Global hydrogen demand on the rise

12.09.2025

Source: E & M powernews

Global demand for hydrogen has increased further in 2024, driven by demand from industry and refineries. The IEA sees great potential for low-emission H2 projects.

Global hydrogen demand increased by 2 percent year-on-year to almost 100 million tons in 2024. This growth was driven by sectors in which hydrogen is traditionally used, such as refineries and industry. This is according to the recently published "Global Hydrogen Review 2025" by the International Energy Agency (IEA). By contrast, demand from new H2 applications accounted for less than 1 percent and was almost entirely focused on the production of biofuels.

The production of conventional hydrogen remained virtually unchanged, dominated by the use of fossil fuels. In 2024, 290 billion cubic meters of natural gas and 90 million tonnes of coal (converted to a unit of coal equivalent) were used to produce hydrogen. Although the production of low-emission hydrogen increased by 10 percent, at 0.8 million tons it was limited to less than 1 percent of global production.

Low-emission H2 production by 2030

The potential for low-emission hydrogen production recorded by 2030 on the basis of announced projects has decreased. According to the report, this potential is now estimated at 37 million tons per year, whereas last year's IEA report assumed 49 million tons per year for 2030.

The potential of both electrolyser projects and projects using fossil fuels with carbon capture and storage (CCU/CCSS) has fallen, with electrolyser projects accounting for more than 80 percent of the decline.

Despite this readjustment of industry plans, strong growth in low-emission hydrogen production is expected until 2030. By then, low-emission hydrogen production from projects that are currently in operation or for which a final investment decision has been made is expected to reach 4.2 million tons per year. This would correspond to a five-fold increase compared to production in 2024.

According to the IEA, this is far below the ambitions of governments and industry at the beginning of this decade, but still represents an increase from less than 1 percent of total current hydrogen production to around 4 percent in 2030.

Furthermore, in a new comprehensive assessment of the prospects for projects announced this year, the IEA concludes that a further 6 million tons of low-emission hydrogen production projects could come on stream by 2030 if effective policies to create demand and facilitate offtake are implemented.

Falling natural gas prices harm hydrogen ramp-up

According to the report, the cost difference between low-emission hydrogen and fossil fuel-based production remains a major obstacle to project development, even if an improvement is on the horizon. The sharp fall in natural gas prices, the rise in the cost of electrolysers and the slower than expected introduction of the technology have widened the cost gap compared to fossil fuel-based production.

In 2022, the average production costs for hydrogen based on natural gas amounted to around USD 1 per kilogram of hydrogen. This compares with the cost of producing hydrogen from renewable energy sources of just under USD 4 per kilogram in areas with abundant renewable resources.

The IEA's 280-page paper is available on the organization's website.

Author: Hans-Wilhelm Schiffer