GLOBAL GREEN HYDROGEN MARKET OVERVIEW AND DEFINITION

The global green hydrogen market is growing quickly as countries around the world shift to cleaner energy systems. This report looks at the key factors driving the market, such as government policies aimed at cutting carbon emissions, the rapid growth of renewable energy sources, and progress in electrolyser technology that makes green hydrogen easier and cheaper to produce. Even though high production costs and a lack of proper transport and storage infrastructure still create major challenges, ongoing innovations and supportive government policies are making green hydrogen projects more practical and appealing. In terms of how it’s being used, green hydrogen is seeing the most interest in industrial uses and power generation. Industries like steel and chemicals are showing strong demand because they are hard to decarbonize with electricity alone. Regionally, Europe is leading the shift, backed by strong regulations and large projects, with Asia-Pacific and North America also making significant progress.

MARKET DYNAMICS

Market Drivers

Decarbonization targets & policy support

The Government around the world plays a crucial role in making green hydrogen accessible and affordable by creating various policies and through its support system. For instance, in May 2022, the REPowerEU plan was introduced by European Union, which aims to produce 10 million tonnes of green hydrogen and import another 10 million tonnes to support industries by 2030. The plan offers grants, special contracts, and support for building pipelines and import systems like H2Global to make this happen. In the United States, the Inflation Reduction Act (passed in August 2022) gives big tax benefits for green hydrogen. Companies can get up to $3 for every kilogram of hydrogen they produce with almost zero carbon emissions. Additionally, if their projects meet specific labour standards, they can receive a 30% discount on project costs through tax credits. These steps make green hydrogen projects cheaper to build and run, and they help businesses feel confident investing in this clean energy source.

Surging Renewable Capacity

The fast growth of renewable energy, especially solar and wind, is playing a big role in making green hydrogen possible. Since 2019, the amount of solar and wind energy installed around the world has increased a lot. This is happening because solar and wind are becoming cheaper, and governments are pushing for clean energy to fight climate change. Green hydrogen needs a lot of electricity to be made, using a machine called an electrolyser that splits water into hydrogen and oxygen. If the electricity used comes from cheap solar or wind power, the cost of making hydrogen goes down. Also, many big projects are now being built where solar and wind farms are located next to hydrogen plants. For example, Saudi Arabia’s NEOM project combines 4 GW of solar and wind with 2 GW of electrolysers. These setups help ensure a steady supply of clean energy for making hydrogen.

Market Restraint

Infrastructure Gaps

A major challenge towards green hydrogen accessibility is the infrastructure gap that limits its widespread adoption. Hydrogen cannot use the same systems we use for oil, gas, or electricity. It needs special equipment for storing, moving, and delivering it. Hydrogen takes up a lot of space, so it must be either compressed at very high pressure or cooled to extremely low temperatures to be stored and transported. Both methods need expensive equipment like high-pressure tanks, special pipelines, or cooling systems. Right now, there are very few pipelines made just for hydrogen, and most are only found in industrial areas like Germany or Texas. Another issue is storage, hydrogen needs to be stored underground at a large scale to balance supply and demand, especially when renewable energy isn’t always available. These gaps in infrastructure make it more expensive to build and operate green hydrogen projects.

High Cost of Production and Capital Expenditure

One of the biggest challenges for green hydrogen is that it’s still very expensive to make. Unlike grey hydrogen, green hydrogen is produced by splitting water using electricity from renewable sources like solar and wind. This process is much costlier right now. To make green hydrogen cheaper, plants need to run at high efficiency. But this is hard to do if they depend only on sun or wind without battery storage. Also, setting up a green hydrogen plant costs a lot of money. Another big factor is the price of renewable electricity. It makes up 60–70% of the total cost of producing green hydrogen. In countries where clean electricity is still expensive or limited, green hydrogen remains too costly.

Market Opportunity

Technological Innovation

Technological innovation is making green hydrogen more affordable and efficient. Since 2019, major improvements in electrolysers, such as alkaline, PEM, SOEC, and AEM types, have reduced costs, improved energy efficiency, and increased system durability. New designs use fewer rare metals, respond better to variable renewable power, and are easier to scale. Companies are also adopting mass production methods, like gigafactories and 3D printing, to lower manufacturing costs. These advancements, along with better integration with solar and wind power, are expected to bring down green hydrogen costs.

Market Trends

Rise of Hydrogen Valleys: Integrated Regional Hubs for Green Hydrogen

A new trend in the green hydrogen space is the development of “hydrogen valleys” or regional hydrogen hubs. These are special areas where everything related to hydrogen, like production, storage, transport, and usage, is set up in one place. This makes it easier to invest, reduces risks, and helps the industry grow faster. For example, in Europe’s TopDutch region, the HEAVENN project brings together 13 different hydrogen activities, such as making hydrogen from offshore wind, storing it in salt caverns, and using it in gas pipelines.  In the U.S., California’s ARCHES hub got a major boost in July 2024 with a $12.6 billion government agreement. The plan includes setting up green hydrogen production plants, fueling stations for trucks, hydrogen use at ports, and underground storage. The goal is to reduce 2 million tons of CO₂ emissions each year and create around 220,000 jobs. These examples show how bringing public and private sectors together in focused regions can drive major change in clean energy.

