Hydrogen Market Poised for Rapid Growth Over Next 12 Months, Analysts Say

May 26, 2025 – The global hydrogen market is set for a significant upswing over the next year, driven by surging public and private investment, advancing technologies, and strategic policy support from leading economies.

Governments across the globe are scaling up their commitment to hydrogen as a key enabler of net-zero goals. In Europe, the European Commission has reaffirmed its target to produce 10 million tonnes of renewable hydrogen annually by 2030. The EU Hydrogen Bank launched its first €800 million auction in late 2024 to support green hydrogen production and is preparing for additional rounds in 2025 (European Commission, 2024).

Private Sector Bets Big

Multinational energy firms are racing to capitalize on these government initiatives. Shell announced in early 2025 that it will expand its Holland Hydrogen I facility in Rotterdam—the largest green hydrogen plant under construction in Europe—with additional capacity by mid-2026. Meanwhile, Saudi Arabia’s NEOM Green Hydrogen Company confirmed that its $8.4 billion ammonia-based hydrogen plant will begin exports to Europe and Asia in 2026, with initial shipments prepared by late 2025 (NEOM Green Hydrogen Company, 2025).

Global hydrogen-related investments are expected to exceed $700 billion in project announcements by the end of this year, up from $570 billion at the end of 2023 (Hydrogen Council & McKinsey & Company, 2024). Analysts forecast that final investment decisions (FIDs) will be reached on over 120 large-scale hydrogen projects between now and mid-2026.

Technological Advances Reducing Costs

Cost remains a critical factor. However, recent advancements in electrolyzer technology are narrowing the price gap between green hydrogen and fossil-based alternatives. A BloombergNEF (2025) report forecasts that in favorable locations like Australia, Chile, and the Middle East, green hydrogen could be produced for as little as $1.80/kg by early 2026, driven by improvements in PEM and alkaline electrolyzers and low-cost renewable electricity.

Additionally, innovation in hydrogen storage and distribution—such as liquid organic hydrogen carriers (LOHCs) and cryogenic liquefaction—is making long-distance trade more viable. These developments are key to establishing a global hydrogen supply chain.

Rising Demand Across Heavy Industries

Hydrogen demand is growing beyond traditional industrial uses. Steelmakers like ArcelorMittal and H2 Green Steel are advancing plans for hydrogen-based direct reduced iron (DRI) production, aiming to decarbonize one of the most emissions-intensive sectors. The first commercial-scale hydrogen-based steel plants in Sweden and Germany are expected to begin production trials by late 2025.

Maritime and aviation industries are also accelerating hydrogen adoption. Maersk has ordered dozens of dual-fuel ammonia-ready ships, while Airbus is testing hydrogen fuel cell propulsion systems for short-haul aircraft, with a target of commercial deployment by 2035 (Airbus, 2025).

Hydrogen Corridors and International Trade

Several international hydrogen trade corridors are beginning to take shape. Japan received its first shipment of liquefied hydrogen from Australia in late 2024, marking a milestone for the Hydrogen Energy Supply Chain (HESC) project (Kawasaki Heavy Industries, 2024). More shipments are expected this year as Japan ramps up its hydrogen import capacity.

Meanwhile, the Port of Rotterdam is building new infrastructure to import hydrogen and its derivatives from countries like Oman, Namibia, and Brazil. According to the International Renewable Energy Agency (IRENA, 2024), over 30 international hydrogen trade agreements have been signed since 2023, signaling a shift toward global hydrogen commerce.

Challenges Remain, but Outlook Remains Strong

Despite the momentum, the hydrogen industry faces significant challenges. These include a lack of standardization in carbon intensity certification, infrastructure permitting delays, and concerns over water use in arid regions. Yet, analysts remain optimistic.

“The next 12 months will be a defining period for the hydrogen economy,” said Daria Nochevnik, policy director at the Hydrogen Council. “We’re seeing the convergence of policy, capital, and technology at scale.”

If current trends hold, the hydrogen market is set to grow from an estimated $180 billion in 2024 to over $230 billion by mid-2026, according to projections from Rystad Energy (2025).

References

Airbus. (2025). Hydrogen-powered aircraft development update: ZEROe demonstrators entering next phase. https://www.airbus.com/en/newsroom

BloombergNEF. (2025). Hydrogen Market Outlook Q1 2025. https://www.bnef.com

European Commission. (2024). EU Hydrogen Bank: First auction results and next steps. https://energy.ec.europa.eu/

Hydrogen Council & McKinsey & Company. (2024). Global Hydrogen Flows: Hydrogen trade outlook for 2050. https://hydrogencouncil.com

International Renewable Energy Agency (IRENA). (2024). Geopolitics of the Energy Transformation: Hydrogen Trade. https://www.irena.org

Kawasaki Heavy Industries. (2024). Successful hydrogen shipment marks global first in energy transport. https://global.kawasaki.com

NEOM Green Hydrogen Company. (2025). Project updates and export timelines. https://www.neom.com

Rystad Energy. (2025). Global Hydrogen Market Forecast. https://www.rystadenergy.com

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