Analysis of IEA's Global Hydrogen Review 2025

Hydrogen is moving forward, the hype phase is over, and the next 5-10 years are critical!

1. Current hydrogen demand and production trends

2. Progress in low-emissions hydrogen deployment

3. Emerging opportunities in trade, infrastructure, and innovation

4. Policy developments and regional insights

5. Challenges and recommendations for scaling up hydrogen

Big picture

Global Hydrogen Demand: Slow but Steady Growth

• Global hydrogen demand reached almost 100 million tonnes (Mt) in 2024, a modest 2% increase from 2023 in step with overall energy demand growth . This demand remains overwhelmingly driven by traditional industrial uses of hydrogen, namely oil refining and the production of ammonia, methanol, and steel via direct-reduced iron , rather than new energy applications . In fact, new hydrogen applications (such as in transport, power, or synthetic fuels) still account for less than 1% of total demand, with their use almost entirely in biofuels production so far .

• Nearly all of the hydrogen consumed today is produced using fossil fuels, which in 2024 equated to roughly 290 billion cubic metres of natural gas and 90 Mt of coal (coal equivalent) used as feedstock . This reliance on unabated fossil-based hydrogen underscores the significant CO₂ emissions footprint of current hydrogen production.

• Hydrogen Demand by Region, 2024: China alone accounts for about 29% of global hydrogen demand in 2024, almost twice North America’s share . The Middle East (15%) and India (10%) have smaller but growing shares, while Europe contributes around 7% . The remaining demand is spread across other countries (about 23% in total).

• On the supply side, low-emissions hydrogen , defined as hydrogen produced via renewable-powered electrolysis or from fossil fuels with carbon capture , is starting to grow but from a very low base . Low-emissions hydrogen output rose ~10% in 2024 and is on track to reach around 1 Mt in 2025, yet that would still be under 1% of global production .

Low-Emissions Hydrogen: Progress Amid Setbacks

• Although the rollout of low-carbon hydrogen is behind earlier expectations, the Hydrogen Review 2025 notes that the sector is still making progress. A wave of project delays and cancellations over the past year forced a reality check on deployment projections for this decade . For the first time, the IEA revised down its estimate of potential 2030 low-emissions hydrogen output based on announced projects , from about 49 Mt per year (as projected in last year’s report) to 37 Mt per year by 2030 in this year’s analysis .

• Even so, the committed project pipeline continues to grow. The number of projects that have passed a final investment decision (FID) jumped by nearly 20% since last year’s report, and FID-approved projects now make up 9% of all announced hydrogen projects slated for 2030 GlobalHydrogenReview2025. If we consider only projects already operating or that have secured FID, global low-emissions hydrogen production is expected to reach about 4.2 Mt per year in 2030, a fivefold increase from 2024 levels.

Several barriers continue to hinder low-emissions hydrogen projects:

• Hydrogen is still expensive: The biggest hurdle for clean hydrogen today is still cost. Green hydrogen remains more expensive than fossil-based hydrogen, especially after natural gas prices dropped following the 2022 energy crisis, which made Gray hydrogen cheaper just as electrolyzer costs went up. That’s why support schemes, like subsidies, tax credits, and contracts for difference, are so important to help close the price gap and keep projects moving forward.

• Costs will improve by 2030: China and Europe may achieve cost-competitive renewable hydrogen by decade’s end due to cheaper renewables and rising carbon prices. In regions with cheap gas (U.S., Middle East), “blue” hydrogen (fossil + carbon capture) is likely to stay more competitive than “green” hydrogen.

• Infrastructure is lagging: Hydrogen pipelines, storage, and port facilities are limited. Without infrastructure, supply can’t easily reach users or export markets.

Major scale-up of electrolyzer capacity, led by China:

• China: the Electrolyser Giant: China has rapidly become the global powerhouse in electrolyser deployment and manufacturing. By mid-2025, global installed electrolyser capacity had reached 3 GW, up from just 0.6 GW in 2021, with China accounting for about 65% of this capacity and nearly 60% of global manufacturing. Costs in China are far lower, between $600 and $1,200 per kW compared with over $2,000 for Western models, although once exported, installation abroad pushes prices up to around $1,500–2,400 per kW due to transport, tariffs, and local construction. Chinese equipment still faces barriers overseas, including efficiency gaps, performance concerns, and compliance with technical standards. However, if these issues are resolved, China could help drive down global costs much as it did for solar PV.

Market Development & Related Policies

Key Takeaway: Policies are being rolled out, but slow implementation risks delaying hydrogen’s breakthrough. Firm offtake agreements are critical to unlocking investments.

Hydrogen Trade & Infrastructure: Ports as Early Movers

Key Takeaway: Ports with existing chemical infrastructure could become the first global hydrogen trade hubs, but only if policies and investments align.

