Hydrogen Generation Market Size, Share & Trends Analysis Report

The global hydrogen generation market size was valued at $158.8 billion in 2023 and is expected to hit around $257.9 billion in 2028, growing at a compound annual growth rate (CAGR) of 10.2% from 2023 to 2028. One of the major drivers for growth in the hydrogen generation market includes the increase in shifting toward more feasible sustainable and low-carbon energy solutions to overcome the plausible consequences of the increase in greenhouse gas emissions. Hydrogen is used as a fuel for FCEVs. With the need for sustainable transport developing across various countries, so is the demand for clean hydrogen that will power such transport vehicles. Transitioning toward a hydrogen-based economy could reduce carbon emissions upto 99%, according to numerous reports, where it is used to replace fossil fuels.

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Hydrogen Generation Market Growth Dynamics

Driver: Enforcement of stringent regulations to curb greenhouse gas emissions

Greenhouse gases can absorb infrared radiation (net heat energy) from the earth’s surface, reradiate it to the surface, and contribute to the net effect. Global GHG emissions continue to rise, mostly as a result of the rapid industrialization and the reliance on fossil fuels. In response to this issue, the US Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) have established the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule. This rule sets lower criteria for GHG emissions and Corporate Average Fuel Economy (CAFE) for vehicles produced between 2021–2026 in the US. The new standards will tighten CAFE and carbon dioxide (CO2) emissions criteria until 2026, when it is predicted that the combined standards for cars and trucks will be 202 g/mile and 40.4 mpg of CO2, respectively. Recent reports revealed that CO2 emissions have increased in most areas worldwide, with annual changes ranging from just under 1% in Japan to over 10% in Brazil and India. The US and European Union (EU) saw an increase of about 7%, while China’s emissions increased by 5%. In the US, electricity and heat production contributed significantly to the spike in CO2 emissions in 2021, rising by over 900 million tons (Mt).

Restraint: Poor refueling infrastructure of hydrogen vehicles and presence of alternatives

The building and operating cost of hydrogen generation plants or biorefinery is high, and that makes it impossible for the hydrogen generations to be competitive with the fossil fuels. Investment covers costs associated with the installation of biorefineries, procurement, testing, and maintenance and cost of feedstock. Generation of hydrogen through modern technological systems without past experience or enough historical data is a capital-intensive operation. It is also mandated that the processes requiring high consumption of energy use specialized systems for the generation of energy in order to co-produce heat or electricity. All these factors make the investment in the hydrogen generations expensive and unappealing. Over the last decade, the rate of inflation has risen internationally, partly due to the inflated prices of foodstuffs and energy. In advanced economies, inflation is expected to reach 6.6%, and in emerging market and developing economies, it is projected at 9.5%, staying higher for longer. The view was that in many economies, supply chain disruptions meant an increase in costs.

Opportunities: Surging investments in low-emission fuels

Hydrogen, and hydrogen-derived fuels are low-emission options that are crucial for reducing carbon emissions in industries that have difficulties with direct electrification, such as heavy industry and long-distance transport. Currently, these fuels only account for about 1% of global final energy consumption in 2021. Hydrogen is a particularly clean transportation fuel, producing less CO2 compared with other fossil fuels. There has been an increase in hydrogen production market driven by tight environmental regulations and strict engine manufacturer specifications.

For instance, India implemented a Green Hydrogen Policy to produce five million tonnes per annum (MTPA) of green hydrogen by 2030. At the same time, the Chinese government has also unveiled a long-term plan for hydrogen generation that spans the years 2021–2035. According to the recent government plan, China will produce 100,000 to 200,000 tonnes of renewable-based hydrogen per year by 2025 and will have a fleet of 50,000 hydrogen-powered vehicles. The demand for cleaner fuels is expected to increase significantly in the future due to a 10% growth in automotive sales in Asia Pacific, the development of premium quality cars, and a rise in consumer fuel spending patterns

Challenges: Underdeveloped hydrogen infrastructure and high-cost production techniques

The lack of an existing clean hydrogen value chain is one of the major obstacles to overcome for developing a low-carbon hydrogen economy. Hydrogen market size value chains are mainly dominated by fossil fuels, with only a few pilot projects on low-carbon hydrogen. A global clean hydrogen market would require creating completely new value chains. Specifically, the major challenge lies in the choice of which pathway to take since hydrogen can follow different paths in the supply, handling, and demand chains. Currently, fuel cell vehicles cannot be used autonomously due to the lack of hydrogen infrastructure. To accelerate the commercialization of hydrogen and fuel cell technology, challenges associated with the transportation and storage of hydrogen gas need to be addressed. In addition, expensive on-site hydrogen production techniques are being used to feed fuel cells.

