Hydrogen Energy: Current Market Drivers and What to Expect Next 

Takeaways 

• Hydrogen energy serves as a clean energy carrier, producing only water when used in fuel cells or combustion. 

• Production methods include gray, blue, and green hydrogen, each with varying environmental impact and cost. 

• Challenges exist in hydrogen storage, transportation, and infrastructure development. 

• The global hydrogen market is growing, with significant applications in oil refining and industrial processes. 

• Environmental impacts depend on production methods, with green hydrogen offering the most sustainable option. 

• Governments worldwide are implementing policies to promote hydrogen adoption. 

• Notable projects, such as NEOM in Saudi Arabia, highlight both the potential and challenges in the sector. 

• Technological advancements, infrastructure development, market creation, policy support, and environmental considerations are key to the future of hydrogen energy. 

Hydrogen Energy

Hydrogen energy has the potential to make a big impact in the transition to a sustainable, low-carbon future. Serving as a versatile energy carrier, hydrogen can be utilized in various applications, offering a pathway to reduce greenhouse gas emissions across multiple sectors.  

This article provides an overview of hydrogen energy, exploring its production methods, infrastructure, market trends, environmental impact, policy landscape, notable projects, challenges, and future outlook. 

Overview of hydrogen energy 

Hydrogen energy is the inherent chemical energy stored in hydrogen molecule (H₂). Hydrogen can be used in gaseous or liquid form as a medium for storing and delivering energy. When utilised in fuel cells or combustion, hydrogen combines with oxygen to produce water, releasing energy without direct carbon emissions. This positions hydrogen as a potential solution in the transition to a low-carbon economy. 
(Wikipedia – Hydrogen Economy) 

Basics of hydrogen production methods 

The common conventional production methods rely on fossil fuels, and produce so called grey hydrogen with a great carbon footprint. However emerging  electrolyser technology may be employed to produce zero-carbon green hydrogen. The two main types of electrolysis are Alkaline and PEM (Proton Exchange Membrane) electrolysers—which offer distinct benefits and limitations. 

• Gray Hydrogen: Produced from fossil fuels, primarily natural gas, via steam methane reforming (SMR). This method emits significant CO₂—approximately 6.6 to 9.3 tonnes of CO₂ per tonne of hydrogen produced. 
    

• Blue Hydrogen: Similar to gray hydrogen but incorporates carbon capture and storage (CCS) to sequester CO₂ emissions. The overall carbon footprint depends on the efficiency of the CCS process. 
   

• Green Hydrogen: Generated by electrolyzing water using renewable energy sources like wind or solar power. This method produces hydrogen without direct CO₂ emissions but is currently more expensive due to the costs associated with renewable energy and electrolysis technology. 
   

• Other Methods: Include biomass gasification, methane pyrolysis, and natural hydrogen extraction. These methods are less prevalent and vary in environmental impact and scalability. 
   

For a deeper understanding of hydrogen production methods, consider reading this article: Hydrogen Production Methods. 

Hydrogen Energy Comparison Table

Hydrogen Energy Infrastructure and Storage 

Developing infrastructure for hydrogen involves addressing challenges in production, storage, transportation, and utilization: 

• Storage: Hydrogen can be stored as a compressed gas, liquid, or in chemical carriers. Compressed gas is the most common form of storage. Each method presents challenges, such as high energy requirements for liquefaction and material embrittlement in storage vessels for gas. 
   

• Transportation: Hydrogen is transported via pipelines, high-pressure tube trailers, or liquefied hydrogen tankers. Pipeline transport requires materials resistant to hydrogen embrittlement, and retrofitting existing natural gas pipelines is under consideration to reduce costs. 
   

• Utilization: Hydrogen can be used in fuel cells for electricity generation, as a feedstock in industrial processes (e.g., ammonia production), and as a fuel for transportation, particularly in sectors hard to electrify, such as steel manufacturing, heavy-duty trucking and aviation. 

To explore more about hydrogen infrastructure and storage, visit: Hydrogen Infrastructure article. 

Hydrogen market trends and economic considerations 

The hydrogen market is experiencing significant growth and transformation: 

• Market Size: In 2022, the global hydrogen production market was valued at over $155 billion, with projections indicating a compound annual growth rate (CAGR) of over 9% from 2023 to 2030. 
  (Wikipedia – Hydrogen Economy) 
   

• Demand: In 2021, global hydrogen production reached 94 million tonnes, primarily used in oil refining (40 Mt) and industrial applications such as ammonia (34 Mt) and methanol production (15 Mt). 
   

