Hydrogen sector continues to grow despite barriers, project cancellations

The industry is recalibrating ambitions amid rising costs and regulatory uncertainty, yet fundamental growth trajectory remains intact with committed investments rising nearly 20 per cent

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THE global hydrogen sector reached a pivotal inflection point in 2024, confronting harsh economic realities whilst simultaneously demonstrating signs of structural maturation that distinguish current progress from previous failed attempts to commercialise the technology.

Global hydrogen demand climbed to nearly 100 million tons in 2024, representing a 2 per cent increase from the previous year that aligned precisely with overall energy demand growth patterns.

The International Energy Agency's (IEA) Global Hydrogen Review 2025 reveals that this expansion was driven entirely by traditional industrial sectors including oil refining and chemicals, whilst demand from new applications accounted for less than 1 per cent of total consumption and was concentrated almost entirely in biofuels production.

Supply remained overwhelmingly dependent on fossil fuels, consuming 290 billion cu m of natural gas and 90 million tons of coal equivalent throughout 2024.

Low-emissions hydrogen production grew by 10 per cent in 2024 and is projected to reach 1 million tons in 2025, yet this still represents less than 1 per cent of global production.

The sector experienced its first-ever contraction in projected 2030 production capacity, with announced projects now totalling 37 million tons per annum (mtpa) compared to 49 million tons forecast in the previous year's review.

Cancellations and delays were concentrated in early-stage projects across Africa, the Americas, Europe and Australia, with electrolysis projects responsible for more than 80 per cent of the total decline.

Final investment decisions increased by nearly 20 per cent since the 2024 review, now representing 9 per cent of the total project pipeline to 2030.

Production from operational projects and those with committed financing is set to reach 4.2 mtpa by 2030, marking a fivefold increase compared to 2024 levels.