Driving forces in the hydrogen industry
Trends driving the hydrogen economy
There are a number of factors behind the positive outlook for the future of the hydrogen economy. Four of them are sustainability, safety, cost and accessibility.
In recent years, the world’s countries have acted together to limit global warming to 2 degrees Celsius, with the ambition of keeping the temperature increase below 1.5 degrees Celsius. This agreement builds on the Paris Agreement that entered into force in 2016 and has resulted in a multitude of supranational and national initiatives to reach the climate target. Examples of these initiatives include the desire to transform the financial sector to encourage sustainable business, to reduce deforestation and to accelerate the transformation of the food sector. The common factor in most decisions is increasing the use of renewable energy and phasing out fossil fuels. Hydrogen and hydrogen-electric solutions are one of the most potent answers to the challenge of phasing out fossil energy.
Policy initiatives in the world
Launched in 2019, the EU Green Deal contains a wide range of policy initiatives aimed at enabling the EU to be climate neutral by 2050. Hydrogen has a crucial role to play in the Green Deal to transform the European energy system and make it fossil-free.
After the European Parliament elections in summer 2024, the conservative EPP is the largest party group, and the Commission is also composed of people with predominantly conservative backgrounds, which is affecting the development of the Union. More pro-growth policies but less focus on sustainability matters can be expected.
In the US, the Biden administration implemented a series of measures to drive the development of the US hydrogen economy. In 2021, the Infrastructure Investment and Jobs Act was launched, setting aside USD 8 billion for hydrogen investments, of which USD 7 billion was earmarked for the development of seven hydrogen hubs.
The election of Donald Trump as President of the US has led to a slowdown in sustainability efforts and the green transition. The US has left the Paris Agreement, cut investment in renewable energy and increased its focus on oil and gas exploration.
In Asia, many countries have initiated extensive hydrogen programs. In 2017, Japan adopted the world’s first national hydrogen strategy, which was revised in June 2023. Through investments from the public and private sectors, Japan aims to increase the use of hydrogen sixfold over the next decade. South Korea initiated its Hydrogen Economy Roadmap in 2019, and China launched its national hydrogen development plan in 2022.
The potential to store energy
A second driver affecting future demand relates to geopolitics and global uncertainty. Russia’s war of aggression against Trends driving the hydrogen economy Ukraine showed how dependent the world’s countries are on energy supply and storage. As European countries cut off gas imports from Russia, gas prices rose on a continent still largely dependent on fossil fuels for heating.
In general, it is expected that more and more countries will want to gain greater control and self-sufficiency when it comes to domestic energy. Renewable energy initiatives are widespread in many parts of the world, but high levels of intermittent energy such as wind and solar power pose challenges to energy systems when these plants are not producing energy. Hydrogen, produced by electrolysis powered by renewable energy, offers a way to store energy over time.
Rapid technology development
The rapid development of technology is a third driver of demand for hydrogen-electric solutions such as fuel cells and electrolyzers. Higher energy density and new production methods and applications are bringing fuel cell technology to markets that have traditionally been dependent on fossil fuels. Examples of this can be found in heavy transport, marine industries and the aviation sector. Hydrogen solutions are particularly effective in industries where battery-electric solutions are not suitable due to long charging times and/or batteries that require a great deal of space and leave less room for freight or people to be transported.
In 2024, the growth of fuel cell-powered electric cars slowed in the US and the EU, and the lack of refueling stations is holding back growth. In January 2025, there were only 77 hydrogen stations in the US and the EU. The strongest growth is in China, where 4,000 fuel cell trucks were sold in January–November 2024, marking the third consecutive year that sales have exceeded 3,000 vehicles.
Increasingly efficient production
A fourth driver is the development of production processes for fuel cells, electrolyzers and their components. To achieve industrial success, the production of flow plates, for example, needs to have a minimal climate impact and be cost-effective and of very high quality.
Overall, we believe the future of hydrogen-electric solutions is promising. They will coexist with battery technology solutions and become increasingly established over time. Available forecasts for the growing importance of hydrogen indicate that its potential is high, while growth is slower than previous projections indicated.