Hydrogen Generation Market Outlook, 2030

The hydrogen generation market is experiencing significant growth and transformation due to increasing global focus on clean energy and decarbonization efforts. Hydrogen, recognized as a versatile and clean fuel, plays a pivotal role in various industries, including transportation, power generation, and industrial processes, and its demand is expected to surge in the coming years. In particular, hydrogen generation technologies, such as steam methane reforming (SMR), electrolysis, and coal gasification, are being refined and developed to improve efficiency and reduce carbon emissions.

The market is seeing significant advancements in green hydrogen production, especially through electrolysis, where water is split into hydrogen and oxygen using renewable energy sources like solar and wind power. This method is considered one of the most sustainable as it produces hydrogen without generating carbon emissions, thus aligning with global goals of carbon neutrality. In addition to technological advancements, there is increasing involvement from both private and public sectors, with companies investing in hydrogen production plants, fuel cell technologies, and hydrogen-powered vehicles. Governments around the world are also offering incentives, subsidies, and funding to accelerate the development of hydrogen infrastructure and encourage adoption across industries. The European Union, for instance, has outlined a comprehensive hydrogen strategy that aims to produce green hydrogen at scale and create a competitive hydrogen market. In addition, countries such as Japan, South Korea, and Australia are making notable strides in hydrogen generation and supply chain development. However, regulatory frameworks for the hydrogen market remain in a state of evolution, as governments work to establish safety standards, certifications, and guidelines for the production, storage, and transportation of hydrogen.

According to the research report “Global Hydrogen Generation Market Outlook, 2030”, the global Hydrogen Generation market is projected to reach market size of USD 240.68 Billion by 2030 increasing from USD 160.21 in 2024, growing with 7.17% CAGR by 2025-30. Among the various methods of hydrogen production, green hydrogen, generated through electrolysis powered by renewable energy sources, is gaining traction due to its environmentally friendly profile and alignment with global sustainability targets. The reduction in the cost of renewable energy, such as solar and wind, further enhances the economic viability of green hydrogen, contributing to market growth. In India, the government has voiced support for the sector through the Green Hydrogen Policy and the National Green Hydrogen Mission, with a financial outlay of nearly Rs. 19,800 crores. The central government has also announced production-linked incentive (PLI) schemes for producing green hydrogen and manufacturing electrolysers. Consequently, the global hydrogen generation market has also been implicated by the pandemic due to the decreasing demand and cash deficit problems among small players and customers. However, numerous governments have unveiled their plans to utilize the low carbon pollution conditions caused by the shutdown of industrial and transport sectors, augmenting the demand for clean fuel alternatives, such as hydrogen, in a post-COVID world. For instance, in December 2020, the government of Japan introduced a new fund totaling over USD 19 billion as an additional COVID-19 stimulus package for the hydrogen industry. The financial assistance is likely to propel new green projects for the next ten years and aims at introducing H2 powered planes and cargo ships to commence the usage of hydrogen as a reliable power source. The transportation sector, particularly the rise of hydrogen fuel cell vehicles (FCVs), is another key factor fueling market demand, as automakers such as Toyota, Hyundai, and Honda invest heavily in hydrogen-powered cars, trucks, and buses. However, despite these advancements, challenges remain in scaling up production, reducing costs, and establishing a global hydrogen infrastructure.

Market Drivers

Shift Towards Clean and Renewable Energy Sources: One of the most significant drivers of the hydrogen generation market is the global transition to clean, sustainable, and renewable energy sources. As governments, corporations, and organizations intensify efforts to meet climate goals and reduce carbon emissions, hydrogen, especially green hydrogen produced through renewable energy sources, is gaining prominence as a key alternative to fossil fuels. Hydrogen’s versatility makes it suitable for use in various sectors like transportation, industrial processes, and power generation, where decarbonization efforts are crucial.

Government Support and Policy Initiatives: Government policies and initiatives are another major driver behind the growth of the hydrogen generation market. Governments worldwide are recognizing hydrogen's potential as a sustainable energy carrier and are implementing favorable regulations and incentives to accelerate its adoption. For example, in the European Union, the 'EU Hydrogen Strategy' aims to scale up the production of green hydrogen and establish a competitive hydrogen economy by 2030.

Market Challenges

High Production Costs: One of the major challenges the hydrogen generation market faces is the high cost of hydrogen production, especially for green hydrogen. While technologies like electrolysis are promising, they require significant amounts of renewable electricity, which remains relatively expensive compared to traditional fossil fuels. The infrastructure for green hydrogen production is still developing, and scaling up electrolysis technology to achieve cost reductions is a long-term goal.

