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08 Jan 2025

Hydrogen Market Databook 2025: Introduction

The world is engaged in an energy transition, one that aims to reduce carbon emissions in not only various industries, but also entire economies. At the time of publication, more than 140 countries have announced net-zero targets, covering approximately 88% of global emissions. Countries and companies are seeking various pathways to limit emissions in industrial operations, transport, power and other various industries. One of these routes is through low-/zero-carbon hydrogen.

Undoubtedly, low-/zero-carbon H₂—referred to as blue or green hydrogen—will play a major role in decarbonisation efforts globally. The colour of hydrogen is determined by the pathway of production.

Green hydrogen is produced using renewable energy (e.g., wind or solar) to power electrolysis. This process uses an electrolyser to separate hydrogen and oxygen molecules, thus producing hydrogen with no carbon emissions. Clean hydrogen (i.e., green hydrogen) can be used to provide carbon-free energy for transportation, industry, power and buildings, and the processing sectors (e.g., refining and petrochemicals manufacturing).

Blue hydrogen is produced from natural gas, primarily via steam methane reforming or autothermal reforming (ATR). This chemical process produces hydrogen and carbon dioxide. Most blue hydrogen production includes CCS or CCUS technologies, which captures CO₂ and either stores it underground in designated caverns or uses it in various applications. Since the CO₂ is captured, blue hydrogen is considered a low-carbon hydrogen production pathway.

Global hydrogen demand

Most industry forecasts show a stark increase in hydrogen demand over the next several decades. However, future demand scenarios can vary widely due to several factors, including inflation, project and hydrogen production costs, sluggish green hydrogen offtake contracts that lead to delayed FIDs, permitting and grid connection challenges and undeveloped value/supply chains, among other issues. For example, management consultancy McKinsey forecasts that global clean hydrogen demand will reach 125–585mt/yr by 2050, depending on various production and demand scenarios.

BP’s forecast shows a similar trajectory but is a little more subdued. In the company’s low-carbon hydrogen forecast, published in July 2024, BP provides two scenarios for future low-carbon hydrogen demand: Current Trajectory and Net-Zero Trajectory. In the Current Trajectory scenario, low-carbon hydrogen demand increases to nearly 20mt/yr by 2035 and up to 85mt/yr by 2050. In the Net-Zero scenario, low-carbon hydrogen demand increases to 90mt/yr by 2035 and reaches nearly 390mt/yr by 2050. Within these scenarios, both blue and green hydrogen capacity increases significantly. In the Net-Zero scenario, blue and green hydrogen capacity reaches more than 138mt/yr and nearly 237mt/yr, respectively, by 2050.

With the stark rise in global hydrogen demand, a significant amount of capital investment is needed to satisfy forecast consumption. These investments include capital-intensive hydrogen production projects, electrolyser manufacturing, pipeline conversion and construction, storage (e.g., underground salt caverns) and hydrogen refuelling infrastructure, among others. According to analysis by consultancy Deloitte, the global clean hydrogen market could increase exponentially from $160b in 2022 to more than $640b in 2030 and upwards of $1.4t by 2050.

Regarding hydrogen production, both renewable energy capacity—to provide power for green hydrogen production—and electrolyser capacity are expected to increase significantly in the future. For example, the IEA forecasts that clean hydrogen-linked renewables capacity will increase by 45GW from 2023–28. This increase in renewables capacity equates to tens of billions of dollars in capex over the next few years. This additional renewables capacity will provide feedstock to electrolysers for clean hydrogen production—there was approximately 1.2TW of electrolyser capacity under development globally at the time of this publication, according to consultancy Aurora Energy Research.

Active projects

Gulf Energy Information’s Global Energy Infrastructure (GEI) database tracks active hydrogen projects globally. Since its inception in 2021, active H₂ projects in the GEI database have increased more than fivefold to nearly 1,420, representing a nearly 450% increase. Conversely, active hydrogen projects globally have slightly decreased year-over-year, from nearly 1,450 in 2023 to 1,423 in 2024, a dip of approximately 1.5%.

Most active projects are in Western Europe, followed by Asia and the US. Collectively, these regions account for 80% of active hydrogen projects globally, with Western Europe representing nearly 50% alone. In total, the GEI database is tracking more than $2t in active hydrogen projects globally. However, more than 90% of active hydrogen projects are in pre-construction phases, with less than 10% having reached FID. Most projects are still in early planning/proposed stages, followed by feasibility study and FEED. When broken down by production pathway, more than 80% are through renewable power (green hydrogen), followed by blue pathways.

As detailed in the individual regional analyses of this report, hundreds of billions of dollars will be invested over the next few decades to generate low- and zero-carbon hydrogen. In turn, renewable power generation investments are likely to surge to 2050, adding a considerable amount of additional capex in new hydrogen developments.

Lee Nichols is Vice-president, content, at Gulf Energy Information.