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The hydrogen market size is forecast to increase by USD 92.35 billion at a CAGR of 7% between 2023 and 2028. The market is witnessing a growing demand for investments by companies in hydrogen production. This surge is fueled by ongoing advancements in production technologies, which are making hydrogen a more viable and efficient energy source. Additionally, the development of regional hydrogen hubs and clusters is playing a significant role, in fostering localized infrastructure and collaboration among stakeholders. These factors collectively drive the market forward, highlighting the increasing importance of hydrogen in the global energy landscape and its potential to contribute to a sustainable energy future.
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The chemical industry segment is estimated to witness significant growth during the forecast period. Hydrogen is one of the important preliminary supplies used in the chemical industry. Hydrogen is used mainly to manufacture methanol and ammonia. It is an important ingredient in the manufacture of methanol, polymers, and ammonia, thereby playing a key role in the fertilizer sector.
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The chemical industry segment was the largest segment and valued at USD 119.06 billion in 2018. Hydrogen is also used in the manufacture of methanol, which is used as a direct fuel or as a blended fuel like gasoline. According to the US Energy Information Administration, liquid fuels stem from their use of methanol and its derivatives, owing to the increased adoption in China's gasoline and liquefied petroleum gas (LPG) streams. In China, the use of methanol as an alternative for energy and fuels is anticipated to grow at a significant rate during the forecast period. Methanol is blended into gasoline pools in an indirect manner or by using a methanol derivative. In China, it is blended into LPG streams as a low-cost substitute and consumed in the domestic LPG cylinder market. The increasing demand for fertilizer and direct fuels will drive the growth of the global market as hydrogen is one of the key components to manufacturing fertilizers, transportation fuels, and domestic fuel products. For instance, solid oxide fuel cells use hydrogen as a fuel source to generate electricity through an electrochemical process, offering a high-efficiency and low-emission energy solution. This, in turn, is likely to boost the growth of the chemical industry segment in the global market during the forecast period.
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APAC is estimated to contribute 56% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional market growth and trends that shape the market during the forecast period. The market in APAC is expected to grow significantly during the forecast period, owing to increasing focus on regional government adoption of clean energy sources such as green hydrogen. Countries such as India, China, and Japan are the major contributing countries in terms of revenue to the growth of the regional market. China stands as a major player in the APAC market, driven by its commitment to clean energy and efforts to reduce carbon emissions. The country is a significant producer of grey hydrogen, primarily through coal gasification and steam methane reforming.
However, China is increasingly emphasizing the development of green hydrogen, investing in renewable energy sources like solar and wind for electrolysis. The government's 14th Five-Year Plan includes provisions to advance hydrogen technologies, with a focus on industrial applications and transportation, positioning China as a key contributor to the global hydrogen landscape. Such initiatives taken by the government in the region are expected to drive the growth of the regional market during the forecast period.
The market is witnessing significant growth due to the global energy transition towards a net-zero carbon economy. Hydrogen production is emerging as a viable solution to reduce CO2 emissions and greenhouse gas emissions, making it an essential component of the decarbonization potential. Energy companies are increasingly focusing on hydrogen production as a means to meet climate-neutral targets. Hydrogen can be produced through various methods, including alkaline electrolysis, which uses electrical energy from renewable sources. However, production costs remain a concern, with grey hydrogen, derived from fossil fuels, being the most cost-effective but carbon-intensive method. Safety concerns associated with hydrogen storage and transportation are also being addressed. Hydrogen demand is expected to increase significantly in transportation fuel and industrial operations, particularly in sectors such as steel and chemicals, where decarbonization is challenging. Green hydrogen, produced from renewable sources, is gaining popularity due to its lower carbon footprint. The market is also witnessing growth in the production of green ammonia, which can be used as a fuel or a fertilizer. Wind energy is a significant source of renewable electricity for hydrogen production. The transformation of energy from electrical to hydrogen form can help reduce world emissions, making hydrogen an essential component of the energy demand mix. In conclusion, the market is poised for growth as countries and industries strive to meet their climate-neutral targets and reduce their carbon footprint. Hydrogen's potential as a transportation fuel, industrial feedstock, and energy storage solution makes it an essential component of the energy sector's decarbonization efforts. However, challenges such as production costs and safety concerns must be addressed to fully realize hydrogen's potential as a climate-disrupting carbon dioxide alternative.
