HYDROGEN ENERGY MOVES CLOSER TO COMMERCIAL REALITY

Hydrogen has spent years being described as the fuel of the future. Now the industry is getting a clearer sense of where that future might actually make sense. The conversation is shifting from how much hydrogen can be produced to a more practical question. Where does it solve a problem that other energy sources cannot solve as easily?

Global hydrogen demand passed 100 million metric tons in 2025, according to the International Energy Agency. Most of that demand still comes from established uses such as refining and industrial processes. Low-emissions hydrogen remains a small part of the market, although production grew 20 percent in 2025 to nearly 1 million metric tons.

The Hydrogen Market Is Finding Its Footing

There is clear progress, but the industry is moving at a more measured pace than some early forecasts suggested. Installed electrolysis capacity more than doubled in 2025, passing 4 GW, while more than 2.5 GW was under construction and expected to begin operating in 2026. At the same time, new final investment decisions slowed during 2025.

The reason is not difficult to understand. Low-emissions hydrogen is still more expensive than conventional hydrogen in most markets. Developers also need customers willing to commit to buying the product before they can justify the cost of a large facility.

That has changed the way many projects are being developed. Instead of building first and looking for buyers later, developers are paying closer attention to who will actually use the hydrogen. Refineries, chemical producers, fertilizer manufacturers and some industrial operations are natural early markets because hydrogen is already part of their processes.

The IEA expects committed projects to provide about 2.5 million metric tons of low-emissions hydrogen for refineries and industrial facilities by 2030.

Finding the Right Jobs for Hydrogen

Hydrogen is unlikely to replace every fossil fuel application. In many cases, direct electrification is simpler and less expensive. Hydrogen makes more sense where electricity cannot easily do the job, particularly when it is needed as an industrial feedstock or for applications that require high energy density.

Steelmaking, refining and ammonia production are among the areas where hydrogen can have a more direct role. Transport is another market being tested. Fuel-cell vehicle numbers grew 20 percent in 2025 to almost 130,000 vehicles worldwide, with trucks and buses accounting for much of that growth.

That does not mean hydrogen-powered transport is about to become the default. Batteries remain attractive for many passenger vehicles and shorter routes. Hydrogen has a stronger case in applications where weight, range, refueling time or operating patterns make battery-electric systems less practical.

The broader lesson is becoming clearer. Hydrogen needs to earn its place. Projects are more likely to succeed when they are built around a specific need rather than around the assumption that hydrogen should be used simply because it is available.

Infrastructure Could Decide How Fast It Grows

Producing hydrogen is only half the job. Once it is made, someone has to store it, move it and get it to the customer.

That infrastructure is still developing. More than 40,000 kilometers of hydrogen pipeline projects have been announced for operation by 2035, but only 9 percent is operational or backed by committed investment.