Despite a recent wave of project delays and cancellations, low-emissions hydrogen production is still set to see robust growth to 2030 as the nascent sector continues to develop, although at a slower pace than announcements earlier this decade had predicted, according to the latest analysis from the International Energy Agency (IEA).
The 2025 edition of the IEA’s annual Global Hydrogen Review tracks developments across the hydrogen sector worldwide, with particular attention to developments in emerging technologies around low-emissions hydrogen.
Worldwide hydrogen demand increased to almost 100 million tonnes in 2024, up 2% from 2023 and in line with overall energy demand growth, according to the report. Most of this demand was met by hydrogen produced from fossil fuels without measures in place to capture associated emissions. Sectors that have traditionally used hydrogen, such as oil refining and industry, remained the biggest consumers.
Globally, producing hydrogen from fossil fuels remains cheaper than other options. The gap has widened lately because of recent declines in natural gas prices and an increase in the price of electrolyzers from inflation and slower-than-expected deployment of the technology. However, the report sees the cost gap narrowing by 2030 because of declining technology costs and, in some regions, strong renewables growth and the enactment of new regulations.
Low-emissions hydrogen uptake is not yet meeting expectations set by industry and governments in recent years. Growth is being restrained by high costs, demand and regulatory uncertainty, and slow infrastructure development. Production projects have been particularly exposed to these headwinds. New analysis of announced projects finds that low-emissions hydrogen production by 2030 now has the potential to reach up to 37 mtpa. That is down from a potential 49 mtpa, based on announced projects a year earlier.
Not all announced projects come to fruition. As a result, actual capacity is likely to be much lower. Even so, low-emissions hydrogen production is expected to see a sizable expansion by the end of the decade compared with where it stands today, according to the report. Projects that are operational, under construction, or have reached a final investment decision by 2030 are set to increase more than fivefold from 2024 levels to more than 4 mtpa. An additional 6 mtpa also has strong potential to become operational by 2030 if effective policies to ensure demand are implemented.
“Investor interest in hydrogen jumped at the start of this decade thanks to its potential to help countries deliver on their energy goals,” said IEA Executive Director Fatih Birol. “The latest data indicates that the growth of new hydrogen technologies is under pressure due to economic headwinds and policy uncertainty, but we still see strong signs that their development is moving ahead globally. To help growth continue, policy makers should maintain support schemes, use the tools they have to foster demand, and expedite the development of necessary infrastructure.”
According to the report, China is the driving force in the deployment of electrolyzers to produce low-emissions hydrogen. The country accounts for 65% of global electrolyzer capacity that has been installed or reached a final investment decision, and it is home to nearly 60% of the world’s electrolyzer manufacturing capacity. Elsewhere, manufacturers have come under financial pressure from rising costs and slower-than-expected uptake. Chinese manufacturers could also face challenges in the future, though, because the existing manufacturing capacity of more than 20 GW per year is significantly above current demand levels.
The report also includes an analysis of the cost of installing Chinese electrolyzers outside China. It finds that the cost is not significantly lower than installing those made by other producers when all factors, including transport costs and tariffs, are considered.
This year’s Global Hydrogen Review includes a special focus on Southeast Asia, which is emerging as a significant and growing hydrogen market. It finds that, based on announced projects, low-emissions hydrogen production in the region could reach 430 000 tonnes per year by 2030, up from just 3000 tonnes per year today. However, many projects remain at very early stages of development, requiring faster deployment of renewables to reduce production costs, targeted policies, and an expansion of expertise-building pilot projects in order to match this potential.