Hydrogen has emerged as a key molecule in efforts to decarbonise sectors where electrification or the use of batteries is not a viable option.
Green hydrogen is produced by splitting water into hydrogen and oxygen using renewable electricity via electrolysis, a route that leads to much lower carbon emissions.
If the market develops fully, green hydrogen will become a crucial component of the chemicals industry’s plans to reduce use of fossil fuels. Aviation and shipping could also be at the front of green hydrogen usage, while there is the possibility for it to play role in storing the excess energy created by renewable sources.
Such is the potential for this route to limit carbon emissions in the hard-to-abate sectors, that the Green Hydrogen Organisation (GH2) has described it as “the sleeping giant of the energy transition.” GH2 seeks to increase the use of green hydrogen, arguing it is essential to decarbonising sectors such as shipping, iron and steel and fertilisers which currently rely on fossil fuels.
Why a sleeping giant? While there has been progress in recent years, there remain hurdles to green hydrogen adoption at scale. One of the barriers to its uptake is that it remains expensive in comparison to oil, gas and coal production - and other forms of hydrogen.
Producing green hydrogen is energy intensive, with the cost of electricity accounting for much the production expense. Renewable energy will help bring these costs down, but establishing the renewable sources – wind turbines an solar cells – is the key step in making green hydrogen a viable option. Electrolysers are also required to split the water into hydrogen and oxygen, creating significant capital cost, although supporters argue that once the electrolyser is running the operational costs are low.
Getting all this infrastructure in place is crucial for the growth of green hydrogen and to reach the ambitious 2050 target for green hydrogen that, for example, GH2 would like to see, where green hydrogen is used for 25% of the world’s energy needs. For comparison the European Union has set itself a target of using ‘renewable hydrogen’ to cover around 10% of its EU’s energy needs by the same date.
But there is a long way to go before either of these targets are met.
In June this year, the International Energy Agency's (IEA) Global Hydrogen Review found that what it measures as 'low-emissions hydrogen production' is set to reach a new record in 2026 – although that only means it will exceed 1% of global hydrogen production for the first time. This includes hydrogen produced via electrolysis where the electricity is generated from a low-emission source - renewables or nuclear - biomass or fossil fuels with carbon capture usage and storage.
However, despite continued progress, investment momentum weakened in 2025, along with delays to final investment decisions. "Demand remains the key missing piece. The volume of low-emissions hydrogen covered by new offtake agreements remained low in 2025, broadly unchanged from the previous year. Only around 20% of newly signed volumes were backed by firm contractual commitments. This lack of demand certainty continues to be cited by developers as one of the largest barriers to investment," the IEA said.
Policy/regulation development
Deployment of green hydrogen is a global endeavour, and there are plenty of moves to create a standardised regime, but this is a complicated process. “Currently we have a situation where countries and institution are approaching the regulation of green hydrogen to create an environment that best meets their national agenda,” says Jonas Moberg, CEO of GH2. So governments in countries where there is a strong oil and gas sector will support standards that tilt towards the continued production of fossil fuels. Moberg concludes that there are multiple efforts in train to create a level playing field for green hydrogen around the world, and there is scope for optimism.
There is also potential for green hydrogen to have an impact beyond replacing fossil fuel. Last year the International Renewable Energy Agency (IRENA) in commentary said: “The benefits of green hydrogen go beyond reducing greenhouse gas emissions. Scaling value chains for green hydrogen and derived commodities can enable green industrialisation, energy independence, increased participation in global trade and markets, and job creation.”
Highlighting the role of green hydrogen derivatives, IRENA added: “The heavy-duty transport sectors—aviation, maritime shipping, and possibly long-haul trucking—are other sectors that represent an opportunity for next frontier green hydrogen deployment. They demand energy-dense solutions capable of powering extended journeys. Instead of fossil fuels, green hydrogen and its derivatives like ammonia, and e-fuels including e-kerosene and e-methanol are expected to provide clean alternatives.”