Infrastructure and Storage Issues: Another challenge lies in the lack of sufficient infrastructure for hydrogen distribution, storage, and transportation. Hydrogen is a low-density gas that requires specialized pipelines, storage tanks, and transport systems to ensure safe and efficient delivery to end-users. The infrastructure needed to scale hydrogen production and make it available on a global scale is expensive and complex to develop.

Market Trends

Technological Advancements in Production Methods: A major trend in the hydrogen generation market is the continuous advancement of hydrogen production technologies, particularly in the area of electrolysis. New methods such as proton exchange membrane (PEM) electrolysis and alkaline electrolysis are being developed to enhance efficiency and reduce costs. Innovations aimed at improving the efficiency of electrolysis, reducing energy consumption, and increasing the lifespan of electrolyzers are playing a key role in making green hydrogen more economically viable.

Hydrogen as a Key Element in Decarbonizing Hard-to-Abate Sectors: Another important trend is the increasing recognition of hydrogen's role in decarbonizing sectors that are difficult to electrify. These include industries such as heavy transportation (e.g., trucks, ships, and airplanes), steel production, cement manufacturing, and chemical industries. Hydrogen fuel cells are being explored as an alternative to battery electric vehicles in heavy-duty transport, where batteries may not provide sufficient range or power.

Pure H2 leads the global hydrogen generation industry due to its innovative technologies and strategic partnerships that drive sustainable and large-scale hydrogen production.

Pure H2 has established itself as a frontrunner in the hydrogen generation industry by leveraging cutting-edge technologies and forming strategic alliances that enhance its production capabilities and market reach. The company's commitment to innovation is evident in its development of advanced hydrogen production methods, such as electrolysis and steam methane reforming, which are more efficient and environmentally friendly compared to traditional techniques. By investing in research and development, Pure H2 has been able to optimize these processes, resulting in higher yields and lower costs, making hydrogen a more viable and attractive energy source for various applications.

Furthermore, Pure H2's focus on sustainability and environmental responsibility has positioned it as a preferred partner for organizations and governments seeking to reduce their carbon footprint. The company's green hydrogen initiatives, which involve producing hydrogen using renewable energy sources like wind and solar power, have garnered significant attention and support from environmental advocates and policymakers. By prioritizing sustainability, Pure H2 not only contributes to global efforts to combat climate change but also enhances its reputation and credibility in the industry. Moreover, Pure H2's commitment to quality and safety has earned it the trust and confidence of its customers and partners. The company adheres to stringent quality control measures and industry standards, ensuring that its hydrogen products are of the highest quality and meet the specific needs of its clients. This dedication to excellence has not only helped Pure H2 build a loyal customer base but also set it apart from competitors in the industry.

The petroleum refinery application is leading in the global hydrogen generation industry due to the critical role hydrogen plays in refining processes, particularly in desulfurization and upgrading crude oil, which is essential for producing cleaner fuels and meeting environmental regulations.

The petroleum refinery application is a dominant sector in the global hydrogen generation market because hydrogen is a vital component in several refining processes that enhance product quality and ensure compliance with stringent environmental standards. In the petroleum industry, hydrogen is primarily used in hydrocracking and hydrotreating, which are critical processes for converting crude oil into valuable refined products such as gasoline, diesel, and jet fuel. These processes not only improve the quality of the fuels by removing impurities but also enable refiners to extract higher-value products from heavier crude oils.

The most prominent use of hydrogen in this context is in hydrodesulfurization (HDS), a process that removes sulfur from refined products to meet the growing demand for low-sulfur fuels. Given the increasing global push for cleaner and more sustainable fuels, hydrogen’s role in reducing sulfur emissions is essential in helping refineries comply with the tightening global environmental regulations. Hydrogen is also crucial in other refining operations such as hydrotreating, which is used to remove other contaminants like nitrogen, oxygen, and metals from the crude oil, and in the production of high-quality lubricants and petrochemicals. For example, the introduction of the International Maritime Organization's (IMO) 2020 sulfur cap, which limits sulfur content in marine fuels to 0.5%, has driven the need for refineries to invest in hydrogen production for desulfurization processes. Furthermore, hydrogen is necessary for hydrocracking, a process where large hydrocarbons are broken down into smaller, lighter, and more valuable molecules such as naphtha and diesel.

Steam Methane Reforming (SMR) technology leads the global hydrogen generation industry due to its high efficiency, cost-effectiveness, and scalability, making it the most widely adopted method for large-scale hydrogen production.

