Global hydrogen demand reached nearly 100 million tons in 2024, yet most supply still comes from fossil fuels. Low-emission hydrogen is growing, but at a slower pace than expected.
The challenge of costs and the role of low-emission hydrogen
Global hydrogen demand hit close to 100 million tons in 2024, a 2% increase from the previous year. The Global Hydrogen Review 2025 from the International Energy Agency (IEA) shows that most production still relies on fossil fuels without carbon capture. While low-emission hydrogen has gained momentum in recent years, progress lags behind expectations, constrained by high costs, regulatory uncertainty, and insufficient infrastructure.
Producing hydrogen from fossil sources remains the cheapest option. Falling natural gas prices and rising electrolyzer costs have widened the gap with clean technologies. According to the IEA, this gap should narrow by 2030 thanks to falling technology costs, renewable energy growth, and stronger regulations. With effective policy support, low-emission hydrogen could become a key driver of the energy transition.
Outlook for 2030 production capacity
IEA analysis suggests that by 2030 low-emission hydrogen production could reach up to 37 million tons per year, down from the 49 million projected just a year ago. Many announced projects have failed to materialize, and actual capacity is likely to be lower. Even so, projects already operating, under construction, or with a final investment decision could surpass 4 million tons per year by the end of the decade, more than five times 2024 levels.
China’s push in electrolyzer manufacturing
The report identifies China as the main driver of global electrolyzer growth for low-emission hydrogen. The country accounts for 65% of installed or committed global capacity and nearly 60% of global electrolyzer manufacturing. With more than 20 GW of annual manufacturing capacity against current demand, Chinese producers may face economic pressure. The analysis also shows that installing Chinese-made electrolyzers outside China offers no major cost advantage once transport and tariffs are considered.
Low-emission hydrogen in shipping and transportation
One focus of the report is maritime shipping, where adopting hydrogen-based fuels requires new technologies and port infrastructure. Opportunities are emerging: nearly 80 ports already have advanced expertise in handling chemicals, providing a foundation for managing alternative fuels. The proximity of many bunkering sites to potential low-emission hydrogen production hubs creates promising prospects for the sector.
Southeast Asia’s fast-growing market
The Global Hydrogen Review 2025 highlights Southeast Asia as an emerging and rapidly expanding market. Here, low-emission hydrogen production could reach 430,000 tons annually by 2030, compared with just 3,000 today. However, most projects remain at an early stage and require stronger support. Expanding renewable energy, implementing targeted policies, and scaling pilot projects will be critical to turning potential into reality.
Policies and investments to support low-emission hydrogen
IEA executive director Fatih Birol noted, “Investor interest in hydrogen grew at the start of this decade thanks to its potential to help countries meet energy goals. The latest data show that growth is under pressure, but progress continues.” To maintain momentum, Birol urged governments to strengthen support schemes, stimulate demand, and accelerate infrastructure development.
