Hydrogen

• China leads on electrolyser capacity additions, with a cumulated capacity of 780 MW in 2023 and more than 9 GW at advanced stages of development. 
• The European Union adopted two delegated acts in February 2023 with rules to define renewable hydrogen, approved funding for four waves of hydrogen-related Important Projects of Common European Interest – with funding already provided to some projects developers - and two auctions of the European Hydrogen Bank for a total of EUR 1.9 billion (USD 2 billion) were launched in 2024.
• India approved in January 2023 the National Green Hydrogen Mission with the aim of producing 5 Mt of renewable hydrogen by 2030. As part of that, the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme is a major financial measure to promote domestic manufacturing of electrolysers and the production of renewable hydrogen. 
• The United Kingdom released in July 2022 its Low-Carbon Hydrogen Standard and in February 2023 launched a consultation for a certification scheme. The first and second Electrolytic Allocation Round to support projects to produce hydrogen using electrolysis were launched, with the aim to support a cumulated of 1 000 MW of capacity.  
• The United States approved USD 1.7 billion for six projects as part of the Industrial Demonstration Programme. In early 2025, the final rules for the Inflation Reduction Act (IRA) clean hydrogen production tax credit were released.
• Mauritania released in 2023 its Hydrogen Strategy, joining South Africa, Kenya and Namibia as the only sub-Saharan countries that have adopted a hydrogen strategy, plus the Economic Community of West African States (ECOWAS).

Hydrogen applications play a fundamental role in sectors where emissions are hard to abate, but production needs to become cleaner

In the NZE Scenario, the use of low-emissions hydrogen and hydrogen-based fuels lead to modest reductions in CO₂ emissions in 2030 compared to other key mitigation measures, such as the deployment of renewables, direct electrification and behavioural change. However, low-emissions hydrogen and hydrogen-based fuels can play an important role in sectors where emissions are hard to abate and other mitigation measures may not be available or would be difficult to implement, namely heavy industry and long-distance transport. Hydrogen's total contribution is also larger in the longer term as hydrogen-based technologies mature.

Replacing unabated fossil fuel-based hydrogen with low-emissions hydrogen in existing applications (namely refining and industry sectors) is a short-term priority given that it presents relatively low technical challenges as it is a like-for-like substitution rather than a fuel switch. Current production of hydrogen for these applications emits 1 100-1 250 Mt CO₂ equivalent¹ (including upstream and midstream emissions from fossil fuel supply). In the NZE Scenario the average emissions intensity of hydrogen production drops from the range of 11.3-13 kg CO₂-eq/kg H₂ in 2023 to 6.8-7.7 kg CO₂ kg CO₂-eq/kg H₂ in 2030.  

¹The range in the emissions and in the average emissions intensity reflects the different allocation methods for the by-product hydrogen production in refineries.1. The range in the emissions and in the average emissions intensity reflects the different allocation methods for the by-product hydrogen production in refineries.

Dedicated hydrogen production today is primarily based on fossil fuel technologies, with around a sixth of the global hydrogen supply coming from “by-product” hydrogen, mainly in the petrochemical industry. In 2023, around two-thirds of the dedicated hydrogen production was met with natural gas and around 20% with coal (mostly used in China, which alone accounted for 90% of global coal consumption for hydrogen production). 

Low-emissions hydrogen production represented less than 1% of total hydrogen production in 2023, with a relatively small growth of 6% compared to 2022. This increase in low-emissions hydrogen production is the result of around 700 MW of electrolysis and more than 10 kt H₂/year production capacity from natural gas with CCUS and biomass, mainly from the Prince George refinery project in Canada, all entering into operation during 2023.  

Getting on track with the NZE Scenario requires a rapid scale-up of low-emissions hydrogen, with around 50 Mt of hydrogen production based on electrolysis and more than 15 Mt produced from fossil fuels with CCUS by 2030, for a total of around half of global hydrogen production. This will require an installed capacity of 560 GW of electrolysers, which in turn requires both a rapid scale-up of electrolyser manufacturing capacity (see Electrolysers page) and significant deployment of dedicated renewable capacity for hydrogen production and enhancement of the power grid. With regard to fossil fuels, by 2030 natural gas demand for hydrogen production is more than 10% higher than in 2023 in the NZE Scenario, while coal demand drops by nearly 10%. In both cases, newly deployed production capacity is equipped with CCUS and a fraction of existing facilities still operational in 2030 are retrofitted with CCUS. 

Global hydrogen demand reached 97 Mt in 2023, a growth of 2.5% compared to 2022. Hydrogen demand remains concentrated in traditional applications in the refining and industrial sectors (including chemicals and natural gas-based Direct Reduced Iron [DRI]), with very limited penetration in new applications. Demand in new applications, such as 100% hydrogen-based DRI, high-temperature heat in industry, transport and power, represents less than 0.1% of global demand. Most of this demand is concentrated in road transport, although other applications are starting to get some traction.  

