Editorial Comment 

TYLER CAMPBELL, Managing Editor

Over the past several years, clean hydrogen (H₂) and its derivatives have emerged as a major focus for industry and government, particularly regarding efforts to improve project bankability and build out supporting supply chains. However, the lack of clarity on future demand, energy and materials costs, and regulatory uncertainty has slowed the industry’s progress. For example, the Hydrogen Council in collaboration with McKinsey & Company projects that approximately 8 million tons per year (MMtpy) of clean H₂ is considered to be policy-supported by 2030, particularly in the U.S., the European Union (EU), Japan and South Korea, while the projected demand for H₂ for these regions is roughly 34 MMtpy.¹ The remaining 26 MMtpy is considered “nearly viable” or “high risk.” However, despite the uncertainty, clean H₂ demand is forecast to reach 600 MMtpy–660 MMtpy by 2050. 

The future demand for H₂ relies heavily on policy initiatives aimed at reducing clean H₂ production costs and mandating and/or incentivizing its use. Current regulations include the EU Renewable Energy Directive (REDIII), Japan’s Contracts for Difference mechanism (CfD), South Korea’s Clean Hydrogen Portfolio Standard (CPHS) and the U.S. Inflation Reduction Act (IRA), which has undergone numerous adjustments in 2025. These policies have the potential to increase or decrease H₂ supply and demand; however, the Hydrogen Council predicts that the global demand for H₂ will grow by 2 to 4 times by 2050.¹ 

H₂ demand is still mostly concentrated in refining and industry applications, and less than 1% of the global demand is associated with the energy transition (i.e., heavy industry, long-distance transport, energy storage), according to the International Energy Agency (IEA).² Most of this H₂ is produced via steam methane reforming (SMR) with carbon capture and sequestration (CCS). The chemical, refining and shipping sectors present the largest amount of contracted demand, as well as the largest share of firm agreements. 

Electrolyzer technologies. Of course, green H₂ production via electrolysis requires cost-effective renewable energy and an increase in electrolyzer capacity. The four primary electrolyzers in the market are solid oxide, anion exchange membrane (AEM), proton exchange membrane (PEM) and alkaline electrolyzers, each of which have unique material costs. The most widely used is the PEM electrolyzer, which costs roughly $5.24/kilogram (kg) of H₂ and consumes approximately 54.3 kilowatt hours (kWh)/kg of H₂ produced, according to the U.S. Energy Information Administration (EIA).³ 

Installed electrolyzer capacity is expected to reach 230 gigawatts (GW)–520 GW by 2030, but only about 20 GW have reached final investment decision (FID)—560 GW are required by 2030 to meet the proposed Net Zero Emissions by 2050 Scenario. Gulf Energy Information’s Global Energy Infrastructure (GEI) database tracks active H₂ projects globally. Since the database’s inception in 2021, active H₂ projects have increased to 1,739, about a 22% increase compared to 2024 (1,423) and a 20% increase compared to 2023 (1,450). Ultimately, the expansion of electrolyzer technologies at scale will determine how quickly H₂ can move from promising solution to mainstream reality. H₂T

LITERATURE CITED 

¹ Hydrogen Council, “Closing the cost gap for clean hydrogen demand by 2030—New report outlines solutions to unlock business cases,” March 2025, online: https://hydrogencouncil.com/en/closing-the-cost-gap-for-clean-hydrogen-demand-by-2030-new-report-outlines-solutions-to-unlock-business-cases/ 

² IEA, “World energy outlook 2024,” October 2024, online: https://www.iea.org/reports/world-energy-outlook-2024 

³ EIA, “Assumptions to the annual energy outlook 2025: Hydrogen market module,” April 2025, online: https://www.eia.gov/outlooks/aeo/assumptions/pdf/HMM_Assumptions.pdf