Analyst data suggests that although the low-emissions hydrogen sector planned to either commit to or initiate the construction of roughly a million tonnes of production capacity per year by 2025, over 4.9 million tonnes of scheduled capacity were canceled. Worldwide, the sector is reducing its scale as it encounters obstacles in securing customers willing to pay a premium for renewable hydrogen. Nevertheless, Chinese firms are at the forefront of project execution without making significant announcements.
Michael Barnard from The Future Is Electric Strategy perceives low-emissions hydrogen mainly as a chemical feedstock and vital for ‘hard-to-abate’ industries such as steel and ammonia manufacturing. Adrian Odenweller from the Potsdam Institute for Climate Impact Research underscores hydrogen’s function in the production of synthetic fuels for aviation and maritime transport.
The majority of hydrogen production relies on fossil fuels, with ‘grey’ hydrogen commonly produced through steam methane reforming. Blue hydrogen captures and sequesters the CO2 emissions produced during this process. Green hydrogen, generated through water electrolysis using renewable energy, is constrained by cost considerations, especially the expense of renewable electricity.
As many extensive hydrogen initiatives were abandoned in 2025, the sector experienced notable cancellations, including BP’s 1.5GW Duqm Green Hydrogen Project in Oman and H2Teesside’s blue hydrogen endeavor in the UK. Elevated electricity prices in Europe also prompted the cancellation of ArcelorMittal’s green hydrogen facility for direct-reduced iron production in Germany, despite considerable government incentives.
Odenweller associates this reduction in projects with unpredictable green hydrogen costs and the significant investment needed for electrolysers. Moreover, rigorous EU regulations concerning the monitoring of hydrogen’s greenhouse gas emissions pose additional hurdles.
While European projects are mainly halted or postponed, China is making progress, with the majority of the new developments commencing in 2025. Chinese initiatives, such as a substantial plant in Heilongjiang Province, represent uncomplicated implementations, comprising half of the production from new international projects.
In spite of obstacles, certain initiatives are moving forward, particularly CF Industries’ Blue Point Complex in Louisiana, which is expected to yield a considerable amount of blue hydrogen. Meanwhile, European ventures like OMV’s electrolysis facility underscore ongoing attempts even in the face of industry doubt.
In summary, although the significance of hydrogen in petroleum refining is anticipated to diminish, demand in sectors lacking alternatives remains. The EU’s target for aviation e-fuels by 2030 encounters uncertainty, yet the requirement for hydrogen in industries such as chemicals and steel persists. Revised industry predictions lessen the expected effect of hydrogen on global carbon emission reductions, though its importance in pivotal sectors is undeniable.