Hydrogen generation Market Ecosystem

Prominent companies in hydrogen generator market include well-established, financially stable hydrogen manufacturers. These companies have been operating in the market for several years and possess a diversified product portfolio, state-of-the-art technologies, and strong global sales and marketing networks. Prominent companies in this market include Air Liquide (France), Linde plc (Ireland), Air Products and Chemicals, Inc. (US), Shell plc (UK), and Saudi Arabian Oil Co. (Saudi Arabia).

The electrolysis segment, by technology, is expected to be the fastest growing market during the forecast period.

This report segments the hydrogen generation market size is based on technology into five types: steam methane reforming (SMR), partial oxidation (POX), coal gasification, auto thermal reforming (ATR), and electrolysis. The electrolysis segment is expected to be the fastest-growing market during the forecast period. The growing investment in the production of green hydrogen is one of the key factors driving the electrolysis segment. Governments and international organizations are implementing regulations and targets to reduce carbon emissions. Other than hydrogen and oxygen, electrolysis does not emit or produce any by-products. Cost reduction and increased energy efficiency in hydrogen generation are achieved through electrolysis and heat recovery.

By application, ammonia production is expected to be the second largest segment during the forecast period.

This report segments the hydrogen generation industry based on application into six segments: petroleum refinery, ammonia production, methanol production, transportation, power generation and others. Ammonia production application is expected to be the second largest segment during the forecasted period. Ammonia’s potential as a carbon-free fuel, hydrogen carrier, and energy store represents an opportunity for renewable hydrogen technologies to be deployed at an even greater scale. Ammonia is essential to most modern nitrogen-based fertilizers. Hydrogen is typically produced on-site at ammonia plants from a fossil fuel feedstock. The demand for carbon-free hydrogen for nitrogen-based fertilizers increases ammonia production thus accelerating the growth of the segment in hydrogen generation market.

North America: The second largest in the hydrogen generation market.

North America is expected to be the largest region in the global hydrogen generation market between 2023–2028, followed by Europe and Asia Pacific. North America has been leading the hydrogen generation market. The regional hydrogen generation market is experiencing growth due to the presence of leading solution providers like Air Liquide (France) and Air Products and Chemicals, Inc. (US). North America produces blue hydrogen on a large scale. The transportation industry in the region is working to tap green and blue hydrogen. The oil refining and chemical industries and transportation and electricity sectors are experiencing significant demand for hydrogen market.

Key Market Players

The hydrogen generation market is dominated by a few major players that have a wide regional presence. The major players in the hydrogen generation market include Air Liquide (France), Linde plc (Ireland), Air Products and Chemicals, Inc. (US), Shell plc (UK), and Saudi Arabian Oil Co. (Saudi Arabia). Between 2018 and 2023, Strategies such as new product launches, contracts, agreements, acquisitions, and expansions are followed by these companies to capture a larger share of the hydrogen generation market.

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Scope of the Report

This research report categorizes the hydrogen generation market based on source, technology, generation and delivery mode, application and region.

On the basis of source:

• Blue hydrogen
• Gray Hydrogen
• Green Hydrogen

On the basis of technology:

• Steam Methane Reforming (SMR)
• Partial Oxidation  (POX)
• Auto Thermal Reforming (ATR)
• Coal Gasification
• Electrolysis

On the basis of application:

• Petroleum Refinery
• Transportation
• Ammonia Production
• Methanol Production
• Power Generation
• Others

On the basis of generation and delivery mode:

• Captive
• Merchant

On the basis of region:

• North America
• Europe
• Asia Pacific
• South America
• Middle East
• Africa

Recent Developments

• In April 2023, Linde plc signed a long-term agreement to provide Evonik, a prominent specialty chemicals company, with green hydrogen.
• In September 2023, Air Liquide announced plans to invest 433 million dollars to build its Normand’Hy electrolyzer with a capacity of 200 MW to decarbonize the Normandy industrial basin and mobility.
• In July 2023, Air Products and Chemicals, Inc. signed an agreement with Edmonton International Airport as the hydrogen and technology provider for Alberta's first hydrogen fuel cell passenger vehicle fleet.
• In December 2022, Saudi Arabian Oil Company, one of the world's preeminent integrated energy and chemicals companies, along with Shandong Energy Group, a state-owned coal mining company in China, came together for the development of technologies related to hydrogen, renewables, and carbon capture and storage.
• In November 2022, Air Liquide invested 140.2 million dollars to construct and operate a unit producing hydrogen at the Grandpuits site with an annual capacity of more than 20,000 tonnes.
• In March 2022, Air Products and Chemicals, Inc. announced the construction and operation of a green liquid hydrogen production plant in Casa Grande, Arizona. It will be a zero-carbon liquid hydrogen facility and stream in the market by 2023.
• On April 2022, Shell plc entered an agreement with Uniper SE, a German energy company, to produce blue hydrogen at Uniper’s Killinghome power station site. With this agreement, both companies will work to decarbonize industries, such as power and transport, throughout the Humber region.

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