By Michael Neswal, Senior Executive Project Director & Partner, BlackSwan Capital
The global hydrogen market is widely regarded as a cornerstone of the energy transition. Yet, as I have observed working with project developers and institutional investors across Europe and the Middle East, the market is evolving differently than many political and policy narratives suggest. Wood Mackenzie’s Hydrogen Outlook 2026 confirms much of what we are seeing on the ground.
From my perspective, hydrogen is not progressing at the pace, nor along the pathways, that policymakers—especially in Europe—currently expect.
Regulatory Complexity in Europe
One of the main challenges is the EU’s strict framework for Renewable Fuels of Non-Biological Origin (RFNBO).While necessary to ensure sustainability, these rules significantly increase project costs and complexity. For developers, this often results in delayed Final Investment Decisions (FIDs), higher execution risk, and more complicated financing structures. In practice, this slows down the deployment of hydrogen projects, even when the technical fundamentals are sound.
Market Dynamics in the Middle East
In the Middle East, supply conditions are excellent, and projects are highly ambitious. However, demand structures, reliable offtake agreements, and the logistics of import/export are still developing. Without these market mechanisms fully in place, projects may face timeline adjustments or scale modifications.
RED III Targets and Investment Implications
Meeting RED III targets for EU member states will be challenging under these conditions. Without more pragmatic regulatory frameworks, accelerated market formation, and alignment between supply, demand, and infrastructure, achieving these goals risks falling short.
What This Means for Investors and Project Developers
Hydrogen remains a strategic, long-term investment opportunity. However, near-term execution requires careful attention to regulatory, commercial, and market risks. Success requires:
- Robust project structuring
- Flexible, adaptable business models
- Disciplined risk allocation
- Integrated industrial and financial expertise
At BlackSwan Capital we leverage our deep industry knowledge, project management excellence, and structured finance expertise to guide clients through these challenges. From project origination and industrial due diligence to equity, mezzanine, and debt structuring, we help ensure that hydrogen projects are not only bankable but operationally executable.
The Hydrogen Outlook 2026 by Wood Mackenzie provides further insights into market trends, regulatory developments, and investment considerations—an essential read for developers and investors navigating this evolving sector.
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Michael Neswal
Senior Executive Project Director & Partner
BlackSwan Capital
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