Low emissions hydrogen projects set to grow strongly – IEA

Despite project cancellations and persistent challenges, low-emissions hydrogen production is expected to see a sizable expansion to 2030, the IEA finds.

In its 2025 Global Hydrogen Review, the IEA reports that worldwide hydrogen demand increased to almost 100Mt in 2024, up 2% from 2023 and in line with overall energy demand growth.

Almost all of this was met by hydrogen produced from fossil fuels without measures in place to capture associated emissions, with the traditional hydrogen using sectors, such as oil refining and industry, remaining the biggest consumers.

But low-emissions hydrogen production, while accounting for less than 1% of the global production, is growing, up 10% in 2024 and on track to reach 1Mt in 2025.

Have you read?
Green hydrogen shows promise for industrial decarbonisation in Global South
Hydrogen at the heart of Trelleborg’s system of energy solutions

Based on projects that are today operational or have reached final investment decision, the production is set to reach 4.2Mt/year, up fivefold on the 2024 production.

But based on the announced projects, by 2030 the potential low-emissions hydrogen production could reach up to 37Mt per year, albeit down from the 49Mt estimated in the previous review.

IEA Executive Director Fatih Birol, commenting, said that investor interest in hydrogen jumped at the start of this decade thanks to its potential to help countries deliver on their energy goals.

“The latest data indicates that the growth of new hydrogen technologies is under pressure due to economic headwinds and policy uncertainty, but we still see strong signs that their development is moving ahead globally.”

Low-emissions hydrogen production cost gap

The Global Hydrogen Review report highlights that globally, it remains much cheaper to produce hydrogen from fossil fuels and that the cost gap with low-emissions hydrogen production remains a key barrier for project development. However, it is expected to narrow.

In China, renewable hydrogen could become cost-competitive by 2030 due to low technology costs and the cost of capital.

In Europe, the gap is also set to shrink from CO2 prices and in areas with high renewable potential, and because natural gas prices for industrial users in the region are set to be more elevated than elsewhere.

In regions where natural gas is cheaper, such as the US and the Middle East, the cost gap is set to remain larger, and CCUS is likely to be more competitive for producing low-emissions hydrogen in the near term.

Electrolyser deployment

The report also finds that China is the driving force today in the deployment of electrolysers to produce low-emissions hydrogen. The country accounts for almost two-thirds of global electrolyser capacity that has been installed or reached FID, and it is home to nearly 60% of the world’s electrolyser manufacturing capacity.

Elsewhere, manufacturers have come under financial pressure due to rising costs and slower than expected uptake. Chinese manufacturers could also face challenges in the future, though, since existing manufacturing capacity of more than 20GW per year is significantly above current demand levels.

For the ongoing growth of the market, IEA recommendations for policy makers include maintaining support schemes, using the tools they have to foster demand and expediting the development of the necessary infrastructure.

The report, which includes an in-depth review of the southeast Asian market, is complemented by an updated hydrogen projects database and the launch of a new online project and policy tracker.