EU Allocates €2.9 Billion for Hydrogen Fuel in Aviation and Shipping

(EUROPE (EU)) The European Union has launched a €2.9 billion funding initiative to speed up the development and market uptake of hydrogen-based fuels in aviation and shipping, marking its most sweeping push yet to cut emissions from two of the hardest-to-abate sectors. Framed under the Sustainable Transport Investment Plan and unveiled on November 5, 2025, the package directs money to new fuel production, aircraft and vessel technologies, and supporting infrastructure, with a dedicated €300 million window via the European Hydrogen Bank to boost hydrogen-based fuels.

Commissioner for Sustainable Transport and Tourism, Apostolos Tzitzikostas, said the plan is designed to move from pilots to scale and tie industrial policy to climate goals.

“Our Sustainable Transport Investment Plan is a decisive step towards a sustainable future. It’s not just about cutting emissions – it’s about building a stronger, more competitive and resilient Europe that leads in sustainable transport. This ambitious plan shows the Commission’s firm commitment to scaling up renewable and low-carbon fuels in aviation and waterborne transport. Success will depend on close cooperation among Member States, industry, financiers and civil society to turn this challenge into a strategic opportunity for Europe.”

The funding is structured to create demand for hydrogen-based fuels while unlocking private capital for production and deployment. The Commission said €2 billion will be mobilized through InvestEU for sustainable alternative fuels until 2027, aiming to de-risk early projects that struggle to secure bank finance. Another €300 million is reserved for hydrogen-based aviation and maritime fuels through the European Hydrogen Bank, with a call for proposals opening by the end of 2025. The Innovation Fund will provide €446 million for synthetic aviation and maritime fuel projects, and €133 million will go to research and innovation under Horizon Europe. An eSAF Early Movers Coalition pilot will also be launched by the end of 2025, with the goal of mobilizing at least €500 million for synthetic aviation fuel projects in cooperation with committed Member States.

Regulators and industry see the package as a way to bridge the gap between EU climate rules and current market realities. Under the ReFuelEU Aviation and FuelEU Maritime Regulations, the bloc needs around 20 million tonnes of sustainable alternative fuels by 2035, including 13.2 million tonnes of biofuels and 6.8 million tonnes of e-fuels. The Commission estimates about €100 billion in investment is needed by 2035 to meet those requirements. By pooling public money through InvestEU, the Innovation Fund, Horizon Europe, and the European Hydrogen Bank, the EU aims to crowd in capital for first-of-a-kind plants and build confidence in long-term offtake contracts.

Officials said the initiative is not just about writing cheques but setting up a pipeline of bankable projects tied to clear climate targets. The Commission expects funded projects to cut 221 million tonnes of CO2 equivalent in their first decade of operation, a figure that underscores the scale of change required to decarbonise planes and ships. Hydrogen-based fuels, including green hydrogen and synthetic fuels made from renewable electricity and captured CO2, are central to that effort because batteries alone cannot power long-haul aircraft or large ocean-going vessels at scale with current technology.

Early projects across northern Europe offer a glimpse of what the plan aims to multiply. In Rjukan, Norway, the RjukanLH2 project is receiving €31.5 million to build what is billed as the Nordic region’s first production plant for zero-emission liquid hydrogen, supplying the maritime sector’s emerging demand.

“At Rjukan, we are building Norway’s – and indeed the Nordic region’s – first production plant for zero-emission liquid hydrogen, with a particular focus on the emerging demand from the maritime sector,” said Jens Berge, Norwegian Hydrogen CEO.

The facility is designed to anchor local maritime fuel bunkering while providing a template for replication at other Nordic ports.