SEGMENTATION ANALYSIS

By Application

Industrial Use: Hydrogen is mainly used in industries like oil refining and chemical production. In 2022, oil refineries alone used over 41 million tonnes of hydrogen out of a total of 95 million tonnes. Other major uses include making ammonia (for fertilizers) and methanol.

Transportation: Hydrogen use in transport, like trucks, trains, and ferries, grew by about 45% in 2022 compared to 2021. Still, it’s less than 1% of overall hydrogen use. But it's growing fast. Countries like Japan, those in Europe, and states like California are building more refuelling stations and buying hydrogen vehicles, so transport is expected to be a major growth area in the future.

Power Generation: Right now, using hydrogen to make electricity is almost zero. Other options like batteries are cheaper today. But in the future, as hydrogen systems improve and costs fall, power plants could start using green hydrogen, especially in areas that depend heavily on solar and wind energy.

Heating in Homes and Buildings: Using hydrogen for heating in houses or offices is still in the testing phase. Only a few places, like parts of Europe and Japan, are blending small amounts of hydrogen into their gas networks. But it's expensive and complicated to do, and electric options like heat pumps are more efficient.

By End‑Use Industry

Oil Refining: Oil refineries are the biggest users of hydrogen. They use it to remove impurities and improve fuel quality. In 2022, they used about 43% of the total global hydrogen supply.

Chemicals and Fertilizers: The chemical industry, mainly for making ammonia and methanol—comes next. These are key ingredients in fertilizers and industrial chemicals. Governments want to replace fossil-based hydrogen with green hydrogen here to quickly reduce carbon emissions.

Metals & Mining: Hydrogen is starting to be used in steelmaking, especially in projects that use direct reduced iron (DRI) instead of coal. New projects in Sweden, the U.S., and Europe are exploring hydrogen-based steel production, which could grow a lot by 2030.

Other Small Uses: Some industries like glassmaking, electronics, and food processing also use hydrogen, but only in small amounts. These uses may stay small because they often have other cleaner or simpler options.

REGIONAL INSIGHTS

Europe currently leads the world in planned electrolyzer capacity, making up about 32% of global projects. This is driven by the EU’s REPowerEU plan and national strategies in countries like Germany, France, and Spain. Policies like hydrogen blending in refineries and steel plants, along with industrial hubs in the Netherlands and Belgium, have attracted private investment.

Asia-Pacific is led by China, which produced nearly 30% of the world’s hydrogen in 2022. China’s large manufacturing capacity supports this growth. Meanwhile, Japan and South Korea are backing hydrogen with billions in subsidies—Japan has committed $21 billion through 2038, and South Korea is blending hydrogen into power generation.

The United States and Canada are emerging as key players in the green hydrogen sector, supported by recent policy measures such as the U.S. Inflation Reduction Act’s hydrogen production tax credit and Canada’s Clean Hydrogen Investment Tax Credit.

This region has big plans for green hydrogen, using its strong solar and wind resources. Countries like Saudi Arabia, Egypt, Namibia, and Morocco are working on large-scale projects, mostly aimed at exporting green ammonia.

Latin American countries such as Chile and Brazil are preparing to become future exporters of green hydrogen. They are using their natural solar power in the north and hydroelectric power in the south to support green hydrogen production.

KEY INDUSTRY DEVELOPMENTS

In July 2025, French grid operator Natran (Engie), storage company Terega, and Spanish firm Enagás partnered to develop the Barmar pipeline beneath the Mediterranean Sea, connecting Marseille and Barcelona. This project is a key part of the larger H2Med corridor, designed to transport renewable hydrogen across Southern Europe and strengthen cross-border energy security.

In 2024, the European Commission held two funding rounds through the new European Hydrogen Bank, giving nearly €2 billion to support small-scale hydrogen projects. This was the EU’s first effort to directly help clean hydrogen producers earn stable revenue and helped launch many pilot plants across different countries.

GLOBAL GREEN HYDROGEN MARKET REPORT SCOPE & SEGMENTATION

MARKET REGIONAL COVERAGE

North America (United States, Canada)

Europe (France, Germany, United Kingdom)

Asia-Pacific (China, South Korea, India, Japan)

Middle-East & Africa (South Africa, Israel, UAE, Iran, Saudi Arabia, Qatar, Rest of Middle East and Africa)

Latin America (Brazil, Mexico, Colombia)

MARKET ACTIVE PLAYERS

Linde plc

Air Liquide

Air Products & Chemicals

Cummins, Inc. (Hydrogenics)

Nel ASA

ITM Power plc

Plug Power Inc.

McPhy Energy

Ballard Power Systems

Bloom Energy Corp.

Siemens Energy

Thyssenkrupp AG

Toshiba Energy Systems & Solutions

Mitsubishi Heavy Industries

Shell (Renewables & Energy Solutions)