Risk management firm DNV has cut its 2050 forecast for North American hydrogen production by 30%, in a major downgrade for the industry’s growth prospects in the wake of recent federal policy changes.

It has also lowered its demand-side forecast for the region, projecting that hydrogen will account for 3% of energy demand in 2050, down from 5% previously.

“Hydrogen production and demand show a decline in North America, with 2025 marking a pivotal year due to policy changes introduced by the One Big Beautiful Bill Act [OBBBA],” DNV said in its latest Energy Transition Outlook North America.

The OBBBA scaled back support for hydrogen. The 45V production tax credit, introduced under the Inflation Reduction Act (IRA), is now available only for facilities that begin construction before 2028 rather than the originally proposed date of 1 January 2033 in the IRA.

“This has a negative impact on projects in the early stages of development and which are unable to reach FID prior to 2027. This timeline of reaching FID prior to the end of 2027 is further complicated by the need to receive required permits and begin construction by the new deadline.”

DNV’s latest North America production forecast is for 45mt/yr by 2050, down from its 2024 forecast of 65mt/yr. It sees 45% of production in 2050 from blue hydrogen, with 22% from grid-connected electrolysis, 17% from dedicated renewables-based electrolysis, 13% from grey hydrogen and the rest from other sources. For 2060, it forecasts total production of 56mt/yr, down by 9mt/yr from the 2024 forecast. About half of this will be from grid-connected electrolysis, with hydrogen one-third from blue production routes.

“We expect the largest contraction will be in electrolytic hydrogen projects of greater capacity than 100MW, which qualified for the highest production tax credits under the IRA,” said DNV. “This green hydrogen was primarily intended for the production of green ammonia or e-methanol for export markets; with the loss of tax credits, these projects are now economically unattractive.”

Decarbonisation delay

DNV said the full range of recent transition-related policy changes have delayed decarbonisation of the energy sector by 5–8 years. “Overall, the 2025 policy shifts have significantly altered the emissions trajectory for North America from 2025 to 2050, reinforcing the reliance on fossil fuels and delaying progress toward long-term climate goals,” it said.

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Author: Stuart Penson