Several demonstrations of key end uses for low-emissions hydrogen and hydrogen-based fuels entered into operation in the past years in chemicals production, refining, high-temperature heating, steel and shipping. Bringing these technologies to commercialisation as soon as possible will be critical to unlocking a significant fraction of demand in these new applications. 

Getting on track with the NZE Scenario will require a step-change in demand creation, particularly in new applications. By 2030 hydrogen demand increases by 1.5 times to reach around 150 Mt, with more than one-third coming from new applications.

Hydrogen is today mostly produced and consumed in the same location, without the need for transport infrastructure. As demand increases, the production of low-emissions hydrogen in regions with abundant renewable energy resources will become more economically attractive, leading to an increase in transport needs to connect production sites with demand centres.

Pipelines are the most efficient and least costly way to transport hydrogen up to a distance of 2 500 to 3 000 km, for capacities above 200 kt per year, particularly in the case of repurposed pipelines. About 5 000 km of hydrogen pipelines are already in operation worldwide, mainly owned by private companies and used to connect industrial users. Several countries are developing plans for new hydrogen infrastructure, with Europe leading the way. The European Hydrogen Backbone initiative groups together 33 gas infrastructure operators with the aim of establishing a pan-European hydrogen pipeline network. Construction of the first 30 km of the Dutch hydrogen backbone - part of a planned 1 200 km network - began in October 2024. In Germany, KfW has granted a EUR 24 billion loan to support the development of the country's 9 040 km hydrogen network, with the first 525 km - mainly repurposed natural gas pipelines - expected to be completed in 2025. In addition, China started construction of the 737 km Zhangjiakou Kangbao-Caofeidian hydrogen pipeline, which is expected to be completed by mid-2027. Staying on track with the NZE Scenario would require around 45 000 km of hydrogen pipelines (including new and repurposed pipelines) by 2035. 

For long distance transport, shipping hydrogen and its carriers may be more cost competitive than pipelines. If pure hydrogen is required, it can be shipped directly or as ammonia or LOHC for later conversion. If not, it can be more easily transported as ammonia, methanol, synthetic fuels or bulk products made with low-emissions hydrogen, such as hot briquetted iron. In February 2022 the Hydrogen Energy Supply Chain project demonstrated for the first time the shipment of liquefied hydrogen from Australia to Japan, but the technology is not yet commercial. As a result, most projects are focused on ammonia exports, with only a few large projects already committed. Notably, Saudi Arabia's 1.2 Mtpa ammonia NEOM project reached financial closure in March 2023 while India's AM Green Ammonia project, a 1 Mtpa plant for low-emissions ammonia production, including for export, reached FID in August 2024. In the NZE Scenario, around 18 Mt of low-emissions hydrogen (in the form of hydrogen or hydrogen-based fuels) are shipped globally by 2030.

The development of infrastructure for underground hydrogen storage will be important to provide flexibility and may be considered for security purposes in the event of supply disruptions. Salt caverns are already used for industrial storage in the United States and the United Kingdom. Several projects are ongoing for the demonstration of fast cycling in salt caverns for hydrogen storage and the repurposing of caverns previously used for storing natural gas. In December 2023, the H2CAST Etzel project successfully converted two large salt caverns previously used for gas storage into hydrogen storage facilities, with leak tests completed in 2024. In August 2024, Uniper inaugurated a hydrogen storage pilot project at a salt cavern site in northern Germany. Although at a lower level of technological maturity, other types of underground hydrogen storage are being tested. Between 2022 and 2024, a demonstration facility for storing hydrogen in lined hard rock caverns has successfully operated in Sweden. There are ongoing projects to demonstrate hydrogen storage in depleted gas fields, such as the Underground Sun Storage 2030 in Austria and HyStorage in Germany. In the NZE Scenario, global bulk storage capacity rises from 0.5 TWh today to almost 300 TWh by 2035. 

The maturity of hydrogen technologies varies across the supply chain. Low-emissions hydrogen production technologies are commercially available but have not yet reached full maturity. Meanwhile, demand-side innovation is progressing slowly, although several technologies are close to significant progress towards demonstration and commercialization.

On the supply side, electrolytic hydrogen production technologies are commercially available, but other low-emissions hydrogen production methods still need to be proven on a large scale. In addition, further innovation is needed to ensure market uptake by lowering production costs, improving efficiency and reducing equipment costs. Alkaline and proton exchange membrane (PEM) electrolysers are the most mature, with ongoing innovation to reduce its costs, such as the reliance on iridium use and its recyclability in PEM electrolysers. Solid oxide electrolysers (SOECs) achieve the highest efficiencies among electrolysers, with research seeking to extend their current limited lifetime. Currently, no fossil-fuel based hydrogen production plant with CCUS achieves CO₂ capture rates above 90%. However, two plants under construction are being built with autothermal reformers (ATR) instead of traditional steam methane reformers (SMR) and will integrate CCUS. In 2024, Nu:ionic and XRG Technologies deployed the first commercial electrified SMR, while Hycamite launched a thermos-catalytic methane pyrolysis demonstration plant in Finland.