Aviation is part of the near-term push as well. Project ODIN in Norway, led by ZeroAvia, plans to retrofit 15 Cessna 208B Grand Caravans with hydrogen-electric fuel cells and set up refueling infrastructure at more than 15 Norwegian airports. The plan targets short-haul regional routes where hydrogen propulsion can move first, creating operating experience and safety cases that regulators can apply more widely. In Finland, the MAGHYC project will demonstrate onboard hydrogen generation with carbon capture on a new-build cruise ship, testing how hydrogen-related systems can be integrated within strict marine safety regimes. These deployments feed into the Sustainable Transport Investment Plan’s emphasis on hydrogen-based fuels as part of an immediate pathway to cut emissions on routes where electrification is not yet viable.

On the synthetic fuels side, France’s Verso Energy is developing the DEZiR project in Normandy, scheduled to produce up to 81,000 tonnes of eSAF per year. The company says the plant could avoid more than five million tonnes of CO2 emissions over 25 years by displacing kerosene.

“France has unparalleled assets to become a global leader in the production of synthetic fuels, meeting not only domestic demand but also that of many other markets,” said Antonie Huard, CEO of Verso Energy.

In Denmark, Arcadia eFuels’ ENDOR project plans a commercial power-to-liquid facility to produce eSAF and e-naphtha using renewable electricity, biogenic CO2, and hydrogen, seeking to link wind power to aviation fuel supply chains.

The plan’s €300 million allocation through the European Hydrogen Bank is framed as a catalytic lever to reduce offtake risk for hydrogen-based fuels and bring production costs down through scale. By tying support to clear climate outcomes and timelines, Brussels wants to carve a path for private investors who have hesitated to enter the market without predictable demand and policy support. The bank’s dedicated call, due by the end of 2025, will target renewable and low-carbon hydrogen for aviation and maritime applications, complementing the eSAF Early Movers Coalition designed to rally airlines, airports, ports, refiners, and technology firms behind multi-year purchase agreements.

Not all industry voices are fully satisfied with the package. Some warn that supply-side funding must be matched by robust carbon pricing and demand-side obligations to close the cost gap with fossil fuels.

“An extension of the ETS is still missing, and without it, we won’t generate the revenues needed to truly accelerate decarbonisation in aviation and maritime. And while it’s positive to see recognition of zero-emission aircraft and hydrogen’s role, support for zero-emission technologies across the board remains limited,” said Aurelia Leeuw, Director of EU Policy at the SASHA Coalition.

Her comments reflect a broader debate over how fast the EU should push toward zero-emission planes and ships versus scaling drop-in fuels that work with existing fleets.

The Commission’s timetable places the heaviest funding activity over the next two years, with calls and awards rolling out through 2027. That timeline aligns with the start of more stringent blending mandates under ReFuelEU Aviation and the ramp-up of FuelEU Maritime, policies designed to ensure airlines and shipping companies buy cleaner fuels as they become available. The Sustainable Transport Investment Plan’s mix of grants, guarantees, and market-making aims to send consistent signals that Europe intends to lead on hydrogen-based fuels and synthetic fuels and keep manufacturing and engineering jobs in the region.

For airports and seaports, the plan signals accelerated timelines for building storage and refueling infrastructure. Hydrogen requires new safety protocols and handling equipment, while eSAF production will need reliable supplies of renewable electricity and biogenic CO2. Project ODIN’s intent to install hydrogen refueling at over 15 Norwegian airports speaks to the scale of infrastructure change required even for small regional aircraft. Ports tied to the North Sea and Baltic shipping lanes are likely to be early movers on liquefied hydrogen bunkering, following the RjukanLH2 model and adapting it for higher-throughput maritime hubs.

Some of the biggest hurdles remain off the construction site. Developers must secure long-term power purchase agreements for renewable electricity, and e-fuel plants must compete for limited supplies of sustainable biogenic CO2. Airlines face tight margins and will weigh eSAF contracts against uncertain ticket demand, while shipowners will factor fuel costs into charters that can shift with freight prices. The Sustainable Transport Investment Plan’s €2 billion via InvestEU is intended to make lenders more comfortable with these risks, while the Innovation Fund’s €446 million and Horizon Europe’s €133 million can support demonstration plants and technology improvements that reduce costs over time.

