Hydrogen Market

Countries around the world are placing increasing emphasis on developing a hydrogen economy as part of their broader strategies to achieve energy transition, climate goals, and economic resilience. Hydrogen, particularly green hydrogen produced using renewable energy, is increasingly viewed as a key solution to decarbonize hard-to-abate sectors such as steel, cement, chemicals, and heavy transport. To accelerate this transition, various governments have introduced comprehensive plans, policies, subsidies, and incentive schemes to support hydrogen development. For instance, • Europe introduced its EU Hydrogen Strategy in 2020, focusing on scaling up hydrogen production and demand, supporting investment, developing infrastructure and markets, advancing research and innovation, and promoting international collaboration. This strategy is reinforced by a range of complementary policies and incentive mechanisms, including the European Green Deal, Renewable Energy Directive III (RED III), and REPowerEU, all of which aim to accelerate the deployment of clean hydrogen across the region. • Canada introduced the Clean Hydrogen Investment Tax Credit (CHITC) in 2022, which became effective in 2023. This refundable tax credit applies to eligible clean hydrogen assets acquired and operational between March 28, 2023, and December 31, 2034, and is designed to stimulate investment in qualified hydrogen projects. • Japan revised its Hydrogen Basic Strategy in 2023, setting a target to mobilize 15 trillion yen in public and private investment over the next 15 years and increase hydrogen consumption sixfold by 2040. Similarly, China’s Hydrogen Industry Development Plan (2021–2035) outlines a comprehensive roadmap for the country’s medium- and long-term hydrogen development, highlighting the strategic importance of hydrogen in achieving industrial transformation.

Hydrogen, while offering significant potential as a clean energy carrier, demands meticulous attention in terms of handling and storage due to its inherently high flammability. This characteristic elevates safety as a critical concern, particularly in hydrogen-powered vehicles, where the risk of ignition becomes a major factor during collisions or accidents. Unlike conventional fuels, hydrogen exhibits a broader flammable range in ambient air and requires significantly lower ignition energy compared to gasoline or natural gas, increasing its propensity to ignite under minimal stimuli. According to the US Department of Energy, a comprehensive suite of safety protocols—such as hydrogen tank drop tests, leak detection tests, and garage leak simulations—must be conducted to ensure secure production, storage, and application. Designing a robust hydrogen storage system necessitates advanced safety measures, including efficient ventilation systems and highly sensitive leak detection technologies. In response to these safety imperatives, researchers and manufacturers are making substantial investments in the development of next-generation hydrogen storage solutions that prioritize both safety and performance, focusing particularly on materials that are lighter, stronger, and capable of withstanding extreme conditions.

The increasing global environmental concerns, particularly the recognition that greenhouse gas emissions are increasing rapidly, serve as a significant catalyst for adopting clean and renewable energies, including green hydrogen. According to the National Oceanic and Atmospheric Administration (NOAA), concentrations of carbon dioxide (CO2), methane, and nitrous oxide—the three greenhouse gases most responsible for driving climate change due to human activity—continued to increase at historically high rates in the atmosphere throughout 2022. Governments worldwide are actively moving toward net-zero emission targets. Over 140 countries, encompassing significant polluters such as China, the US, India, and the EU, have pledged to achieve net-zero emissions by 2050. The growing focus on achieving net-zero emissions drives the demand for clean and renewable energies, including green hydrogen. The Hydrogen Council states hydrogen is pivotal for achieving net-zero emissions by 2050 and limiting global warming to 1.5°C. Clean hydrogen stands out as a viable, long-term, and scalable solution for significantly reducing emissions in hard-to-abate sectors like steel production, shipping, aviation, and ammonia manufacturing. By 2050, hydrogen could prevent 80 gigatons (GT) of CO2 emissions, contributing to 20% of the total decrease needed. According to China’s National Energy Administration (NEA), in 2024, China produced around 320,000 mt through water electrolysis (using both renewable energy and thermal power) in 2024, up 3.6% year over year. Green hydrogen is regarded as a crucial element in reaching the country's goal of carbon neutrality.

Green hydrogen, produced using renewable energy sources or other low-carbon power, is increasingly recognized as a cornerstone for achieving deep decarbonization across a range of energy-intensive and hard-to-abate sectors. Industries such as steel, cement, chemicals, heavy-duty transportation, shipping, and aviation can leverage green hydrogen to significantly reduce their carbon footprints and align with global net-zero targets. Despite its environmental benefits, the commercial viability of green hydrogen remains a major challenge. Currently, the cost of green hydrogen is approximately two to four times higher than that of grey hydrogen, which is derived from fossil fuels without carbon capture. Several factors contribute to this disparity, including the high capital expenditure required for electrolyzer systems, the limited and uneven availability of low-cost renewable electricity, and the underdeveloped infrastructure for hydrogen production, storage, and distribution. These economic and logistical hurdles continue to hinder the widespread adoption of green hydrogen and restrict its contribution to the global energy transition.