Global Hydrogen Demand Rises 2% in 2024

Global Hydrogen Demand and the Role of Fossil Fuels

The global demand for hydrogen reached 100 million tonnes in 2024, marking a 2% increase from the previous year. This growth aligns with the broader trend of rising energy demand worldwide. However, the majority of this hydrogen was still produced using fossil fuels, without adequate measures to capture the associated emissions.

According to the International Energy Agency (IEA), the continued reliance on fossil fuels for hydrogen production is driven by cost considerations. In many regions, producing hydrogen from natural gas remains the most economical option. This affordability has been further reinforced by recent declines in natural gas prices. At the same time, the cost of electrolysers—key components in producing low-emissions hydrogen—has increased due to inflation and slower-than-expected technological deployment.

Despite these challenges, the IEA highlights that the cost gap between fossil fuel-based and low-emissions hydrogen is expected to narrow by 2030. This projection is based on anticipated reductions in technology costs, alongside the expansion of renewable energy sources and the implementation of new regulatory frameworks.

Slow Progress in Low-Emissions Hydrogen Adoption

While the potential for low-emissions hydrogen has been widely discussed, its actual adoption has not met expectations set by industry leaders and governments. Several factors are limiting its growth, including high production costs, uncertain demand, regulatory ambiguity, and slow development of necessary infrastructure.

New analysis from the IEA shows that the projected capacity for low-emissions hydrogen production by 2030 has decreased compared to earlier estimates. Initially, it was expected to reach 49 million tonnes per year, but the current estimate stands at 37 million tonnes per year. This decline reflects the ongoing challenges in scaling up clean hydrogen production.

However, despite these setbacks, the IEA forecasts a significant expansion in low-emissions hydrogen production by the end of the decade. Projects that are either operational, under construction, or have received final investment decisions by 2030 are expected to increase hydrogen output more than fivefold from 2024 levels, reaching over 4 million tonnes per year.

In addition, an additional 6 million tonnes per year could become operational by 2030 if supportive policies are put in place to ensure consistent demand. These policies would be critical in driving the transition toward cleaner hydrogen production.

China's Leading Role in Electrolyser Deployment

China is currently the primary driver in the global deployment of electrolysers for low-emissions hydrogen production. The country accounts for 65% of the world’s electrolyser capacity that has been installed or reached a final investment decision. Furthermore, China is home to nearly 60% of the world’s electrolyser manufacturing capacity.

This dominance positions China as a key player in shaping the future of clean hydrogen. As the country continues to invest in electrolyser technology, it may influence global trends and accelerate the shift toward sustainable hydrogen production.

With the right combination of policy support, technological innovation, and market incentives, the transition to low-emissions hydrogen could gain momentum. However, the path forward requires addressing existing barriers and ensuring long-term commitment from both public and private sectors.