• Cost Dynamics: Gray hydrogen remains the most cost-effective, with production costs ranging from $1.50 to $2.50 per kilogram. Blue hydrogen costs between $2.00 and $3.50 per kilogram, influenced by natural gas prices and CCS costs. Green hydrogen is currently the most expensive, ranging from $3.50 to $6.00 per kilogram, but costs are expected to decline with advancements in renewable energy and electrolysis technologies.  

Hydrogen policy landscape and global initiatives 

Government support is shaping the future of hydrogen through national strategies and public investment. Key initiatives include: 

• European Union: Launched the Hydrogen Strategy for a Climate-Neutral Europe in 2020. The EU aims to scale green hydrogen use between 2024 and 2030 and fully integrate it into energy systems by 2050. 
  (Wikipedia – Hydrogen Strategy) 
   

• United States: Through tax incentives and the 2021 Infrastructure Law, the U.S. is funding hydrogen hubs and supporting clean hydrogen production. The continuation of these efforts may vary with policy shifts. 
   

• Japan: Plans to become a "hydrogen society" by 2050. The strategy includes using hydrogen for 10% of electricity generation and increasing its use in industries such as shipping and steel. 
  (Wikipedia – Hydrogen Economy in Japan) 
   

For further reading on policies shaping hydrogen energy, see the article about partnerships in the hydrogen economy. 

Case studies and the latest notable hydrogen projects 

Several projects show both the progress and hurdles in hydrogen energy deployment, here is an example of the latest and largest Green Hydrogen project: 

• Saudi Arabia – NEOM Green Hydrogen Project: The NEOM Green Hydrogen Company (NGHC), a joint venture between ACWA Power, Air Products, and NEOM, secured $8.4 billion to build the world’s largest green hydrogen facility. Located in Oxagon, it will produce 600 tonnes per day using 4 GW of renewable energy by 2026. All output will be used for green ammonia under a 30-year off-take agreement. (Wikipedia – NEOM) 
   

To understand real-world examples of hydrogen initiatives, check Stargate Hydrogen’s reference page: Hydrogen Projects and Case Studies. 

 
Challenges and Opportunities around hydrogen 

Hydrogen energy offers promise, but key challenges must be addressed for widespread use: 

• Technology: Efficiency improvements in electrolysis and CCS can lower costs and emissions. Research is ongoing to improve material durability and reduce energy use. 

• Infrastructure: New pipelines, refueling stations, and storage systems are needed. Integrating hydrogen into existing infrastructure is technically possible but requires upgrades. 

• Market Demand: Industries like steel, ammonia, shipping, and long-haul transport need affordable hydrogen to drive adoption. Early-stage investments and buyer commitments are essential. 

• Policy Support: Incentives, standards, and carbon pricing can encourage private investment and guide development priorities. 

• Environmental Integrity: Ensuring hydrogen is clean—especially when labeled as green—means transparent accounting of energy sources and emissions is necessary. 

Interested in these topics? Check out this article: 50 most asked questions about hydrogen. 

Hydrogen Energy and its future outlook 

The hydrogen energy sector is moving quickly, supported by strong market signals and government backing. Here’s what lies ahead: 

• Production costs are expected to fall, especially for green hydrogen, as renewables get cheaper, and electrolysis improves. 

• Industrial adoption is likely to increase in sectors where alternatives to fossil fuels are limited. 

• Hydrogen could serve as seasonal storage to balance grids with high renewable energy production fluctuations. 

• Global collaboration will help align standards, improve technology, and share best practices. 

With coordinated policy, technological progress, and infrastructure development, hydrogen energy can become a reliable part of a clean energy future. 

Conclusion 

Hydrogen energy is not a distant promise—it's a growing part of today’s energy transition. Whether used in industry or heavy transport, hydrogen offers a way to reduce emissions in areas where direct electrification isn’t practical.  

The range of production methods—gray, blue, green—shows that hydrogen is not inherently clean, but its potential to support climate goals depends heavily on how it's made and used. 

As production technologies improve and infrastructure catches up, green hydrogen in particular could become cost-competitive and widely available. Government policies and major investments are already helping push the sector forward, although some projects face setbacks that highlight the need for solid planning, market demand, and realistic timelines. 

The future of hydrogen depends on staying grounded in facts, focusing on environmental outcomes, and building systems that are practical and scalable. Companies, researchers, and policymakers who work together with this mindset will shape a cleaner, more flexible energy system—with hydrogen playing a real and valuable role. 

Want to go further into the world of hydrogen energy? 
Browse more insights, technical updates, and articles at Stargate Hydrogen’s Blog