Clean hydrogen investment tops $110bn to defy industry pessimism
Money flowing into green and blue hydrogen projects rises $35bn in the past year
Over $110bn is being invested in more than 500 clean hydrogen projects worldwide, according to a new report that pushes back against growing scepticism about the fuel’s future after a wave of high-profile cancellations.
The study, commissioned by the Hydrogen Council, found that $35bn of new projects had reached a final investment decision over the past year, and that pledged investment has been growing at more than 50 per cent annually since 2020.
“The pendulum has been swinging between exuberant enthusiasm — or hype — and doom and gloom,” said Ivana Jemelkova, the lobby group’s chief executive. “If you tell me hydrogen is dead, I can show you 500-plus examples that it’s not.”
The promise of hydrogen, an alternative to oil and gas that produces only water vapour when it burns, peaked in 2022, when the EU forecast that renewable hydrogen would cover one-tenth of the bloc’s energy needs by 2050, turning its industry and transport system green.
The gas is widely used in refineries, in making fertiliser, and can power steel furnaces, heavy machinery and vehicles. But producing, storing and transporting it remains expensive and technically difficult. Demand has been limited at current prices, which vary by individual project.
And while at least 50 projects have been abandoned over the past 18 months by groups such as BP, Shell, ArcelorMittal and Iberdrola, Jemelkova said this did not reflect a broader slowdown.
“The industry is growing through the process of natural attrition — it’s normal. It was the same in solar,” she said.
China and the US account for more than half of the $110bn so far invested. Beijing has prioritised “green” hydrogen, which uses renewable electricity to split water molecules, while Washington has focused on “blue” hydrogen, derived from gas with carbon emissions captured and stored.
In total, there is now 1mn tonnes of hydrogen capacity in operation and another 5mn tonnes under construction, equivalent to about half of current US consumption.
“It’s far lower than people had expected,” said Sanjiv Lamba, chief executive of industrial gas group Linde and Hydrogen Council co-chair, but it did show that “projects at scale, which are there to meet demand” can be competitive.
Much of the new investment in the past year stemmed from a few mega projects, including four large Chinese plants under construction, Blue Point in the US, and that being developed by India’s Hygenco and Ameropa of Switzerland.
“We’re seeing projects that are a bit more serious, which are bigger, which are supported by the strongest technologies,” said Pierre-Etienne Franc, head of asset manager Hy24, which has invested $2bn in clean hydrogen.
“Developers have disappeared, some gigantic projects have disappeared as well. But if you really look at the figures, they’re far better than what people were saying on the market.”
Franc said that growth, and the focus of his investment, was increasingly in Asia, the Middle East and the US, while Europe was lagging. “If Europe doesn’t get its act together then it’s going to be closed,” he said, echoing widespread criticism of the EU’s regulatory approach.
Lamba said Europe was being held back by a “lack of pragmatism” and its refusal to consider blue hydrogen as a lower-cost transitional option.
One of the largest proposed blue hydrogen projects is ExxonMobil’s plant at Baytown in Texas, but the company has yet to take a final investment decision. “We’re concerned about the development of a broader market,” Exxon chief Darren Wood told analysts last month. “If we can’t see an eventual path to a market-driven business, we won’t move forward with the project.”