This article was first published in Decarbonisation Technology

By Özlem Duyan, Head of Research, Hydrogen Council

Like the turning of the ocean tide, hydrogen’s progress advances in waves – sometimes barely visible from the shore, yet behind the surface, a far more important story is unfolding: one of industrial maturity, global collaboration, and continued progress. Just as wind and solar went through early ebbs and flows before reaching scale, hydrogen is also navigating its own cycle of trial, consolidation, and growth.

Not every project will reach the shore, and this is a normal part of industrial evolution. However, those that do will set the course for the next decade of clean energy transformation. They are proving that hydrogen is moving into the build-out phase, establishing the foundations for scale, cost reduction, and long-term competitiveness.

The first wave takes shape

The Hydrogen Council’s latest report, Global Hydrogen Compass, tracks this evolution across the globe (Hydrogen Council, 2025). Drawing from a comprehensive dataset and direct perspectives of more than 70 CEOs and industry leaders, we see a sector progressing steadily from ambition to execution.

Globally, more than 1,700 clean hydrogen projects have been announced across the value chain. Of these, 510 projects have advanced past final investment decision (FID), entered construction, or are already in operation, representing more than $110 billion in committed capital. That is a rise of $35 billion in just the past year, and a remarkable 50% average annual growth since 2020.

Behind those numbers lies a clear signal: hydrogen investment is not slowing down; it is maturing. The sector is beginning to deliver on the infrastructure, partnerships, and policy frameworks needed to transform early ambition into lasting impact.

Lessons from attrition

As it matures, every industry goes through a natural process of consolidation. In hydrogen, at least 50 projects have been publicly cancelled over the past 18 months, most of them early stage renewable hydrogen ventures. About 38% of those cancellations were linked to policy and market uncertainty, while 27% stemmed from financing challenges.

While such figures may appear discouraging at first glance, they actually reflect a healthy phase of industrial maturation and need to be read in the context of a natural pipeline shakeout. Similar patterns were seen in the early years of solar and wind, two sectors that also went through waves of adjustment before achieving scale. In each case, the pruning of projects with less competitive advantage paved the way for stronger, more competitive ones to advance. Without further action, some projects, including renewable hydrogen projects in the US, challenged by recent regulatory changes, and in Europe, impacted by relatively high power costs in some regions, could become at risk.

As our conversations with CEOs revealed, this process of natural attrition is helping the sector focus its capital and effort where it can have the greatest near-term impact. Projects with strong fundamentals – credible offtake, access to infrastructure, and policy alignment – are moving forward. The result: fewer announcements, but more credible execution. The hydrogen industry is entering its buildout phase, more disciplined and grounded in realism.

China’s acceleration

Nowhere is that momentum clearer than in China, a region that is deploying a hydrogen playbook reminiscent of its industrial strategies for solar, wind, and batteries, leading to rapid deployment of electrolytic hydrogen capacity. The country leads the world in total committed investments ($33 billion), boasts half of the global renewable hydrogen capacity, and leads in hydrogen vehicle deployment, with thousands of heavy-duty trucks and buses already on the road.

Operational electrolysis capacity has grown sixfold since 2022, outpacing every other market. Most projects are financed, built, and consumed domestically, a self-reinforcing loop that ensures resilience and speed. When surveyed, 97% of CEOs agreed that China will remain one of the leading regions for hydrogen deployment, and nearly a third believe it could maintain its current leadership position in the years ahead.

China’s model – build first, learn fast, scale relentlessly – carries lessons for others. It demonstrates that policy ambition, industrial coordination, and infrastructure readiness can combine to accelerate progress even in uncertain global conditions.

North America and Europe’s diverging paths

North America offers a different story. With $23 billion in committed investments, it is now the world’s second-largest hydrogen market, home to 85% of planned global low-carbon hydrogen production. However, the slow implementation of landmark regulations, such as the Inflation Reduction Act (IRA), has led to proportional delays in projects dependent on these support mechanisms. Regulatory clarity on timelines and implementation will be critical. Developers are moving forward, but the speed of progress will depend on how quickly demand-side mechanisms and infrastructure align.

