The hydrogen sector is already an established industry with a present-day demand just short of 100 million metric tons per annum (MMTA) and slowly growing. Industrial applications like ammonia, methanol, and steel production, and oil refining which are responsible for this demand will have to decarbonize their operations and thus form the basis of the low-carbon hydrogen economy.
Beyond those existing segments, there’s potential for hydrogen to play a significant role decarbonizing transportation and shipping (road, aviation, and maritime) as they seek alternatives to end their reliance on fossil fuels.
According to our projections, the hydrogen industry could amount to over 250 MMTA by 2050. Improvements in cost, clarification of already announced policy, and a step-by-step approach to project phasing will all contribute to the adoption of the green fuel.
In spite of the degree of pessimism with which the hydrogen revolution is being welcomed, the sectors mentioned above lack real alternatives for the most part, or at least alternatives that are truly sustainable and scalable.
The aviation industry is preaching about sustainable aviation fuels (SAF) derived from biogenic feedstock like used cooking oil, municipal waste, or crops but the only solution that doesn’t involve displacing emissions from an adjunct industry is green hydrogen. Even if we talk about eSAF – SAF manufactured from green hydrogen and captured carbon – for long-haul routes, then hydrogen stands to benefit.
The maritime shipping sector is currently prioritizing short-term decarbonization in the form of liquified natural gas (LNG) as a replacement to the traditional bunker oil. This solution ensured ship operators are in compliance with the first set of constraints like the ones imposed by Europe under the FuelEU Maritime regulation but has little to no potential when it comes to further reductions in emissions.
Ammonia and methanol seem to be the choices that will significantly drop operating emissions and there are plenty of ship operators going down this route with many orders placed for ships capable of burning the fuels. Both these fuels require green hydrogen as feedstock.
When it comes to road transportation and shipping, hydrogen faces a tough battle against batteries which are already a full-scale industry, are cheaper, and are set to alleviate range concerns through the adoption of solid-state technologies with higher energy densities. Furthermore, certain applications here like passenger cars, trains, and buses will become more expensive to operate when the round trip efficiency of battery systems is compared to those of hydrogen production and fuel cell utilization.
Long-haul routes driven by class 8 tucks is the sector with the most potential for fuel cell powertrains in the context of road transport, but even here batteries are making a compelling case as the range that novel technologies like nickel oxide or iron phosphate are capable of, start to match hydrogen’s unique selling points.
Iron and steel manufacturing is another industry that has a few options when it comes to decarbonization and the transition towards a green steel standard. Molten oxide electrolysis uses only renewable electricity but direct reduction of iron using green hydrogen is the most commercially advanced novel technology with a number of pilot projects and factories underway.
But there’s a common trend over all of these sectors. Who stands to benefit and who is the most likely to lose out when truly sustainable solutions like green hydrogen are implemented? The answer to the first question is quite clear. The people and the world we live in. In the case of the second question, the answer is the oil majors and businesses that buy their products, who prioritize shareholder returns over sustainability.
The hydrogen economy will reach its full potential when today’s corporations either recognize the need to decouple growth from carbon emissions or are replaced by institutions with progressive, forward-thinking ideologies.
Other forms of low-carbon hydrogen face specific challenges. Nuclear-derived hydrogen is linked to growth in the nuclear sector which for the moment is being dampened by the cost issues of small modular reactors. Blue hydrogen – produced from steam methane reforming coupled with carbon capture technology – is mostly promoted by current fossil fuel producers and will forever be linked with the price volatility of natural gas while naturally occurring hydrogen is yet to be proven as an affordable natural resource at scale.
China is today’s largest user and producer of hydrogen and has install vast quantities of unprecedentedly cheap utility-scale wind and solar in the past two years – at the kind of levelized cost of electricity (LCOE) necessary to produce green hydrogen cost-effectively. With low-cost alkaline electrolysis technology prevalent to use that cheap power, China is well positioned to not only decarbonize its current hydrogen offtake but also expand in the production of green ammonia and eSAF thus influencing global markets.
When it comes to the cost of production of green hydrogen, electricity is responsible for around 60%, while the rest comes down to the electrolyzer, balance of plant, and maintenance. This represents another incentive for countries like Australia, Chile, Spain, and even Denmark to incentivize production and benefit long-term given the wide array of favorable natural resources like wind speeds and solar irradiance.