The area of maritime shipping is one that Moberg sees as a great example of what could be done to encourage the use of green hydrogen to produce ammonia for use in cleaner shipping. It had been anticipated, during 2025, that a plan from the United Nations Maritime Organisation (IMO) for a framework that would lead to a reduction of greenhouse gas emissions from ships would have been implemented, supporting demand for cleaner fuels. However negotiations over the implementation were adjourned with a commitment to resume during 2026. With many businesses having made investments to support the shipping sectors’ move to cleaner fuels, companies including shipowners, fuel producers and technology providers signed a joint statement calling on International Maritime Organization member states to adopt what is known as the Net-Zero Framework during 2026.
“Further delay risks undermining international investments needed to scale alternative fuels, vessels and infrastructure,” the statement said.
Maaten Wetselaar, CEO, Moeve, a signatory to the statement commented back in March: “Our recent final investment decision on one of Europe’s largest green hydrogen projects, shows that industry is ready to scale clean fuels for the maritime sector. What we need now is regulatory certainty.”
“There are complexities, as you don’t want to penalise those ships that will run on liquified natural gas until they are decommissioned,” explains Moberg. “You don’t want to ban them tomorrow, but you want to create a pathway that makes it increasingly expensive for carbon intensive fuels and increasingly cheap for green fuels.” But Moberg stresses that agreements, such as those being developed by the IMO are an essential part of policy interventions that will allow green hydrogen to flourish.
A report from Deloitte, released during 2023, calculated that the global clean hydrogen (mostly green) economy could grow up to US$1.4 trillion annually by 2050. It can reduce GHG emissions by 85 GtCO2eq and contribute significantly to economies by supporting about 1.5 million new jobs per year between 2030- 2050 in developing and emerging economies.
Projects in development
Looking at the growth regions for the development of green hydrogen, Moberg highlights China. “There is no doubt that we are seeing a ramp up in green hydrogen and green ammonia production in China. There are also several projects in India which are making good progress, as well as some in the Middle East. We are also seeing developments in Africa, but here the projects are some ways behind the other global regions. Of course, Europe is in there as well,” says Moberg. Europe’s commitment to making progress on green hydrogen saw the European Commission award almost €1 billion to 15 renewable hydrogen projects last year.
According to the IEA, global installed electrolysis capacity doubled in 2025 to exceed 4GW, with China behind nearly three-quarters of new installations. This growth is attributed to low technology costs and experience with large projects. While surplus capacity is leading to market consolidation, China’s government has announced new support schemes to expand use of hydrogen and hydrogen-based fuels to new sectors which the IEA said will “reinvigorate” investment activity in the coming years.
The UK is also backing green hydrogen with the government having announced, during April this year, that 27 projects had been shortlisted for the next stage of the Second Hydrogen Allocation Round (HAR2) – supporting low-carbon hydrogen production in the UK. The industry has the potential to attract over £1 billion of private sector investment into the UK by 2029, the government has said. Moberg makes mention of AM Green, in India, which has several significant green hydrogen projects, not least its 2 million metric tpa green ammonia/green hydrogen project located in Kakinada, Andhra Pradesh, India.
Deloitte’s analysis of global green hydrogen investment notes that: “Access to affordable finance can be a critical enabler for green hydrogen projects, and particularly those located in emerging markets with high political risks that may be otherwise prevented from tapping into their exceptional production potential.” There is indeed great potential for renewable hydrogen. But Moberg cautions that there are many strands that must come together for this potential to be fully realised. “We need pipelines. It may be possible to use some existing infrastructure, but we will need pipelines in new places, crossing new boundaries. The infrastructure projects will be on a huge scale, with hydrogen pipelines from, for example, the south of Europe and North Africa to the north of Europe.”
Moberg believes that beyond those directly involved in the development of low carbon hydrogen, there is still some misunderstanding around the impact and use of hydrogen, and this is something that he hopes can be cleared up as the benefits for climate become clearer.
“There has been a huge amount of technological advancements in the last five to ten years,” Moberg notes, “but at this stage I would say the cost is the issue that is most hampering more rapid progress in the deployment of renewable hydrogen.” But he argues that there are ways that sectors and industries can be incentivised to adopt and champion clean and renewable energy.
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