Global hydrogen demand is entering a critical growth phase, with total demand projected to increase by 50% from around 100 million metric tonnes per annum (MMTPA) in 2024 to 150 MMTPA by 2030. However, the pace of project execution remains well below the level required to meet long-term clean hydrogen ambitions, Renewable Watch reported.
According to the “World Green Hydrogen Outlook: GHIC Annual Flagship Report”, published by the International Solar Alliance (ISA), clean or low-emissions hydrogen could account for nearly 45% of supply by 2030 under the International Energy Agency’s Net Zero Emissions pathway. Green hydrogen, however, represented less than 1% of total hydrogen supply in 2024.
Project development remains a major bottleneck. Only around 9% of announced hydrogen projects have reached final investment decisions, with progress particularly limited in emerging markets outside China. Weak offtake commitments, high financing costs and infrastructure constraints continue to hold back investment.
The report said the immediate focus should be on established or “drop-in” hydrogen applications such as refining, ammonia and methanol. It also highlighted the need for low-cost renewable power with round-the-clock availability and bankable mechanisms to create demand and convert project announcements into operating assets.
The high cost of green hydrogen remains one of the biggest barriers to scaling up the sector. This continues to limit offtake and delay market adoption. At the same time, falling renewable power and energy storage costs, along with declining electrolyser prices, are gradually improving the economics of green hydrogen projects.
Several structural challenges remain, including shortages of specialised and skilled workers, inadequate infrastructure, technology and knowledge gaps, high operating costs and limited access to affordable finance. The absence of clear and dedicated green hydrogen policies in several countries is also adding to investment uncertainty and slowing large-scale deployment.
The report said overcoming these challenges will require greater public and private investment, targeted government incentives and policy support, continued engineering and technological improvements to lower costs, and focused workforce development.
The ISA study aims to provide a strategic framework for accelerating green hydrogen deployment by narrowing the gap between policy ambition and actual project implementation. It examines market creation, cost competitiveness and infrastructure requirements while assessing challenges related to capital costs, fragmented demand and technology.
The report also calls for the development of resilient green hydrogen ecosystems through integrated hubs, innovative financing mechanisms and localisation of manufacturing. Digital technologies, including artificial intelligence, along with advances in materials, could further improve project efficiency and help bring down costs.