Steam Methane Reforming (SMR) technology has emerged as the dominant method for hydrogen production globally, primarily because of its high efficiency, cost-effectiveness, and scalability. SMR involves reacting methane, which is predominantly available in natural gas, with steam under high pressure and temperature in the presence of a catalyst to produce hydrogen and carbon monoxide. This process is highly efficient, with an efficiency rate of about 65% to 75%, making it one of the most effective commercially available hydrogen production methods.

The widespread availability of natural gas as a feedstock further enhances the cost-effectiveness of SMR, as it allows for the production of hydrogen at a relatively low cost compared to other methods such as electrolysis. Additionally, the scalability of SMR technology makes it suitable for large-scale hydrogen production, which is essential to meet the growing global demand for hydrogen in various industrial applications, including ammonia production, refineries, fuel cells, and energy storage. While SMR does produce carbon dioxide as a byproduct, advancements in carbon capture and storage (CCS) technologies have made it possible to capture and store a significant portion of the carbon dioxide generated during the process. This has led to the development of 'blue hydrogen,' which is produced using SMR with CCS, offering a more environmentally friendly alternative to traditional hydrogen production methods. The ability to produce low-carbon hydrogen through SMR has garnered support from governments and regulatory bodies worldwide, further driving its adoption and growth in the industry.

Captive systems are leading in the global hydrogen generation industry because they allow industries to produce hydrogen on-site, ensuring a reliable and cost-efficient supply for their operations, while reducing dependency on external sources and mitigating logistical challenges.

Captive systems, where industries generate their own hydrogen on-site rather than relying on third-party suppliers, are becoming increasingly prevalent in the global hydrogen generation market due to several advantages that align with the growing needs of industrial users. The key driver behind the adoption of captive systems is the demand for a reliable, consistent, and cost-effective supply of hydrogen to support essential processes, particularly in sectors such as petroleum refining, chemicals, and manufacturing. These industries are the largest consumers of hydrogen, and their operations often require large, uninterrupted supplies of hydrogen for processes like hydrocracking, hydrotreating, ammonia production, and methanol synthesis.

A captive hydrogen generation system ensures that these critical processes are not interrupted by supply chain issues or price volatility that can occur when sourcing hydrogen from external suppliers. This independence from external hydrogen providers is especially crucial for industries operating in remote locations or those with large-scale hydrogen consumption needs, where centralized hydrogen distribution infrastructure may be inadequate or inefficient. In industries like petroleum refining, captive hydrogen systems are especially advantageous because they allow refineries to produce hydrogen on-site through processes like steam methane reforming (SMR) or autothermal reforming (ATR), tailored to their specific operational requirements. These systems reduce transportation costs and logistical complexities, ensuring hydrogen is available where and when it is needed without the reliance on transportation infrastructure, which can be costly and subject to disruptions. Moreover, captive hydrogen generation allows companies to closely monitor and control their hydrogen production, providing a higher level of flexibility in meeting fluctuating demand, adjusting production capacity, and improving overall process efficiency.

Natural gas is leading in the global hydrogen generation industry because it is the most cost-effective and widely available feedstock for producing hydrogen, particularly through the established process of steam methane reforming (SMR), which currently accounts for the majority of global hydrogen production.

Natural gas plays a dominant role in the global hydrogen generation industry primarily because it is the most economically viable and accessible feedstock for hydrogen production. The process most commonly used to produce hydrogen from natural gas is called steam methane reforming (SMR), which involves reacting methane (the primary component of natural gas) with steam at high temperatures to produce hydrogen and carbon monoxide. This method, while not carbon-free, has long been the preferred choice due to its relatively low operational costs, scalability, and ability to produce large quantities of hydrogen.

SMR accounts for approximately 75-80% of the world’s hydrogen production, underscoring the pivotal role natural gas plays in the hydrogen sector. Natural gas is abundantly available and relatively inexpensive compared to other feedstocks, making it the go-to resource for industries that require hydrogen in large quantities. Countries with rich reserves of natural gas, such as the United States, Russia, Qatar, and Iran, have a competitive advantage in hydrogen production, as they can utilize locally sourced natural gas to fuel SMR processes. This access to affordable natural gas makes the production of hydrogen more cost-effective, especially when compared to other methods like electrolysis, which requires significant amounts of electricity, often sourced from renewable energy, and can be more expensive due to the high costs of electrolyzers and renewable energy infrastructure. Furthermore, natural gas is deeply integrated into the energy infrastructure of many countries, making it an appealing choice for scaling up hydrogen production. The infrastructure for natural gas extraction, transportation, and storage is already well-established in many regions, reducing the need for new investments in supply chains. This makes natural gas a more practical and efficient resource for hydrogen production compared to other feedstocks, such as coal or biomass, which may require more complex logistics and infrastructure.

