The decarbonisation of the economy is one of the greatest challenges of our time. Hydrogen plays a key role in this: it can replace fossil fuels in sectors like industry, transportation, and certain areas of energy production – especially where electricity alone is not sufficient. For industries such as steel, chemicals or refineries, hydrogen is often the only realistic option to become climate neutral. The following article sheds light on the topic of hydrogen and provides an overview of the current status, domestic strategy, and insurability of hydrogen plants.
European Strategies and Initiatives
Many European countries have already recognised the importance of hydrogen and are specifically focusing on building their own hydrogen economy. With its hydrogen strategy, the European Union is pursuing the goal of achieving a climate-neutral economy by 2050 and significantly increasing the share of renewable energies.
National hydrogen strategies and initiatives such as the European Hydrogen Backbone are driving the expansion of a cross-border network that connects large industrial centres, storage facilities and production sites. Plans for the gradual expansion of the infrastructure are underway in numerous member states, and the first network sections for renewable hydrogen are to go into operation as early as 2027.
At the same time, production capacity is being increased: by 2030, electrolysers with a capacity of at least 40 gigawatts (equivalent to approx. 40 nuclear power plants) are to be installed throughout Europe – this corresponds to several hundred-terawatt hours of green hydrogen per year (by comparison, electricity consumption in Italy is at approx. 300 TWh per year). The demand is there: The current hydrogen demand in Europe is several million tonnes per year, almost exclusively for industrial processes. By 2040, many times this is expected.
Hydrogen Strategy Austria
Austria has also recognised the importance of hydrogen and is focusing specifically on the development of its own hydrogen economy. The goal is clear: by 2040, a nationwide hydrogen network is to be created in Germany as well, to create a connection between industrial centres, storage facilities and production sites. Plans for the gradual expansion of the pipeline network are already in place, and renewable hydrogen is to be transported via the first network sections in the period 2027-2029.
In addition, electrolysers with a capacity of 1 gigawatt are to be installed by 2030. That’s the equivalent of about 3.5 terawatt hours of green hydrogen per year. At the beginning of 2025, electrolysers with a capacity of 18 MW will be in operation, and approx. 350 MW are under construction or in advanced planning. To meet the established targets, significant capacity expansion will continue to be required in the years ahead.
What Makes Hydrogen Projects Special in Terms of Risk Management?
Achieving a hydrogen-based future is challenging. The technology is complex, the investments are high, and the risks are manifold.
A systematic approach to risk assessment that takes into account technical, economic and regulatory factors should therefore be implemented in all project phases. This is because hydrogen is a demanding energy carrier that is extremely light, odourless and colourless and has a barely visible flame. The ignition energy is very low, making hydrogen highly explosive. At the same time, hydrogen can embrittle metals and penetrate plastics, which can lead to leaks. For risk managers, this means that materials and components must be carefully selected as early as the planning and construction of plants. Not every pipe or valve is suitable for hydrogen.
The operation also requires special attention. Regular maintenance, safety rounds and staff training are mandatory. Detectors for hydrogen, emergency plans and a well-thought-out explosion protection concept are standard. Interfaces to existing natural gas networks are particularly critical: Here, the risks from hydrogen exposure must be precisely assessed.
It is crucial for insurers and risk managers to keep an eye on the entire system, not only the main asset, but also ancillary units, peripherals and logistics. The experience of the operators, the quality of maintenance, and the availability of spare parts all play a major role in the overall risk. In addition, external factors such as natural hazards (e.g. earthquakes, floods) should also not be underestimated.
What Does this Mean for Insurability?
Hydrogen plants can be insured, but only if the risk management is right. Insurers must pay particular attention to:
Damage caused by corrosion, material fatigue or serial defects is often excluded or provided with high deductibles. Replenishment times for spare parts and dependence on individual suppliers are also important factors.
Concluding Insights
Despite its challenging nature, hydrogen is a central building block for a climate-neutral future, and an exciting field for risk management. Those who ask the right questions at an early stage, have technical and organisational risks under control, and rely on close cooperation with insurers can take advantage of the opportunities offered by the hydrogen economy and at the same time make the risks manageable.
If you have any questions about hydrogen, our experts at GrECo Risk Engineering GmbH are available at any time.
Sabine Bradac
Risk Consultant GrECo Risk Engineering
T +43 50404 896