On the demand side, beyond traditional uses of hydrogen in refining and industrial applications, most hydrogen applications with limited decarbonisation alternatives have yet to be demonstrated at scale, but ongoing innovation efforts may soon lead to advances. In the steel industry, Stegra started construction of the world's first large-scale 100% hydrogen-based Direct Reduced Iron (DRI) plant in Boden, Sweden, in November 2023, with an expected production of 2.5 Mtpa of steel. In the chemical sector, Skovgaard Energy inaugurated a demonstration plant in Lemvig, Denmark, in August 2024, using Topsoe's flexible ammonia synthesis technology with a capacity of 5 ktpa, capable of operating between 5% and 100%. In shipping, ammonia-fuelled ships are not yet commercially available, but significant progress has been made in testing ammonia-fuelled marine engines, with the first ammonia-fuelled ships expected to enter service within the next two years. In power generation, the Hyflexpower project successfully demonstrated the use of 100% renewable hydrogen in a 12 MW gas turbine in October 2023, while JERA successfully tested 20% ammonia co-firing at its 1 GW Hekinan coal-fired power plant in April 2024.

As of September 2024, a total of 58 governments, the European Union and the Economic Community of West African States had a hydrogen strategy in place. Targets for the deployment of low-emissions hydrogen production technologies are growing, reaching an aggregate of 35-43 Mt, which accounts for 55-65% of the production by 2030 in the NZE Scenario. However, there has been limited progress in establishing targets to increase demand for low-emissions hydrogen: meeting governments targets could create around 11 Mt by 2030, but this is reduce to 6 Mt when only policies already in force are taken into account. Since the release of the Global Hydrogen Review 2023, 26 policies to stimulate demand have been announced, with the industrial sector being the most targeted one for the policies with a sectoral focus. The majority of policies in place uses instruments such as grants for CAPEX support. Quotas are defined in India’s announced policy, although not entered into force yet, while public procurement has not been considered in announced policies over the past year. Policies targeting the aviation and shipping sectors have recently been published, namely the REFuelEU in the European Union and the Sustainable Aviation Fuel Mandate in the United Kingdom.

Government investment in RD&D in hydrogen technologies remained robust in 2023, growing by almost 5% from the record value reached in 2022. In the past five years alone, RD&D spending on hydrogen technologies has nearly quadrupled, increasing faster than spending on other clean technologies. Governments have started to adopt new mechanisms to support project developers and mitigate investment risk

Several governments have begun to implement policies in the form of grants, loans, tax breaks and carbon contracts for difference. Activity has been particularly intense over the past years, with several significant announcements: 

• European Union: the European Commission approved funding for four waves of hydrogen-related Important Projects of Common European Interest, for a combined EUR 18.9 billion (USD 19.5 billion) and an expected additional amount of EUR 10 billion (USD 10.3 billion) of private investment leveraged. In addition, the first auction of the European Hydrogen Bank has awarded support to seven renewable hydrogen projects in April 2024. 
• Germany: the first auction for supporting fuel switching in industry, with a total of EUR 4 billion (USD 4.1 billion) in a CCfD scheme, has been launched in 2024. The results of the first auction of the H2Global initiative were announced in July 2024 and a second one is ongoing, while other countries such as The Netherlands and Canada have joined the scheme providing additional fundings. 
• Japan: 15-years CfD subsidies are included in the Hydrogen Society Promotion Act, to support domestic hydrogen production and import. 
• United Kingdom: eleven projects, for a total of 125 MW of electrolysis, have been selected as part of the Hydrogen Allocation Round and received over GBP 2 billion (USD 2.5 billion) in OPEX support. 
  

The International Organization for Standardization (ISO) has published a technical specification 19870/2023 for determining the GHG emissions of hydrogen supply chain from production to consumption which will serve, as the basis for the ISO standards to be published in the next years. 

In parallel, governments are working on the establishment of regulatory frameworks and certification schemes. Australia is developing a voluntary scheme for Guarantee of Origin certificates. The European Commission published a draft delegated act for the methodology to evaluate emissions savings of low-carbon fuels, which consultation period closed around the end of 2024.  The United Kingdom released a Low-Carbon Hydrogen Standard in July 2022 and in February 2023 launched a consultation for a certification scheme. The International Organisation for Standardization (ISO) published the technical specification ISO/TS 19870 concerning the methodologies to determine the emissions associated with the production, conditioning and transport of hydrogen. At COP28, the CertHiLAC certification system was launched by the Inter-American Development Bank (IDB) and the Latin American Energy Organization (OLADE): it is a certification system for the production of low-emissions hydrogen in the region of Latin America and the Caribbean. Still at COP28, a Declaration of Intent on the mutual recognition of certification schemes for hydrogen and hydrogen derivatives was signed by 39 countries.

However, the methodologies defined for these certification schemes are not necessarily aligned. This may become an important barrier as the investments that will lead to trade in low-emissions hydrogen will rely on international recognition of standards and certificates.