Exploring Internal and External Drivers of Hydrogen Deployment in the Energy Transition

Hydrogen is increasingly recognized as an indispensable energy carrier for deep decarbonization. However, its deployment remains highly uncertain, shaped by a complex interplay of factors often examined in isolation. We categorize the drivers into two categories: external drivers, e.g., hydrogen use in transport and industry, and internal drivers which reflect specific conditions for either green or blue hydrogen, e.g., electrolyzer costs or CO2 capture rates. Here, we extend the open-source PyPSA-Eur model to incorporate country-level carbon constraints and simulate multiple energy transition scenarios from 2025 to 2050 across three carbon budget pathways. Results show that internal drivers play a more decisive role than external ones in shaping hydrogen deployment. Widespread green hydrogen uptake could raise EU demand to up to 3,200 TWh/year. In contrast, blue hydrogens long-term role varies between pathways, but deployment consistently concentrates in Spain. When deployed, it faces asset stranding risks under tighter CO2 budgets. Sequestration capacities consistently emerge as scarce and are prioritized for hard-to-abate sectors. The interplay between hydrogen drivers and carbon budgets further shapes system costs, price stability, and infrastructure needs. By quantifying the boundaries and potential evolution of hydrogen deployment, this study offers new system-level insights that challenge simplified hydrogen roadmap assumptions.