Regional Spotlight: Southeast Asia’s Hydrogen Opportunity

• Demand and emissions profile: Hydrogen demand was about 4 million tonnes in 2024 (~4% of global use). Nearly all supply is fossil-based, consuming ~8% of the region’s natural gas and contributing ~1% of CO₂ emissions.

• Country breakdown: Indonesia accounts for more than a third of Southeast Asia’s hydrogen demand (around 35%), followed by Malaysia at about 22%, Vietnam at 15%, and Singapore at 12%.

• Sectoral uses: About 50% of Southeast Asia’s hydrogen is used for ammonia production (mainly in Indonesia), around 33% is consumed in oil refining (notably in Singapore), and roughly 20% goes into methanol production (primarily in Malaysia).

• Strategies and roadmaps: Hydrogen strategies now in place in Indonesia, Malaysia, Vietnam, Singapore, and Lao PDR. Common focus areas: low-carbon hydrogen, certification systems, and fuel-switching in existing industries.

• Clean hydrogen project pipeline: By 2030, Southeast Asia’s announced low-emissions hydrogen projects could provide around 480,000 tonnes per year of capacity, with nearly 90% of this concentrated in Indonesia and Malaysia. However, progress remains limited, only about 6% of projects have reached final investment decision, around 60% are still at very early stages, and roughly 40% are aimed at exports, mostly in the form of ammonia.

• Opportunities for scaling up: Hydrogen-based Ammonia & methanol production in Indonesia, Malaysia, Vietnam; Steelmaking in Indonesia & Vietnam; Shipping fuel in Singapore

• Challenges to overcome: Slow renewable energy deployment, which limits clean hydrogen supply and Financing and infrastructure constraints across the region.

• Strengths to leverage: Large state-owned industrial players that can drive projects at scale. Existing industrial clusters and port hubs (e.g., Singapore, Indonesia, Malaysia) well-suited for early hydrogen hubs.

• Policy actions recommended: Accelerate renewables, pilot projects, use existing industries as “anchor demand”. Foster international partnerships to bring capital and technology into the region.

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Key Takeaway: "Southeast Asia has huge potential but needs faster renewable deployment, better policies, and lower capital costs to compete globally."

Policy Pathways and Recommendations

• Support shovel-ready projects: Prioritize incentives for projects in existing hydrogen applications (refining, fertilizers, methanol) where technology is mature and costs can quickly fall with scale.

• Create demand for clean hydrogen: IEA recommends using tools like quotas, mandates, and public procurement to guarantee demand. Pooling demand in industrial hubs can help reduce risks for investors, while developing lead markets for products such as green steel, fertilizers, and fuels will provide clear pathways for scaling up hydrogen use..

• Accelerate infrastructure build-out: The IEA calls for faster hydrogen infrastructure development by cutting permitting delays, supporting early pipelines, storage, and port facilities, and focusing first on industrial clusters and ports where supply and demand naturally connect..

• Enhance public finance and de-risk technologies: Expand tools such as loan guarantees, concessional loans, and export credits. Use risk-sharing mechanisms to unlock private investment in first-of-a-kind projects and innovative technologies.

• Support emerging economies: The IEA highlights the importance of supporting renewable hydrogen projects in Africa, Latin America, and Southeast Asia through targeted finance and partnerships. Beyond simply exporting hydrogen, these regions should be helped to build local value chains, such as green fertilizer or steel, while stronger international cooperation ensures developing economies share in the benefits of the clean hydrogen transition.

Key Takeaway: Hydrogen is progressing, but realistic timelines and targeted policies are needed to avoid another ‘hype cycle’.

Conclusion: Overall Key Takeaways

• Hydrogen demand is growing, but still fossil-heavy – >95% of supply from unabated fossil fuels; low-emissions hydrogen <1% today.

• Clean hydrogen projects are advancing, but momentum has slowed – 2030 pipeline projection down to 37 Mt from 49Mt, though FIDs and operational projects could deliver 4.2 Mt.

• Costs remain a barrier – fossil-based hydrogen still cheaper; gap narrowing by 2030, especially in China and Europe.

• China dominates electrolyser supply – 65% of installed capacity, 60% of manufacturing; cheap but with export barriers.

• Policies are crucial, but implementation lags – most demand creation still in traditional sectors; public procurement underused.

• Southeast Asia is an emerging player – 4 Mt demand today, mostly fossil-based; promising pipeline but still immature.

• IEA’s advice is clear: keep supporting projects, create demand, fast-track infrastructure, de-risk technologies, and ensure emerging economies share in the growth.

One thing is clear: Hydrogen is no longer a futuristic dream, it’s a real, scaling industry. But its success depends on smart policies, firm demand, and global co-operation.

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