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Hydrogen Hope amidst Hurdles: Hyperbole, Headwinds & Heavy Investments
Saturday, June 7, 2025
Synopsis: - Global clean hydrogen investment is set to rise by 70% in 2025 to $8 billion, according to the International Energy Agency, despite major project delays from firms like Air Products, Ørsted & ongoing challenges in offtake agreements.
Fiscal Fervour Fuels Futuristic Hydrogen Frontiers Despite FluxClean hydrogen, long heralded as a panacea for decarbonising heavy industry & transport, is poised for a 70% jump in global investment, soaring to nearly $8 billion in 2025. This prediction comes from the International Energy Agency’s latest World Energy Investment 2025 report. The bullish momentum follows a robust 60% rise in 2024, even as a cascade of project cancellations clouded the sector's aura of inevitability.
Electrolyzer Escalation Eclipses Earlier ExpectationsIn a remarkable display of resilience, investment in electrolyzers, the core technology for green hydrogen, grew by 90% in 2024 to reach $2.5 billion. This surge occurred despite prominent cancellations such as Ørsted’s 50,000 metric tons/year FlagshipONE e-methanol facility in Sweden. The IEA predicts this trend will intensify in 2025, also projecting a 150% increase in electrolyzer spending, driven by scaled-up production lines & project execution.
FID Fortitude Fosters Funding, Fuels Facility FormationThe projected $8 billion investment hinges on successfully executing all projects that have reached Final Investment Decision. These undertakings could expand hydrogen capacity to 7.5 million metric tons annually by 2035, nearly 15 times the current global level. Despite delays, developers remain committed to pushing projects from blueprint to build-out, reinforcing hydrogen’s central role in global energy transition narratives.
Cancellations, Complexities & Carbon Cost Conundrums ContinueSector turbulence remains a concern. In the U.S., Air Products exited a 13,000 metric tons/year project, while a massive 600,000 metric tons/year hydrogen complex in Louisiana was paused pending offtake arrangements. Such setbacks, even after FID, underscore the volatility stemming from uncertain demand guarantees, high upfront costs & policy-dependent profitability.
Geostrategic Gambits: India Ignites Industrial AmbitionsAmong the emerging hydrogen hotspots, India has begun flexing its strategic sinews. A large-scale electrolyzer project in Kakinada, greenlit in mid-2024, aims to produce 1 million metric tons/year of low-emission ammonia by 2026, primarily destined for European export. This venture exemplifies the southward expansion of the global hydrogen map, where lower capital costs & renewable abundance fuel feasibility.
Biofuels, Biogases & Blue Hydrogen Bolster Broader PortfolioHydrogen’s rise forms part of a broader 30% investment uplift in low-carbon technologies. Combined spending on liquid biofuels, biogases & low-carbon hydrogen is expected to hit a record $25 billion in 2025. This expansion illustrates a holistic effort to diversify energy portfolios beyond traditional renewables, catering to hard-to-abate sectors like aviation & heavy freight.
Cost Calculus Complicates Commercial CompetitivenessAccording to S&P Global’s Platts, the price of renewable hydrogen produced via alkaline electrolysis in the Netherlands, backed by green power purchase agreements, was €7.77/kg ($8.80/kg) as of June 5. In stark contrast, unabated fossil fuel-based H₂ costs a mere €2.72/kg. This glaring disparity continues to restrain adoption, making policy intervention not just helpful, but essential.
Policymaking Propels Projects Past Perils & PausesGovernments remain the principal patrons of hydrogen proliferation. Without robust policy scaffolding, most projects would remain marooned in planning phases. Subsidies, tax incentives, also regulatory alignment are imperative to attract private capital. Although some North American CCUS-based hydrogen ventures face uncertainty, Europe & Asia continue to anchor the hydrogen hope, underscoring the criticality of transnational cooperation.
Key Takeaways
IEA forecasts a 70% rise in clean hydrogen investment in 2025 to $8 billion, despite delays.
Electrolyzer spending surged 90% in 2024 & is expected to rise 150% in 2025.
Renewable hydrogen remains significantly more expensive than fossil-based H₂, necessitating strong policy support.