Asia Pacific leads the global hydrogen generation industry due to its robust investments in renewable energy infrastructure, supportive government policies, and the region's significant industrial demand for hydrogen.

Asia Pacific has emerged as a leader in the global hydrogen generation industry, driven by a combination of robust investments in renewable energy infrastructure, supportive government policies, and substantial industrial demand for hydrogen. The region's commitment to transitioning to cleaner energy sources is evident in the significant investments made by countries like China, Japan, and South Korea in developing hydrogen production capabilities. China, for instance, has unveiled its first long-term plan for establishing a national hydrogen economy, aiming to leverage its rapidly growing renewable energy capacity to produce green hydrogen.

This plan aligns with China's broader goals of reducing carbon emissions and achieving carbon neutrality by 2060. Similarly, Japan and South Korea have been pioneers in the hydrogen sector, with both countries adopting national roadmaps to enhance their hydrogen capabilities and integrate hydrogen into their energy systems. The industrial demand for hydrogen in the Asia Pacific region is another significant factor contributing to its leadership in the global hydrogen generation industry. Hydrogen is widely used in various industrial applications, including ammonia production, petroleum refining, and methanol production. The region's strong industrial base, coupled with its growing energy needs, has driven the demand for hydrogen as a versatile and clean energy carrier. For example, the Asia Pacific region accounts for approximately 40% of global hydrogen demand, with China alone representing 26% of the total demand. This substantial demand has spurred investments in hydrogen production technologies and infrastructure, further solidifying the region's position as a leader in the industry.

• April 2024 - A Gujarat state govt committee has, in principle, permitted allotting 63,000 hectares for making green hydrogen from wind, solar, and wind-solar hybrid energy sources. These site parcels are located in Banaskantha, Kutch, and Patan districts.
• April 2024- Accelera by Cummins, the energy technology company, will deliver Chevron New Energies with a 5-MW electrolyzer technology system for the production of low carbon intensity (LCI) electrolytic hydrogen at its capacity plant in Lost Hills, CA.
• March 2024 - GAIL Ltd. (India), a state-run natural gas company, plans to contract its first green hydrogen project in central India in 2024. Moreover, The 10MW proton exchange membrane electrolyzer, the production of green-hydrogen, has been imported to the Vijaipur complex in Madhya Pradesh from Canada.
• February 2021 - China Petroleum & Chemical Corporation (Sinopec) unveiled its strategy to construct around 1,000 hydrogen fueling stations over the next five years. The new infrastructure is set to boost the hydrogen generation output and propel clean energy across the nation.
• December 2020 - Seven key companies, namely Envision, Snam, ACWA Power, Iberdrola, CWP Renewables, Yara, and Ørsted, initiated a new global alliance called “Green Hydrogen Catapult” to increase the green H2 output by 50 folds. The coalition aims to install 25 GW of hydrogen production from renewable sources and simultaneously reduce the production cost to lower than USD 2 per kilogram by 2026.

Considered in this report

• Geography: Global
• Historic Year: 2019
• Base year: 2024
• Estimated year: 2025
• Forecast year: 2030

Aspects covered in this report

• Global Hydrogen Generation Market with its value and forecast along with its segments
• Region & country wise Hydrogen Generation market analysis
• Application wise Hydrogen Generation distribution
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Hydrogen Type

• Pure H2
• Mix. With other gases

By Applications

• Methanol Production
• Ammonia Production
• Petroleum Refinery
• Transportation
• Power Generation
• Others (Steel+Iron+commercial uses+semiconductors, LEDs, displays, photovoltaic segments, and other electronics etc)

By Technology

• SMR =steam methane reforming
• Coal gasification
• Others (Electrolysis, oil/refining or auto-thermal reformation)

By System Type

• Captive
• Merchant

By Energy Source

• N.GAS
• COAL
• Others (oil, Renewable Energy, etc.)

The approach of the report

This report consists of a combined approach of primary as well as secondary research. Initially, secondary research was used to get an understanding of the market and listing out the companies that are present in the market. The secondary research consists of third-party sources such as press releases, annual report of companies, analyzing the government generated reports and databases.

After gathering the data from secondary sources primary research was conducted by making telephonic interviews with the leading players about how the market is functioning and then conducted trade calls with dealers and distributors of the market. Post this we have started doing primary calls to consumers by equally segmenting consumers in regional aspects, tier aspects, age group, and gender. Once we have primary data with us we have started verifying the details obtained from secondary sources.

Intended audience

This report can be useful to industry consultants, manufacturers, suppliers, associations & organizations related to chemical industry, government bodies and other stakeholders to align their market-centric strategies. In addition to marketing & presentations, it will also increase competitive knowledge about the industry.

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