Brussels is also betting on learning curves. By backing first-of-a-kind installations now, the EU expects production costs for hydrogen-based fuels to fall as supply chains mature and electrolyser and carbon capture equipment scales up. The Commission’s projection of 221 million tonnes of CO2 equivalent reductions in the first decade is contingent on these facilities reaching high utilisation rates and customers signing multi-year offtake agreements. The eSAF Early Movers Coalition, with a target of mobilising at least €500 million, is one mechanism to lock in those purchases and give developers enough certainty to reach final investment decisions.

The geographic spread of early projects underscores the region-wide nature of the plan. Norway features prominently with RjukanLH2 and Project ODIN, tapping its hydropower-heavy grid and maritime expertise. Finland’s MAGHYC cruise ship platform extends the experimentation to complex passenger vessels. France’s DEZiR in Normandy and Denmark’s Arcadia eFuels add major synthetic fuel capacity tied to strong wind resources and industrial CO2 sources. Together, they form a cluster of efforts the Commission wants to multiply across member states as the Sustainable Transport Investment Plan moves from announcement to implementation.

For the aviation sector, the DEZiR and Arcadia eFuels projects are intended to complement airline strategies that mix eSAF with conventional kerosene in the near term while preparing for possible hydrogen-powered aircraft on short-haul routes. The inclusion of Project ODIN reflects a dual-track approach: scale eSAF for mainline jets while proving hydrogen-electric propulsion on smaller aircraft. Maritime projects similarly combine near-term fuel switches with infrastructure that could handle hydrogen or derived fuels as engines and safety standards evolve. The EU’s explicit support through the European Hydrogen Bank is meant to reassure operators that hydrogen-based fuels will not be a passing experiment but a core part of Europe’s transport energy mix.

Businesses watching the plan will look for clarity on contract design and eligibility rules when the European Hydrogen Bank opens its €300 million call by the end of 2025. Developers will want auctions or contracts-for-difference structures that stabilise revenues, while airlines and shipowners will push for mechanisms that offset initial fuel cost premiums. Airports and ports will seek guidance on safety and interoperability standards to avoid stranded assets. The Commission’s emphasis on cooperation among Member States, industry, financiers and civil society, echoed in Tzitzikostas’s remarks, points to a policy process that will continue through 2027 as funding windows open and close.

If the plan succeeds, Europe could secure a first-mover advantage in technologies and supply chains critical to meeting climate neutrality by 2050, from electrolyser manufacturing to e-fuel synthesis and aircraft and ship retrofits.

“Our Sustainable Transport Investment Plan is a decisive step towards a sustainable future,” Tzitzikostas said, linking the €2.9 billion package to a larger industrial strategy that aims to keep skilled jobs and know-how within the bloc. “It’s not just about cutting emissions – it’s about building a stronger, more competitive and resilient Europe that leads in sustainable transport.”

For now, much depends on whether capital markets, fuel producers, and transport operators respond to the policy signals. With regulations driving demand, and EU programmes pushing down the cost of supply, the next two years will test how fast hydrogen-based fuels and eSAF can move from pilots to contracts and from contracts to operating plants. The Sustainable Transport Investment Plan’s blend of InvestEU guarantees, Innovation Fund grants, Horizon Europe research support, and the market-creating role of the European Hydrogen Bank is designed to keep that pipeline flowing. The Commission’s targets are clear: 20 million tonnes of sustainable alternative fuels by 2035, backed by an estimated €100 billion in investment, and 221 million tonnes of CO2 equivalent abated in the first decade of operations from projects seeded by today’s funding. Whether Europe can hit those numbers will hinge on the speed of permitting, the availability of renewable power, and the willingness of airlines and shipping companies to sign up for long-term supply at a premium until costs fall.