Meanwhile, Europe continues to set important precedents in regulation and infrastructure planning. From the Renewable Energy Directive III (RED III) to the Hydrogen Bank and the European Hydrogen Backbone, the EU has built the most comprehensive regulatory and infrastructure framework in the world. However,

it must ensure that this ambition translates into projects on the ground. Although the region accounts for nearly two-thirds of the expected 2030 global demand, it accounts for less than 20% of total committed investment today. This mismatch reflects the challenge of turning policy intent into projects on the ground and highlights the importance of clear, long-term demand signals to de-risk private investment.

The message is clear: ambition sets direction, but certainty unlocks delivery.

The supply foundation

Hydrogen supply is already shifting from concept to capacity. As of 2025, the global project pipeline includes about 6 million tons per year (mtpa) of committed clean hydrogen capacity, of which 1 mtpa is already operational – a milestone largely driven by the rapid scale up of electrolysis in China.

This projected supply range reflects the potential of the current project pipeline through 2030. However, the actual volumes that materialise will depend on how much capacity secures firm, often policy-supported, offtake agreements. Without clear demand signals, production assets risk remaining underused or becoming stranded.

Across conversations with CEOs, a consistent note of optimism emerged: once market demand strengthens, the existing supply pipeline will be ready to rise to the challenge. Yet, many emphasised that supply alone will not be enough to spark wider adoption. Our analysis reinforces this view. Our report shows that an estimated 9-14 mtpa of clean hydrogen supply could realistically come online by 2030; however, only around 8 mtpa of demand currently shows a policy-supported, positive business case.

The demand challenge

If the hydrogen supply chain provides the foundation for progress, demand is what sets it in motion. Without secure offtake agreements, even well-funded projects can struggle to move forward.

As of 2025, around 3.6 mtpa of binding offtake agreements have been secured, covering around 60% of committed capacity. Most of this demand (70%) remains anchored in existing industrial uses, with refining and ammonia accounting for the bulk. Ammonia alone represents about 43% of total binding offtake, making it the single largest demand segment at present.

Regional patterns are emerging. China and Europe lead on renewable hydrogen offtake, with China sourcing all volumes domestically. The US and Canada dominate low-carbon offtake, which is also primarily domestic. While the majority of existing capacity still serves domestic markets, early signs of an international market are taking shape; already 45% of Europe’s offtake is imported, signalling the first flows of cross-border hydrogen and derivatives.

Up to 8 mtpa of clean hydrogen demand carries a positive business case under existing or announced policy frameworks, notably the EU’s RED III quotas and clean power mandates across East Asia, and could materialise by 2030. Achieving that outcome will depend on how effectively these mechanisms are implemented and on whether infrastructure can expand quickly enough to connect supply with demand.

Infrastructure as catalyst

Demand is now the single most critical factor determining how quickly the ecosystem will scale, with infrastructure deployment the next most important. Infrastructure readiness is the make-or-break factor in regional hydrogen competitiveness. It underpins costs, investor confidence, and market formation. For hydrogen to move into profitable, scalable deployment, demand and infrastructure must advance together, de-risked by policy certainty and anchored in industrial clusters, until economies of scale bring costs down.

Advancements in both new and existing infrastructure have expanded the geographic range of offtake, allowing it to occur at greater distances from production sites than in the past. Prior to 2021, offtake was predominantly co-located with production. Today, while international offtake markets are still developing, domestic offtake benefits from improved logistical and distribution infrastructure.

An additional 13 mtpa could be unlocked by 2030 with the scale-up of enabling infrastructure. Expansion of midstream infrastructure to enable low-carbon supply for existing use cases is critical to address the cost gap with higher emission alternatives for new end uses.

