IEA: Global Hydrogen Industry Still Has Potential for Significant Growth

The International Energy Agency (IEA) latest analysis shows that despite frequent cancellations of hydrogen projects and ongoing cost challenges leading to a nearly 25% reduction in the announced project pipeline, the global low-carbon hydrogen sector is still poised for significant growth before 2030.

According to the IEA's "Global Hydrogen Review 2025," based on current project progress, global annual low-carbon hydrogen production could reach 37 million tons by 2030—down from last year’s projected 49 million tons based on announced projects. In a statement accompanying the report, the IEA said: “In recent years, the deployment of low-carbon hydrogen has not met expectations set by industry and governments. High costs, uncertain demand and regulation, and slow infrastructure development are constraining sectoral growth.” This marks the first time the projected potential output of low-carbon hydrogen by 2030 has declined.

However, the IEA emphasized that by 2030, the capacity of low-carbon hydrogen projects already operational, under construction, or having reached final investment decisions (FID) will still grow more than fivefold compared to 2024 levels, exceeding 4 million tons per year. With effective demand-stimulating policies, an additional 6 million tons per year of potential capacity could be unlocked. Moreover, the number of projects reaching FID increased by 20% year-on-year, accounting for 9% of the total project pipeline by 2030. Fatih Birol, IEA Executive Director, stated: “To maintain momentum, policymakers should continue advancing support schemes, use existing tools to stimulate hydrogen demand, and accelerate the development of necessary infrastructure.”

The industry group Hydrogen Council noted that globally, low-carbon hydrogen projects having reached FID now exceed 6 million tons per year in capacity, with over 500 projects collectively securing $110 billion in funding commitments. In its "Global Hydrogen Review" released on September 9, the Council mentioned that 1 million tons per year of low-carbon hydrogen capacity is already operational.

IEA data show that global hydrogen demand approached 100 million tons in 2024, up 2% from 2023, consistent with overall energy demand growth. However, the vast majority of this hydrogen comes from fossil fuel-based production; in 2024, global hydrogen production consumed 290 billion cubic meters of natural gas and 90 million tons of standard coal. By application, oil refining, fertilizers, and chemical industries are the largest consumers of hydrogen, while demand from new applications accounts for less than 1%.

Nevertheless, the IEA remains optimistic, noting that since the release of its first Global Hydrogen Review in 2021, the low-carbon hydrogen economy has made significant progress. Low-carbon hydrogen production projects have expanded from a few demonstration initiatives to over 200 projects with committed investments, growing continuously in both number and scale—highlighting hydrogen’s important role in achieving climate goals, ensuring energy security, and enhancing industrial competitiveness.

Recently, another challenge facing the low-carbon hydrogen economy is the widening cost gap between conventional and low-carbon hydrogen, driven by falling natural gas prices, inflation-driven increases in electrolyzer costs, and slower-than-expected technology deployment. S&P Global Commodity Insights assessed on September 10 that, supported by renewable power purchase agreements in Germany, green hydrogen produced via alkaline electrolysis costs €10.04 per kilogram—compared to just €2.62 per kilogram for conventional steam methane reforming.

Despite short-term cost pressures, the IEA expects that by 2030, as technology costs decline, rapid growth of renewables in certain regions lowers hydrogen production costs, and new regulatory frameworks take effect, the cost gap between conventional and low-carbon hydrogen will gradually narrow. The IEA believes the shipping sector must increase investment to advance suitable technologies and build sufficient port infrastructure to support hydrogen-based fuels. Currently, nearly 80 ports worldwide already possess mature chemical handling experience, indicating strong capability in managing hydrogen-based fuels; moreover, existing marine refueling facilities are often located near low-carbon hydrogen production sites, laying a foundation for future expansion.

In addition, Southeast Asia is emerging as a significant hydrogen market. Based on announced projects, the region’s potential low-carbon hydrogen capacity could reach 430,000 tons per year by 2030—a substantial increase from the current 3,000 tons per year. However, the IEA cautioned that most projects in the region remain in early development stages and will require accelerated renewable energy deployment, targeted policy support, and accumulated pilot project experience to fully realize this potential.