Despite the uptick in demand, the transition to low-emissions hydrogen continues to lag behind. In 2024, hydrogen supply remained dominated by fossil fuels, consuming 290 billion cubic metres of natural gas and 90 Mt of coal equivalent.
Although, low-emissions hydrogen production grew by 10 per cent and is on track to reach 1 Mt in 2025, it still comprises less than 1 per cent of global production.
According to the International Energy Agency, Global Hydrogen demand climbed to nearly 100 million tonnes (Mt) in 2024, marking a 2 per cent increase from the previous year, in line with the overall rise in global energy consumption.
The growth was primarily fuelled by traditional uses in oil refining and industrial processes, while demand from emerging applications – such as biofuels – accounted for less than 1 per cent of the total usage.
The sector has been hampered by high costs, uncertain demand, regulatory complexity, and infrastructure delays. A wave of project cancellations and postponements in 2024 — particularly for electrolysis-based projects — has reduced the projected low-emissions hydrogen output for 2030 from 49 Mtpa to 37 Mtpa.
Nonetheless, the number of projects reaching final investment decision (FID) increased by 20 per cent over the past year, with more than 200 projects receiving FID since 2020.
China continues to dominate the electrolyser market, with 65 per cent of global installed capacity and nearly 60 per cent of global manufacturing. However, global uptake of Chinese-made electrolysers remains constrained by concerns over efficiency, local compatibility, and lifetime maintenance — although Chinese firms are increasingly adapting their products for international markets.
Meanwhile, the cost gap between low-emissions hydrogen and conventional fossil-based hydrogen remains a critical barrier. In 2024, electrolysis projects outside China cost between USD 2,000–2,600/kW, compared to USD 600–1,200/kW in China. However, transportation, installation, and regulatory factors narrow this disparity when Chinese products are used abroad.
Ports are emerging as crucial hubs for hydrogen-based fuels, particularly for shipping. Locations like Singapore, Rotterdam, and Ain Sokhna have been identified as key sites for early infrastructure development, given their proximity to supply and existing industrial demand.
In Southeast Asia, hydrogen demand reached 4 Mtpa in 2024, dominated by the chemical sector and largely reliant on natural gas. While low-emissions hydrogen projects in the region show promise, only 6 per cent have reached FID.
