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IEA slashes 2030 low-emissions hydrogen projections by a quarter

by September 12, 2025
by September 12, 2025

The International Energy Agency reported on Friday that the projected development of low-emissions hydrogen projects by 2030 has decreased by nearly a quarter. 

This decline is attributed to a combination of project cancellations, increasing cost pressures, and uncertainty surrounding policy.

The IEA’s Global Hydrogen Review indicates a revised projection for low-carbon fuel production, with an expected 37 million metric tons per year by 2030. 

This marks a decrease from the previous year’s estimate of 49 million, attributed to developers postponing or canceling their plans.

Source: IEA

Decline in low-emissions hydrogen

It was also noted that the actual output would likely be lower due to the non-completion of all announced projects.

“Potential production fell for both projects using electrolysis and those using fossil fuels with carbon capture utilisation and storage (CCUS), although electrolysis projects were responsible for more than 80% of the total drop,” the IEA said in the report. 

These delays and cancellations included early-stage projects across Africa, the Americas, Europe and Australia.

Since the publication of the Global Hydrogen Review 2024, the number of projects that have received a final investment decision has grown by almost 20%. 

These projects now constitute 9% of the total project pipeline projected until 2030.

Investment growth amid challenges

The report indicated a projected five-fold increase in operational, under-construction, or final investment decision capacity. This surge, from 2024 levels, is anticipated to exceed 4 million tons per year by 2030.

The IEA indicated that an additional 6 million tons could be achieved by then, provided governments implement effective demand-creation policies and expedite infrastructure development.

The primary obstacle remains cost competitiveness. 

The gap between fossil-based and low-carbon hydrogen has recently expanded, favoring the former due to declining natural gas prices, while elevated electrolyser prices have negatively impacted low-carbon initiatives.

Cost competitiveness and manufacturing

By 2030, the IEA anticipates a reduction in the cost disparity, driven by decreasing technology expenses and enhanced cost efficiencies in areas with robust renewables expansion and updated regulations.

China leads the world in hydrogen electrolyser development, holding 65% of global capacity either installed or at final investment decision, and nearly 60% of worldwide electrolyser manufacturing capacity. 

Low-carbon hydrogen is generated via electrolysis, a process that separates water into hydrogen and oxygen using electricity, frequently sourced from renewables.

Globally, manufacturers are under financial pressure from increasing costs and sluggish adoption rates. Chinese firms, too, might face future difficulties, as their current manufacturing capacity of over 20 gigawatts per year surpasses present demand.

An IEA analysis indicates that installing Chinese-made electrolyzers outside of China offers no substantial cost advantage over other manufacturers when transportation costs and tariffs are taken into account.

Southeast Asia market

Southeast Asia’s hydrogen market is rapidly expanding, with announced projects projecting approximately 430,000 tons per year of low-emissions hydrogen production by 2030, a substantial increase from the current 3,000 tons.

The pipeline for low-emissions hydrogen production in Southeast Asia shows considerable promise but needs to mature.

By 2030, anticipated low-emissions hydrogen production from announced projects is projected to reach 480 kilotonnes per annum (ktpa), with a significant concentration in Indonesia and Malaysia.

Despite announcements, only 6% of the planned production has reached a final investment decision, with a significant 60% still in the very early stages of development.

Near-term success will depend on accelerating the deployment of renewables to reduce production costs, implementing targeted policies for fuel-switching, and developing pilot projects that enable gradual progress towards commercialisation.

The post IEA slashes 2030 low-emissions hydrogen projections by a quarter appeared first on Invezz

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