Johnson Matthey has significantly scaled back investment in its green hydrogen technology  business in response to a “palpable” slowdown across the entire value chain.

The UK-based firm’s hydrogen technology unit is expected to account for 10% of total group capital expenditure over the three-year period to 2026–27, down from previous guidance of 30%, the company said in its 2023–24 full-year earnings report. That implies investment of up to £90m ($144.5m) in the hydrogen technology business over that period.

Sales in the hydrogen technology business rose 31% to £71m but growth slowed in the second half of the year as the market began to soften and customers reduced inventory levels. The business reported an operating loss of £50m for the year. The outlook for 2024–25 is for “modest sales growth”.

“We now expect the [hydrogen technology] business to break even by the end of 2025–26 against a softening market backdrop,” said chief financial officer Stephen Oxley.

The hydrogen technology unit is focused on the supply of catalyst coated membranes for electrolysers in the green hydrogen sector. The firm’s blue hydrogen technology sits within a separate catalyst division.

The green hydrogen sector slowdown is evident across the value chain, CEO Liam Condon said. “[The slowdown] is very palpable throughout the value chain—it is across the board,” said Johnson Matthey’s CEO, Liam Condon. “There is not one single company that is challenged by this, it is the entire value chain,” he said during a presentation of the firm’s latest full-year earnings.

The key reasons for the slowdown are a lack of clarity over regulatory incentives, particularly in the US, which is holding back investment decisions, Condon said. He also cited a lack of infrastructure and the slow buildout of hydrogen refuelling stations, as well as the price of renewable power, especially in the US.

“Those three points need to be addressed for the market to accelerate. What we do see is when they are addressed, the market can accelerate at speed,” he said, citing the “really fast development” of the fuel-cell market in China.

“[In China] you have clear regulatory support, you have clear infrastructure, and the total cost of ownership is highly competitive. So when those conditions are met, the market booms. And I think this will be typical within the energy transition,” Condon said.

Green growth engine

Despite the recent setbacks, Condon stressed that green hydrogen technology was expected to be the company’s “long-term growth engine”.

“Green hydrogen is absolutely crucial for the net-zero transition, he said. “This market will develop over time, but it is developing at a relatively slow place. There is a slight analogy to the battery electric vehicle development here. We are growing as a business, but we want to grow responsibly.”

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Author: Stuart Penson