Framework for success

Lighthouse case stories from the first wave of clean hydrogen projects – 12 of which are included in the Global Hydrogen Compass report – can teach us valuable lessons on what it takes to succeed in hydrogen today.

In our report, we identified six enabling factors that distinguish projects moving toward execution from those that remain stalled. These include:

• Strategic location selection: connection to pipelines, storage, or hubs.
• Capex and technology optimisation: efficient design, phased build-out, and local resource fit.
• Cost and schedule optimisation: disciplined delivery and smart contracting.
• Offtake and commercial strategy: credible offtake and end-use partnerships.
• Policy landscape navigation: clear compliance and incentives.
• Value chain collaboration: experienced teams and proven technology.

While successful projects may not have to excel across every single dimension, we noticed that the common denominator among successful projects was the combination of a majority of the above enabling factors.

The next wave: what will shape hydrogen’s expansion

A convergence of trends across sectors will determine how the next wave of clean hydrogen deployment takes shape. Growth in end-use markets such as mobility, fertiliser, and maritime, coupled with the build-out of connective infrastructure and the implementation of new policies, will define the pace and direction of progress.

In mobility, the first hydrogen ecosystems are now materialising with fleets, refuelling stations, and supply contracts aligned in early regional hubs. Yet large-scale rollout remains challenging: vehicles, refuelling infrastructure, and hydrogen supply must all develop in parallel, with utilisation rates high enough to keep costs competitive.

In fertiliser and industrial feedstocks, demand for clean ammonia is advancing on the back of new policies. The EU Emissions Trading Scheme (ETS) and Cross Border Adjustment Mechanism (CBAM) are tightening the cost of carbon for both domestic and imported to form, and technology to scale ammonia, strengthening the case for low emissions options. In Japan and Korea, power sector auctions and contracts-for-difference are boosting co-firing with clean ammonia in coal plants, while governments in the US, China, and India are promoting production through distinct incentive frameworks.

The maritime sector is emerging as an important frontier for hydrogen-derived fuels. The upcoming IMO decision on the Net-Zero Framework this month could become the defining inflection point for global shipping. It will set the regulatory basis for the industry that will shape demand for hydrogen-derived fuels, vessel technologies, and port infrastructure over the coming decades.

Delivering this expansion requires midstream solutions that connect production with users. For long-distance transport, industry players are assessing opportunities to repurpose existing gas pipelines and build new dedicated hydrogen corridors. However, infrastructure investment depends on one essential condition: demand clarity. Binding targets, quotas, and mandates that underpin offtake contracts are indispensable to de-risk capital and attract financing. Without them, even regions with abundant, low-cost renewables may struggle to convert potential into investment.

Ultimately, scale will come from a combination of market-enabling, technology-neutral policies, efficient project design, and a robust base of trade and transport infrastructure. Together, these elements can carry hydrogen from its current wave of demonstration to the sustained tide of commercial deployment.

The road ahead

The next two to five years will determine whether hydrogen’s first wave becomes a sustained tide. The foundations are strong: supply capacity is growing, projects are consolidating, and policies are advancing. But the balance between supply and demand remains delicate.

To stay on course, the sector needs clarity on policy frameworks, timelines, and demand formation. Clear, stable, practical conditions enable capital to flow, infrastructure to form, and technology to scale. Without them, even regions rich in natural resources risk being left behind.

Global Hydrogen Compass shows a sector that has moved beyond first ambitions into a more pragmatic phase focused on delivery. If the early 2020s were about announcements, the late 2020s are about execution. The pioneers of this first wave – those securing offtake, breaking ground, and building infrastructure – are defining how fast the second wave can rise.

To succeed, the hydrogen industry must stay the course: anchor demand through credible, long-term frameworks, invest in connective infrastructure that reduces cost and risk, and adopt pragmatic, pathway-agnostic strategies to scale.