- Global hydrogen demand rose to 100 million tonnes in 2024, up nearly 2 percent year on year.
- Almost all supply still produced from fossil fuels without carbon capture.
- Low emissions hydrogen output growing steadily but demand uncertainty remains a major constraint.
Global hydrogen demand reached 100 million tonnes in 2024, marking an increase of almost 2 percent compared with 2023 and broadly tracking overall energy demand growth, according to the latest International Energy Agency Global Hydrogen Review.
Consumption remains concentrated in traditional applications, notably oil refining, chemicals production and the iron and steel sector. However, almost all hydrogen used globally continues to be produced from fossil fuels without carbon capture, underlining the scale of the decarbonisation challenge facing the sector.
The IEA reports that current production relies on around 290 billion cubic metres of natural gas and 90 million tonnes of coal equivalent annually. This fossil fuel dependence persists despite growing policy and investor interest in low emissions hydrogen as a pathway to reduce greenhouse gas emissions and strengthen energy security, particularly in countries heavily reliant on imported fuels.
Early stage but gathering momentum
Low emissions hydrogen production, defined as hydrogen produced from low emissions electricity through electrolysis, from bioenergy, or from fossil fuels combined with carbon capture and storage, remains at an early stage of deployment.
In 2020, global low emissions hydrogen output stood at just over 0.5 million tonnes, largely from a limited number of carbon capture projects and small scale electrolysis demonstrators. By 2024, production had increased to nearly 0.8 million tonnes and is estimated to approach 1 million tonnes in 2025.
Based on projects that are operational, under construction or have reached final investment decision, output is expected to exceed 4 million tonnes by 2030. This would lift low emissions hydrogen from less than 1 percent of total production today to around 4 percent by the end of the decade.
While this falls short of the ambitious targets announced in the early 2020s, the IEA notes that growth from such a small base remains significant and comparable to early stage expansions seen in other clean energy technologies.
A further 6 million tonnes of annual production could come online by 2030 if announced projects with strong potential reach completion. Realising this upside will depend heavily on targeted policy action to bridge the cost gap with conventional hydrogen and to stimulate demand in established sectors such as refining and chemicals.
Scale of projects increasing rapidly
The review highlights a marked increase in project scale. In 2020, the largest electrolyser in operation was a 25 megawatt facility in Peru. By mid 2025, a 500 megawatt electrolysis project had been commissioned in China. Meanwhile, the NEOM Green Hydrogen Project in Saudi Arabia, currently under construction, is expected to reach 2.2 gigawatts by 2027.
China, Europe, India and North America account for nearly 90 percent of committed low emissions hydrogen production capacity to 2030. Other regions are likely to see material scale only after 2030, despite a sizeable pipeline of announced projects.
Demand uncertainty remains a key barrier
Despite supply side momentum, demand remains the most significant bottleneck. Producers require firm and predictable offtake agreements to secure financing, yet binding long term contracts account for less than 2 million tonnes per year. This is well below the potential 4 million tonnes of output from committed projects by 2030.
While preliminary agreements and self-consumption arrangements exist, the lack of dependable demand signals continues to constrain investment decisions.
Governments have begun introducing measures to stimulate demand, including tenders and procurement programmes. Refineries in Europe and India have contracted more than 220 kilotonnes per year of renewable hydrogen. In India, more than 700 kilotonnes per year of renewable ammonia has been awarded through fertiliser sector tenders. However, progress in sectors such as steel has been slower, with some tenders delayed or suspended due to high bid prices.
Policy design critical for next phase
The IEA underscores the importance of targeted policy instruments to close the cost gap and create bankable demand. These include grants, subsidies, concessional finance, loan guarantees and export credit facilities on the supply side. On the demand side, quotas, mandates and carbon contracts for difference are among the most widely deployed tools.
Hydrogen hubs are also emerging as a mechanism to aggregate demand, reduce coordination risks and support integrated project development. However, effective implementation will require clear certification schemes to track greenhouse gas emissions across the value chain and differentiate low emissions hydrogen from conventional supply.
The report cautions that delays in policy implementation and regulatory uncertainty have slowed project development in some regions. At the same time, overly rigid rules risk constraining market growth in what remains a nascent industry.
As governments refine their approaches, adaptive policy frameworks with shorter review cycles are likely to prove essential. Clear, credible signals on both supply support and demand creation will determine whether low emissions hydrogen can move beyond early milestones and play a meaningful role in national energy security and industrial decarbonisation strategies.
Author: Bryan Groenendaal
