Hydrogen remains one of the most talked-about — yet least realised — pillars of the energy transition. Despite a surge in global ambition, over 99% of hydrogen today is still produced from fossil fuels, primarily natural gas and coal, with minimal carbon capture.
Renewable or “green” hydrogen, produced via electrolysis powered by wind or solar, accounts for less than 1% of global supply due to high costs, infrastructure gaps and complex energy conversion losses.
Unlike other alternative fuels such as bioethanol or sustainable aviation fuel, hydrogen requires energy-intensive production, compression and transport processes, limiting near-term scalability.
Yet its potential remains vast — from decarbonising heavy industry to powering long-haul transport and storing surplus renewable energy. That promise explains why investment and project pipelines continue to grow, even amid technical hurdles.
Hydrogen exemplifies how no single solution can decarbonise the world alone; multiple pathways must progress in parallel.
While CFP Energy does not yet offer hydrogen as a fuel, we are closely monitoring technological, regulatory and market developments as part of our broader commitment to the energy transition.
Our team, however, support CBAM compliance, and hydrogen is covered under the incoming regulation. If you import hydrogen into the EU, you will have to pay an additional carbon tax for the C02 generated through it's production.
You can contact our CBAM-dedicated team, here.
Progress, Risks, and the Road Ahead
The Global Hydrogen Review 2025 by the IEA presents a candid, data-rich snapshot of the state of the hydrogen sector: where it’s advancing, what’s holding it back, and what must change for it to fulfil its promise in the energy transition.
Modest Growth, but Dominance Persists
Global hydrogen demand in 2024 rose to nearly 100 million tonnes (Mt) — a 2 % increase over 2023, in line with broader energy demand growth. But low-emissions hydrogen (i.e., hydrogen produced via renewables or fossil fuels with carbon capture, utilisation and storage (CCUS)) still accounts for less than 1 % of the total.
Traditional applications—refining and industrial processes—remain the major consumers, while newer sectors contribute marginally (<1 %) to demand.
Ambitious Pipelines, Tempered Expectations
The number of announced low-emissions hydrogen projects has ballooned, but the pipeline is shrinking. Delays and cancellations have revised the 2030 potential downwards — from 49 Mtpa (in the prior review) to 37 Mtpa now.
Most of the reduction stems from electrolysis projects, though fossil + CCUS projects also saw downward adjustments. Only about 9 % of the pipeline has secured final investment decisions (FID).
Still, the IEA projects that by 2030, low-emissions production of 4.2 Mtpa is feasible from existing and FID-stage projects — a roughly fivefold increase from 2024 levels.
This would shift low-emissions hydrogen to around 4 % of total hydrogen supply.
Cost Gaps and Technological Bottlenecks
A central obstacle remains the persistent cost gap between low-emissions routes and unabated fossil hydrogen production. In recent years, the decline in natural gas prices and rising costs for electrolyser technology (due to inflation, supply-chain constraints, slower deployment) have widened this gap.
China dominates the global electrolyser market: in 2024, it accounted for 65 % of installed capacity and for ~60 % of global manufacturing.
Costs of Chinese electrolysers, when deployed locally, are significantly lower (USD 600-1,200/kW) compared to installing them elsewhere (USD 1,500–2,400/kW).
However, issues around standards, maintenance, performance, and cross-border trade limit uptake of Chinese units abroad.
Uneven Demand and Weak Offtake Commitments
Low-emissions hydrogen demand is weak and uncertain. In 2024, new offtake agreements (i.e. buyer commitments) reached just 1.7 Mtpa, down from 2.4 Mtpa in 2023.
Most of these deals are concentrated in refining, chemicals, and shipping. Meanwhile, firm offtake contracts cover less than 5 % of the potential 2030 production pipeline.
Some policy momentum is emerging: the EU’s Renewable Energy Directive mandates hydrogen quotas in industry and transport, and Japan, India, Korea are initiating programs in their priority sectors.
The IMO’s new Net-Zero Framework could also help boost hydrogen-based fuels in shipping, though uptake may lag.
Infrastructure, Trade, and Strategic Hubs
Ports present early opportunities for hydrogen-based fuel adoption because many already host chemical or refining infrastructure. More than 60 major ports are chemically capable; just 17 ports cover over 60 % of bunkering demand.
Several ports are positioned within 400 km of announced low-emissions hydrogen projects, offering logistical advantages.
Cross-border hydrogen trade is nascent. Infrastructure deficits (pipelines, storage, compression) and weak demand signals remain major barriers.
Spotlight: Southeast Asia
In Southeast Asia, hydrogen demand in 2024 was about 4 Mtpa, led by Indonesia (35 % share), Malaysia, Viet Nam, and Singapore. Demand is dominated by chemical (esp. ammonia) production and refining. Nearly 80 % of this demand is met with unabated natural gas.
The low-emissions pipeline here is promising but fragile: by 2030, capacity could reach 480 ktpa, largely concentrated in Indonesia and Malaysia.
Only 6 % of announced projects have hit FID; 60 % are still at very early stages. Notably, a 240 MW electrolyser project under construction in Viet Nam has recently advanced to FID — one of the region’s largest.
Opportunities to scale include ammonia export markets, maritime bunkering in Singapore, and hydrogen-based steel/methanol production.
To succeed, Southeast Asia must decarbonise power sources, build pilot demand, and strengthen investment frameworks.
Policy Moves & Strategic Recommendations
IEA’s recommendations pivot around four levers:
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Sustain support for near-ready low-emissions hydrogen projects, especially those targeting existing hydrogen use cases.
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Stimulate demand via mandates, quotas, public procurement, and incentives in industrial and transport sectors.
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Accelerate infrastructure rollout, in particular in industrial clusters and port zones, by streamlining regulations and coordinating across agencies.
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De-risk investments via public backing, guarantees, and export credit mechanisms—especially for first-of-a-kind projects and in developing economies.
Additionally, governments should partner with emerging markets to help them ‘move up the value chain’ and encourage adoption of hydrogen-based products (e.g. fertilisers, chemicals) domestically, reducing reliance on exports.
A Small but Important Piece of the Energy Puzzle
The picture painted by the 2025 Review is one of cautious optimism.
The hydrogen sector continues to make incremental progress, but it is far from its ambitions.
Project delays, cost challenges, unpredictable demand, and weak infrastructure remain the key hurdles.
Yet, growth is still possible.
The fivefold expected increase in low-emissions hydrogen by 2030 shows the potential of momentum already built.
If governments and industry act decisively—especially on demand creation and de-risking investment—the hydrogen sector could transition from promise to backbone of a decarbonised energy system.
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