Low-emissions hydrogen production grew by 10% in 2023 and is on track to reach one million tons (MT) by the end of 2025, according to the International Energy Agency’s (IEA) Global Hydrogen Review 2025.

Currently, low-emissions hydrogen accounts for less than 1% of global production.

High costs, uncertain demand, regulatory uncertainty, and slow infrastructure development hindered the uptake of low-emissions hydrogen in 2024.

Despite a recent wave of project delays and cancellations, several positive trends indicate that the industry is maturing. Since 2020, over 200 low-emissions hydrogen projects have reached final investment decisions (FIDs), a major leap from just a handful of pilot projects a few years ago.

Technological innovation across the hydrogen value chain is accelerating, with a record number of advancements achieved in the past year.

While short-term challenges persist, the long-term outlook shows the sector gaining traction and building a stronger foundation for scalable deployment in the years ahead.

Global Low-Emissions Hydrogen Production to Reach One Million Ton by 2025

Potential production fell for projects using electrolysis and fossil fuels with carbon capture, utilization, and storage (CCUS), though electrolysis projects accounted for more than 80% of the total decline.

Electrolysis-derived hydrogen surged by 60% year-over-year in 2024 to reach more than 100 KT. However, electrolysis represents only around one-sixth of total low-emissions hydrogen production methods.

Capital spending on low-emissions hydrogen projects reached $4.3 billion in 2024, an 80% increase from 2023. In 2024, global capital investment in low-emissions hydrogen was nearly evenly divided between electrolysis and CCUS-based production. However, in 2025, electrolysis is projected to account for about 80% of total spending while contributing only 56% of hydrogen output from projects under construction, reflecting its higher capital intensity compared with CCUS technologies.

Regional growth

Europe remains the largest hub for low-emissions hydrogen projects, accounting for nearly 25% of global announced production by 2030, despite a 20% year-on-year decline driven by slow market uptake and project cancellations tied to weak business cases.

North America and Latin America account for about 20% and 15% of the global pipeline, respectively. Both regions saw project reductions, around 10% in North America (mainly the U.S., amid policy uncertainty surrounding the Inflation Reduction Act) and 15% in Latin America, driven by cancellations in Chile. However, Brazil bucked the trend with a 60% surge in capacity, supported by its new hydrogen hubs program.

Meanwhile, China’s announced hydrogen capacity rose by 30%, fueled entirely by new electrolyzer projects.

Cost Gap

The decline in natural gas prices and the increase in electrolyzer costs have widened the cost gap with fossil-based hydrogen, necessitating support programs. However, the gap is expected to narrow by 2030.

Renewable hydrogen in China could become cost-competitive by the end of the decade, due to low technology and capital costs. In Europe, high CO₂ prices and strong renewable energy potential are expected to narrow the gap, especially as natural gas prices remain elevated.

However, in regions with lower gas prices, such as the U.S. and the Middle East, the gap will remain wider, making CCUS-based hydrogen more viable in the near term.

Electrolyzers

China has emerged as the global leader in electrolyzer deployment and manufacturing, accounting for 65% of installed and FID-approved capacity and nearly 60% of global manufacturing capacity. China’s 20 GW annual manufacturing capacity far exceeds current global demand (around 2 GW in 2024), suggesting potential industry consolidation ahead. Meanwhile, manufacturers outside China face declining revenues, rising losses, and in some cases bankruptcies or acquisitions, reflecting mounting financial strain.

Chinese electrolyzers are much cheaper to produce and install domestically ($600/kW-$1,200/kW) than those made elsewhere ($2,000/kW-$2,600/kW). Yet, when factoring in engineering, procurement, construction, transport, and tariffs, the cost advantage narrows for projects outside China, with installed costs rising to $1,500/kW-$2,400/kW.

The total installed electrolyzer capacity reached almost 2 GW at the end of 2024. Alkaline remains the leading technology, accounting for 60% of additions and global installed capacity.

Global Low-Emissions Hydrogen Production to Reach One Million Ton by 2025

Slowing Offtake

While global hydrogen offtake agreements slowed down in 2024, tenders for low-emission hydrogen yielded mixed results. Tenders in the steel sector in Europe were delayed or put on hold, while tenders for refining and fertilizer led to final investment decisions for production plants in Europe and India.

Global Low-Emissions Hydrogen Production to Reach One Million Ton by 2025

Currently, agreements for the offtake of low-emission hydrogen are less than 2 MTPA, around 5% of global production.

Southeast Asia is driving low-emission hydrogen production to reach 480 KTPA by 2030. However, only 6% of announced production has reached a final investment decision, and 60% remains at very early stages of development.

Outlook 2030

The report noted that for the first time, projected low-emissions hydrogen production by 2030 declined, falling to 37 million tons per annum (MTPA) from 49 MTPA estimated a year earlier.

If all projects for low-emission hydrogen production in Africa, Latin America, and Southeast Asia are realized, it could exceed 9 MTPA by 2030.

Global Low-Emissions Hydrogen Production to Reach One Million Ton by 2025

More than 0.5 MT of low-emissions hydrogen is expected to be produced and used in refineries by 2030.

Operational low-emissions hydrogen projects and those with FIDs are expected to reach 4.2 MTPA by 2030, a fivefold increase from 2024 levels. While still below initial government and industry ambitions, this would raise the share of low-emissions hydrogen from under 1% today to about 4% by 2030, mirroring the rapid early growth seen in technologies like solar PV.

A new assessment also indicates that an additional 6 MT of projects could become operational by 2030 if strong policy support and demand-creation measures are implemented.

By 2030, hydrogen produced via electrolysis using low-emissions electricity is expected to be almost 10 times larger than in 2024, but it will still account for only 15% of all low-emissions hydrogen use.

By 2030, over 95% of planned low-emissions hydrogen production in industry is expected to be located in North America (50%), China (25%), the European Union (15%), the Middle East (6%), and India (4%).

Nearly 45% of the low-emissions hydrogen from announced production projects is intended for export, exceeding 16 MTPA by 2030 if all such projects materialize.

Recommendations

To accelerate low-emission hydrogen production, the report recommends providing financial support to shovel-ready projects.

To scale low-emissions hydrogen, demand creation must accelerate through targeted regulations and support programs in key sectors. Swift policy implementation can drive offtake and attract investment in supply.

Collaboration between governments and industry can further establish lead markets for sustainable products, encourage early adoption, and strengthen the hydrogen economy.

The capacity of the clean hydrogen market is expected to expand to 170 MT by 2030 and reach 600 MT by 2050, according to Deloitte’s 2023 Global Green Hydrogen Outlook.