Introduction
The Renewable Energy Directive (RED) is the EU’s main legal tool for boosting the use of renewables across all sectors of the economy. It sets binding targets, supports cooperation between member states and lays out rules to ensure that the growth of renewable energy is both ambitious and sustainable.
The Renewable Energy Directive (RED) has evolved through three key legislative phases. RED I (2009) laid the foundation by setting a binding 20% renewable energy target for 2020, introducing national goals and the first sustainability rules for biofuels. RED II (2018) raised the ambition to 32% by 2030 and introduced innovative concepts such as renewable fuels of non-biological origin (RFNBOs), including renewable hydrogen, along with stricter sustainability criteria. RED III (2023) significantly reinforced the framework, raising the target to 42.5% by 2030, establishing binding sectoral targets (notably for renewable hydrogen in industry and transport), and simplifying permitting processes to accelerate deployment.
The evolution of RED and its growing ambitions
RED III is the third iteration of the European Renewable Energy Directive. This version entered into force in November 2023, giving Member States until the recent 21 May 2025 to transpose it into national legislation. As part of this ongoing transposition process, in the case of Spain, for example, the Ministry for the Ecological Transition and the Demographic Challenge launched a
While RED III introduces some non-negotiable measures, such as the minimum 42.5% share of renewable energy in gross final energy consumption by 2030 and the creation of renewable acceleration areas, it also allows greater flexibility than previous versions in other sections. This includes positive incentives such as subsidies and tax breaks, or direct obligations for companies through penalties and fines.
Strategic role of hydrogen
In this new directive, green hydrogen is highlighted as a strategic priority. However, stakeholders in the sector point out that the lack of clear incentives for both production and demand is slowing its deployment. The directive places particular emphasis on Renewable Fuels of Non-Biological Origin (RFNBOs).
As for binding targets, RED III requires that 42% of the hydrogen used in industry be RFNBO by 2030, increasing to 60% by 2035.
In the transport sector, the integration of renewable energy should contribute to a 14.5% reduction in greenhouse gas emissions by 2030, through greater use of advanced biofuels and a more ambitious share of non-biological renewable fuels, where hydrogen could play an important role.
Clear rules needed
Building on recent experiences and with an eye toward the future, the European Union aims to reduce its dependency on energy imports. A central pillar of this effort is the development of a comprehensive strategy for both imported and domestically produced hydrogen. This approach is closely aligned with the EU Hydrogen Strategy, outlined in the Commission’s Communication of July 2020, titled “A hydrogen strategy for a climate-neutral Europe”. The strategy highlights the important role of retrofitted hydrogen production facilities in cutting greenhouse gas emissions. In line with these objectives, early movers in the sector have already made investment decisions to upgrade existing plants and adapt them to cleaner production processes.
In summary, RED III makes clear that hydrogen is becoming increasingly central to powering Europe, and for this reason, regulations governing hydrogen production and use are rapidly evolving. This development must be carried out as swiftly as possible, since, as shown by the Hydrogen Strategy, regulatory clarity is crucial for investors—and investment is a key driver for the hydrogen sector.
References
Writer: Oria Pardo
Editorial: Lucía Salinas
June, 2025
