The International Energy Agency (IEA) said in its Global Hydrogen Review 2025 that low-emissions hydrogen production capacity is on track to grow significantly by 2030 despite a decline in new project announcements and mounting economic and regulatory challenges. The report projected that announced projects could provide up to 37 million tonnes of low-emissions hydrogen annually by the end of the decade. This marks a substantial decrease from the nearly 49 million tonnes forecast in the agency’s 2024 assessment, reflecting the recent slowdown in new commitments.
The IEA emphasized that the figure represents potential output and that real capacity will depend on how many projects advance beyond the planning stage. Operational projects, those under construction, or those that have reached a final investment decision are expected to expand more than five-fold from current levels. Their combined capacity is forecast to reach more than 4 million tonnes per year by 2030. An additional 6 million tonnes could be delivered if projects move forward that are close to investment decision but still pending, underscoring the importance of progressing initiatives already in the pipeline.
Several obstacles continue to hinder faster deployment. Costs for producing low-emissions hydrogen remain significantly higher than hydrogen generated from fossil fuels without emissions control. The gap has widened due to lower natural gas prices and rising expenses for electrolysers and other equipment. Inflation has also contributed to the increase in capital costs, putting pressure on developers working to achieve financial viability.
Rising costs pose challenge to project viability
Policy frameworks remain inconsistent across major markets, creating uncertainty for investors and developers. Questions around subsidies, standards, and certification schemes have slowed progress for many projects that have been announced but not advanced. Infrastructure limitations also present difficulties, as transport, storage, and port facilities for hydrogen and hydrogen-derived fuels have not kept pace with project announcements.
China has maintained its position as the largest player in the sector, accounting for about 65 percent of electrolyser capacity that is either installed or has reached final investment decision. It also represents close to 60 percent of global electrolyser manufacturing capacity. The IEA report noted that while this scale places China at the center of global supply, deployment beyond its borders is constrained by logistical and cost considerations.
Southeast Asia poised for significant production gains
Southeast Asia is emerging as an important region for new capacity. Hydrogen production from announced projects in the region could climb from roughly 3,000 tonnes today to about 430,000 tonnes annually by 2030. Growth in the region is tied to the development of renewable energy and the availability of competitive project costs supported by government programs. IEA Executive Director Fatih Birol stated that the growth of low-emissions hydrogen remains under pressure from financial and policy challenges but confirmed that the sector is still expanding worldwide.
He said governments should ensure adequate policy support, create demand through clear frameworks, and accelerate infrastructure development to maintain progress toward climate and energy objectives. The agency concluded that the global hydrogen sector is advancing, though at a slower pace than previously expected. While the overall pipeline of projects has contracted, the capacity from projects already committed to construction or operation indicates a clear trajectory of growth through 2030. The report underscores that low-emissions hydrogen remains a critical component of international efforts to decarbonize energy systems and reduce reliance on fossil fuels. – By Content Syndication Services.