One of the most discussed and important topics today is the energy transition and its surrounding issues. The International Energy Agency (IEA) announced that global production of low-emission hydrogen is expected to reach 1 million tons (Mt) by 2025. This figure alone is not that high, representing less than 1% of the total global production, but it is still a breakthrough that deserves attention and recognition, as it represents an indication of growth in this area. This is increasingly essential to the transition.
Low-emission hydrogen advances slowly, but shows clear signs of growth
Hydrogen is already widely used in various industrial sectors, but much of this volume is actually produced through processes based on fossil fuels, which are highly polluting and harmful to nature and humans. When we talk about “low-emission hydrogen,” we mean hydrogen produced through electrolysis with renewable energy or through carbon capture, aiming to offset polluting emissions.
According to the IEA, in 2024, production of this cleaner version grew by 10%, making it possible to estimate that it should lead to the 1 Mt milestone by 2025. Although this is a low percentage of total emissions on a global scale, the pace of this growth demonstrates that the sector is increasingly gaining ground and gradually increasing its potential impact.
Hydrogen projects move forward despite high costs
This significant increase can be seen in the sector’s increased project approvals over the past few years. Since 2020, more than 200 projects have received final investment decisions, a significant increase compared to just a handful of experimental trials at the beginning of the decade.
It’s worth noting, however, that this progress isn’t linear. The low-emission hydrogen market faces high costs and delays in projects already announced and approved. Even so, significant expansion is expected by 2030, when production could reach a level five times higher than the current level.
Costs still challenge global expansion, but the trend is towards a gradual reduction
It’s no secret that one of the main obstacles to advancing low-emission hydrogen continues to be cost. Today, it’s much cheaper to produce hydrogen from natural gas or coal, without carbon capture. The financial aspect is always a sensitive topic because it makes these projects less attractive to investors, requiring more incentives through supportive public policies.
But the good news is that the cost gap is expected to narrow over the decade. The IEA projects that falling prices for electrolysis technologies, combined with stricter climate policies and rising natural gas prices in some markets, could increase incentives for hydrogen production. In China, for example, renewable hydrogen has a chance of becoming competitive before 2030, and in Europe, factors such as carbon prices and renewable potential should also help.
In other regions where natural gas is cheaper, such as the United States and the Middle East, the cost has a greater impact, so production with carbon capture and storage should remain a viable alternative. However, government incentives and long-term purchase agreements can also accelerate the adoption of cleaner hydrogen in various sectors.
Policies and infrastructure will be crucial to transforming potential into reality
Financial issues aren’t the only concern for this sector. For the sector to continue growing, it’s crucial to have the necessary infrastructure in place. Creating distribution routes, investing in ports equipped for refueling, and stimulating the industry’s supply chain are some of the essential factors for establishing a low-emission hydrogen sector.
The 1 Mt milestone of low-emission hydrogen by 2025 may seem small compared to global demand, but it’s a figure that deserves attention in the context of the energy transition. Advances in incentive policies, cost reductions, and infrastructure improvements are some of the areas where the fuel has room to grow and ensure a greater positive impact on the environment.