A letter from the Hydrogen Council Co-Chairs reflecting on industry progress
The first wave of mature clean hydrogen projects is coming online. Today, about $110 billion in committed investment supports more than 500 projects past final investment decision, in construction or operation across the globe – up $35 billion in the past year alone. In just five years, our sector has scaled at remarkable pace, with investment growing over 50% year-over-year. The total committed capacity now exceeds 6 million tonnes per year (mtpa), of which 1 mtpa is already operational.
But this progress has not come without turbulence. The sector is navigating through the hype cycle and moving from a surge of announcements in 2022–2023 to a more disciplined era of maturation, similar to the solar, wind, and battery industries. Over 1,700 projects have been announced globally since 2020, a 7.5 increase, but a pipeline clean up is underway – a natural attrition phase where the projects with the strongest business cases get selected, win regulatory support, and close financing, while projects that lacked commercial viability inevitably get cancelled. A challenging macroeconomic environment with structurally higher interest rates, elevated energy and equipment costs, and delayed implementation of climate policies in some regions is exacerbating this selection process.
What is emerging is a stronger, more credible foundation of projects built on solid business cases and growing offtake certainty. Including the projects that are already committed, the current supply pipeline could support a total of 9-14 mtpa by 2030. However, how much of that capacity materializes still hinges on demand and only those projects that secure offtake will ultimately come online.
Demand is our next great test. Roughly 3.6 mtpa of binding offtake has been secured globally. In key markets such as the EU, US, Japan, and Korea, implementation and enforcement of existing policies could enable a total of up to 8 mtpa of clean hydrogen demand by 2030, although there is still more work to do. A further 13 mtpa could be unlocked through targeted infrastructure investment and continued cost reductions, but without timely implementation, much of the supply opportunity will remain unfulfilled.
CEOs from Hydrogen Council member companies who were interviewed in preparation for this report acknowledged that the environment remains challenging for clean hydrogen, but shared a sense of optimism, particularly those leaders accustomed to the development cycles that come with large-scale industrial sectors. Leaders also pointed to demand, backed up by policy stability, as the lynch pin for future growth, with most anticipating additional regulatory clarity in the near term.
Realism, pragmatism and focus will be key to success in the next phase of hydrogen build-out. We are therefore proud to introduce this inaugural Global Hydrogen Compass – a unique report that provides much needed clarity on what is really happening in hydrogen through a combination of comprehensive industry data, direct insights from global CEO leaders, and case examples of projects that demonstrate what it takes to progress despite a challenging environment. Like a compass, we hope it will guide business, policy and other decision-makers through this pivotal moment in our important collective effort to build a clean, secure, and resilient energy future.