Momentum will also positively impact the electrolysis industry which has technologies like anion exchange membrane or non-PGM (platinum group metal) proton exchange membrane which are yet to undergo cost savings due to economies of scale, automation, and supply chain integration.
The projection above represents a global average cost of production for green hydrogen based on a turnkey electrolyzer solution starting at $5,000/kW and reaching $2,700/kW in 2050, and a global renewable electricity price average of $60/MWh dropping over time as per IEA’s levelized cost of electricity by region analysis.
Present day policies need time to be implemented and those who choose to engage (investors, producers, off-takers, etc.) need clarity before doing so. Announcements of projects around the GW-scale are nothing but intentions while those involved in pilot schemes as small as 1 MW in electrolysis capacity are actually paving the way forward for the hydrogen economy to progress because they directly add to the de-risking of the industry thus further solidifying the business case.
In other hydrogen news
HIF Global’s Haru Oni pilot project in Chile is installing direct air capture (DAC) technology to produce synthetic gasoline from green hydrogen and atmospheric CO2. Previously using biogenic CO2, the plant features Siemens wind-powered electrolysis and captures 600 tons of CO2 annually. DAC equipment assembly will be complete in early 2025.
China is on track to exceed its 2025 green hydrogen production target of 100,000–200,000 tons annually, with 64,500 tons already operational and 163,000 tons under development. The country is also progressing toward deploying 50,000 fuel-cell vehicles, aligning with its ambitious hydrogen and clean energy goals.
California will invest $1.4 billion in hydrogen refueling stations (HRSs) and EV chargers to expand zero-emission infrastructure. Focused on heavy-duty trucks, the plan aligns with the state’s diesel truck phase-out by 2042. The funding, distributed over four years, supports California’s leadership in clean transport technologies.
Electric Hydrogen CEO Raffi Garabedian views Europe as the most attractive market for green hydrogen, driven by EU mandates. The US-based electrolyzer maker shifted focus to Europe before concerns over the Inflation Reduction Act’s hydrogen tax credit under a Trump presidency, emphasizing Europe’s strong renewable hydrogen policies.
Germany’s energy minister Robert Habeck abandoned the Power Plant Security Act due to parliamentary opposition after the coalition collapse. The plan sought to tender 12.5GW of hydrogen-ready power plants to stabilize renewable energy during “dark lulls.” Renewables currently account for 63% of Germany’s power, targeting 80% by 2030.
The UK government’s Clean Power 2030 Action Plan proposes subsidizing gas power plants to transition to hydrogen or CCS. It includes stricter decarbonization rules for new fossil plants and plans for “hydrogen-ready” facilities to ensure grid reliability during renewable energy lows. Challenges include investment risks and reliance on hydrogen infrastructure. The UK targets a decarbonized grid by 2035.
DH2 Energy, a Spanish company, plans to build four green hydrogen projects in the Extremadura region, totaling 1.5GW of electrolyzer capacity. These projects, located in Badajoz, could produce over 75,000 tons of hydrogen annually and require an estimated €2.25 billion investment. Extremadura’s abundant solar and hydro resources make it ideal for renewable hydrogen production, according to Managing Director Marcos López-Brea Baquero.
Oman plans to launch its third green hydrogen tender in Q1 2025, introducing mechanisms like double-sided auctions used by H2Global. Previous rounds granted exclusive development rights for gigawatt-scale projects, attracting companies such as EDF, BP, and Uniper, with commitments to produce 1.3 million tons of renewable hydrogen annually. The new auction targets both developers and end-users in industries like green steel and fertilizers, aiming to align production with demand. Oman aims to produce one million tons of green hydrogen by 2030.
Air Liquide has secured a €110m EU Innovation Fund grant for its ENHANCE ammonia cracking project in Belgium’s Port of Antwerp-Bruges. This facility, retrofitted to an existing hydrogen unit, aims to produce low-carbon and renewable hydrogen from ammonia, reducing over 300,000 tons of CO2 annually. It includes liquefaction capabilities to deliver hydrogen as a liquid or gas. Despite energy-intensive ammonia cracking challenges, the project targets sectors requiring hydrogen molecules, like steelmaking and transport. ENHANCE is described as the first large-scale ammonia-to-hydrogen facility for production, liquefaction, and distribution.