Hydrogen Review

The IEA’s Global Hydrogen Review 2025: green hydrogen ramp up is slower than we wanted– but it is happening all the same

The International Energy Agency (IEA)’s annual Global Hydrogen Review has become an important barometer of the sector which we have helped to peer review over a number of years. These words sum up the latest 288-page report well and give a reasonable reflection of where the sector is at: 

“While the challenges facing the hydrogen sector have led to slower-than targeted deployment, a closer look at the evidence shows that — rather than stalling or faltering — the sector is progressing and reaching important milestones”. 

The report confirms that the world continues to use a huge amount of hydrogen, with demand increasing to nearly 100 million tonnes in 2024. The bad news is that nearly all this hydrogen continues to be made from unabated and unsustainably dirty fossil fuels, with less than 1 percent classified as “low-emissions”.  

We continue to challenge the IEA on how it defines low-emissions hydrogen made from fossil fuels. According to the IEA, upstream emissions including from methane need to be “sufficiently low” and carbon capture needs to be at “high rates” but surely it is time to be specific. Let’s draw a line and accept nothing more than 0.2% upstream leakage, and at least 95% carbon capture. If blue hydrogen projects don’t meet these criteria, they are stranded assets in waiting and should not be eligible for any state or investor support.  

The IEA has taken a leading role in arguing against further oil and gas development. In its “Net Zero Emissions by 2050” (NZE) scenario, the IEA states that beyond the oil & gas projects already committed as of the baseline year (2020-2021), no new conventional oil and gas fields are required to meet a pathway compatible with limiting warming to 1.5 °C. And yet it’s position on defining low-emissions hydrogen makes no reference to this conclusion.  

The amount of low emissions hydrogen being produced is now growing but from a very low level. It comes as no surprise to us that no new blue hydrogen projects commenced production in 2024. As the IEA points out: “most of the growth stems from electrolyser-based units” which grew “60% year-on-year in 2024”.  

One of the standout projects in 2025 is GH2 member Envision’s 500MW Chifeng project in Inner Mongolia which was commissioned in July. The IEA highlights that China is leading the pack for green hydrogen. It is the global leader in electrolyser manufacturing capacity (with 60% of global capacity which now stands at 4.9GW compared to just 0.6GW in 2021) and deployment. It is also the most cost competitive jurisdiction, where the cost for green hydrogen can be 40-45% lower than Europe or the United States due to lower cost of capital, renewable electricity prices and faster permitting procedures. 

The IEA does a good job of showing how the cost of low-emissions hydrogen can vary. Cost is very location specific. Making hydrogen from fossil gas in the US or Middle East is cheap since carbon dioxide is not priced adequately to account for emissions and benefits from large and regressive subsidies. Blue hydrogen might also be competitive in these regions, but big questions remain over the eventual emissions reduction performance of these facilities which are yet to be built.  

In other parts of the world this is simply not the case. We welcome the IEA projecting that by the end of the decade “the cost of producing [green] hydrogen using optimal conditions for renewable electricity generation in China is within the range of producing hydrogen from unabated fossil fuels. In other regions…the cost gap narrows significantly. For example, in some areas of Latin America the cost gap in 2030 could be reduced to just above USD 0.5/kg H2.”  

Global statements we have seen from some noting that “blue is cheaper than green” don’t take different locations into account and are not worth the paper they are written on. Green hydrogen and its derivatives are competitive, especially when upstream methane emissions and the uncertain performance and permanence of CCS are properly taken into account. For more details, see our paper – In Search of the Real Cost of Blue Hydrogen.  

The IEA rightly notes how the International Maritime Organization (IMO)’s new Net-Zero Framework could boost the uptake of green hydrogen-based fuels in the maritime sector but warns that in the short term the regulations may stimulate demand for liquefied natural gas or biofuels instead. At GH2 we are working closely with partners to ensure this is not the case. Regrettably, key players like DNV are doubling down on LNG, deepening fossil fuel dependency. As T&E have warned, the vast majority of biofuels will come from palm and soy, which are heavily linked to deforestation.  

This year’s report includes a section on the potential for green hydrogen in Southeast Asia. It is early days for the sector in Indonesia, Vietnam and Malaysia but we agree that green hydrogen must ramp up to decarbonise ammonia production for fertilizer and shipping, as well as steelmaking and of course maritime bunkering in Singapore.    

We concur with the IEA’s updated set of policy recommendations but urge even more ambition.  

  • Carbon Pricing. Carbon pricing makes the unsustainable, polluting hydrogen production pathways expensive and the clean, green more attractive. Reducing fossil fuel subsidies makes economies more efficient, lowers emissions, improves public finances, and supports a fairer transition to clean energy. 

  • On production support schemes, these need to be increased and not just maintained for green hydrogen. In the EU, the Hydrogen Bank needs more money and needs to support real and viable projects rather than those that just exist on a spreadsheet. Australia can reach its full potential if it layers on further support for green iron on top of its existing hydrogen tax credits.  

  • On accelerating demand, in Europe governments must implement the Renewable Energy Directive (RED) targets for transport and industry. Only the Czech Republic and Romania (less than 5% of EU hydrogen demand) have transposed these important targets into national law. 

  • On supporting emerging and developing economies to move up the value chain, many parts of Africa hold enormous potential for green hydrogen production yet access to low-cost finance and infrastructure is holding them back. We agree that high income countries should partner more meaningfully with these economies to encourage new domestic use cases (such as fertiliser production) and open export opportunities for hydrogen-based products like green iron or ammonia for shipping. We’ll be discussing this topic in detail next week at the Cairo Regional Forum on Financing Renewables, Green Hydrogen and Green Ammonia at Nile University. 

 While some commentators want to give up on this goal and on green hydrogen, we are more determined than ever to make it happen. The IEA’s report shows it can be done.  

 

Joe Williams,
Deputy CEO, GH2