In Part III of our insights into Europe’s hydrogen market entering a new phase of development, we continue to highlight demand is being driven by binding regulation rather than voluntary decarbonisation targets.

Last week Provaris Management attended a NOR-GER bilateral H2 event in Oslo with analysis presented from DNV and Rystad. Both highlight a widening gap between mandated demand and available supply, particularly in Germany and across key industrial sectors.

• Demand is policy-driven and accelerating, particularly in Germany and refining sectors.
• A material supply gap is emerging by 2030, even under optimistic project delivery assumptions.
• Imports are essential — not optional, creating a clear role for hydrogen shipping.
• Provaris’ regional supply model fits the early market reality.

1. Demand is Now Mandated — Not Voluntary

• European hydrogen demand is increasingly driven by regulation, not economics
• Germany’s transport and refining sectors are subject to GHG quota and RED III mandates
• These policies:
  • Require physical delivery of RFNBO-compliant fuels (not certificates)
  • Effectively set a price floor for hydrogen (linked to carbon compliance costs)

📌 Investor implication: German demand is now being “locked in” by law — the key question is how will it be supplied.

2. A Structural Supply Gap is Emerging (Germany Case Study)

• Forecast demand linked to EU mandates (e.g. refinery sector) exceeds visible project supply by 2030
• Many projects are still early-stage or uncommitted. Not all will deliver volumes within required timelines
• Additional supply options (pipelines, imports, ammonia conversion) are uncertain and dependent on infrastructure not yet built

📌 Investor implication: Europe is missing credible supply pathways to meet its own mandates.

3. Rystad: Imports Will Bridge the Gap — But Not All Imports Are Equal

• Europe is expected to fall short of domestic production targets, despite subsidies.
• High local production costs (e.g. power prices) constrain scale.

Challenges with proposed large-scale import pathways:

• Ammonia-based imports require “cracking” infrastructure, which is limited and costly.
• Pipeline imports depend on 10x scale and long lead-time network buildout.

📌 Investor implication:
The market is shifting towards simpler, scalable, near-term delivery solutions.

4. DNV Forecast: Hydrogen Market Scales, But Slowly and Unevenly

• Clean hydrogen is projected to grow ~100x from current levels
• Total hydrogen demand is expected to increase by ~170%

However:

• Growth depends heavily on policy execution and infrastructure rollout
• Scaling requires closing gaps in safety, cost and supply chain confidence

📌 Investor implication: The opportunity is large — but while execution risk is high, favouring early, capital-efficient solutions.

5. Why This Matters for Provaris?

The market signals align strongly with Provaris’ strategy:

✔ Regional Supply Advantage

• Nordic hydrogen offers:
  • Lower-cost renewable power
  • Short shipping distances to Germany

✔ Policy Alignment

• Delivering compressed hydrogen meets RFNBO traceability requirementsand supports physical delivery obligations

✔ Infrastructure-Light Model

• Avoids Cracking plants and large-scale pipeline dependency (cross-border or subsea)

✔ Timing Advantage

• Shipping fits the “pre-pipeline” market phase, when demand exists but infrastructure lags

📌 Investor positioning:
Provaris is aligned to the most likely early-stage hydrogen trade model in Europe.

In summary…

Europe’s hydrogen market is accelerating under policy and supporting pipeline infrastructure.  With demand mandated and supply lagging, the near-term market will favour simple, scalable import solutions — positioning regional hydrogen shipping as a critical enabler of Europe’s energy transition.