electricity demand. That demand should trigger early investment in generation and transmission, not follow it. Europe inverted that sequence—building variable renewable generation rapidly without sufficient grid expansion, then attempting to absorb the resulting imbalance by creating hydrogen demand.
The effective sequence is straightforward: First, expand transmission and distribution to eliminate curtailment and reduce congestion. Second, electrify end uses that are already cost-effective—light-duty transport, space heating, low-temperature industrial heat. Third, allocate remaining clean electricity to niche hydrogen uses where no direct alternative exists, as industrial feedstock where hydrogen is the only molecule that will do. This minimizes wasted energy, reduces total system cost, and limits hydrogen to roles where its inefficiencies are unavoidable rather than elective.
Lesson 7: Ambition requires discipline
This isn't an argument against ambition—it's an argument for discipline. Decarbonization is constrained by physics, capital, and time. Policies that assume demand into existence, ignore grid realities, or treat all clean molecules and electrons as interchangeable will repeat the same mistakes.
The Path Forward
Build the grid early. Let real demand pull infrastructure into place. Use hydrogen sparingly as an industrial feedstock, not a Swiss Army knife. The transition will move faster and cost less if policy follows evidence rather than aspiration. Europe needs to drop its hydrogen dreams and commit to rapid buildout of the mesh HVDC grid it needs.