Increasing government focus on the adoption of clean hydrogen is notably driving the market growth. Growing government initiatives and policies play a pivotal role in shaping the trajectory of the global market, providing crucial support and direction for its growth. One notable example is the European Union's ambitious Hydrogen Strategy, which aims to establish a clean market and facilitate the production of green hydrogen using renewable energy sources.
In addition, in the United States, the Biden administration's focus on clean energy has led to the inclusion of hydrogen in the American Jobs Plan. The plan allocates substantial funds for the development and deployment of hydrogen technologies, emphasizing the role of hydrogen in achieving climate goals and promoting job creation. Thus, the increasing government focus on boosting hydrogen generation is expected to drive the growth of the market during the forecast period.
Growing investments by vendors in hydrogen production is an emerging trend shaping the market growth. For instance, on July 19, 2022, Shanghai Chemical Industry Park Industrial Gases Co., Ltd (SCIPIG), a subsidiary of Air Liquide, announced that it is set to invest more than USD 220 million in constructing two hydrogen production units and associated infrastructure within the Shanghai Chemical Industry Park (SCIP). Through contracts spanning over 15 years, these units will generate hydrogen and carbon monoxide for the supply to Covestro China and Shanghai Lianheng Isocyanate Company (SLIC), a joint venture led by BASF and Huntsman, within the park.
Additionally, the units will cater to mobility, other industrial, and electronics customers in the Yangtze River Delta megalopolis. The total hydrogen (H2) production capacity of the two units will be approximately 70,000 Nm3/h. They will also feature units for capturing and recycling carbon dioxide (CO2) to contribute to the production of carbon monoxide (CO), with a total capacity of 28,000 Nm3/h. Thus, the growing number of investments in hydrogen production is expected to drive the growth of the market during the forecast period.
High costs associated with the production of green and blue hydrogen is a significant challenge hindering the market growth. The production costs associated with different hydrogen types, especially green and blue hydrogen produced through renewable energy, remain relatively high. The current levelized cost of producing green hydrogen ranges widely from USD 3 to USD 6 per kilogram, rendering it economically unviable. The cost of green hydrogen production is primarily influenced by the capital expenditure (CAPEX) of electrolyzers, their capacity or utilization factor, and the procurement cost of renewable electricity. CAPEX encompasses expenses related to the electrolyzer system or stack, essential balance of plant components, and electricity grid connection.
Additionally, the capital cost encompasses essential components such as the reformer unit, steam turbine, necessary balance of plant, and other units depending on the technology employed, such as steam methane reforming (SMR) and auto thermal reforming (ATR). Thus, the high costs associated with the production of green and blue hydrogen can become a major challenge for the growth of the market during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Air Liquide SA - The company offers hydrogen used in fuel cells to generate heat and electricity used in many industrial sectors such as refining, chemistry, and metallurgy.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
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The market is witnessing significant growth as energy companies shift towards producing hydrogen as part of the energy transition to a net-zero carbon economy. Hydrogen production is gaining traction due to its potential as a climate-neutral transportation fuel and its role in reducing CO2 emissions and greenhouse gas emissions in industrial operations. Two main methods for hydrogen production are alkaline electrolysis and steam methane reforming. Alkaline electrolysis, which uses green electricity from renewable sources, produces green hydrogen. In contrast, steam methane reforming, which relies on natural gas and coal gasification, produces grey hydrogen, which emits significant CO2 emissions. The market is expected to grow due to the increasing demand for hydrogen in various sectors, including refineries, chemical sectors, and transportation fuel. The demand for hydrogen is driven by the need to reduce crude oil consumption and decrease CO2 emissions. However, safety concerns associated with hydrogen production and storage are hindering market growth. Hydrogen stations and infrastructure development are essential to address these concerns and expand the market. Methanol and ammonia manufacturing are significant consumers of hydrogen, and the demand for these products is expected to increase as the world moves towards a net-zero carbon economy. Funding and government support are crucial to drive the growth of the market and make hydrogen production cost-effective. The market is expected to transform the energy landscape, providing a viable alternative to fossil fuels and contributing to the reduction of world emissions. The future of hydrogen production lies in the integration of renewable sources and the production of green hydrogen.
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Market Scope |
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Report Coverage |
Details |
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Page number |
167 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 7% |
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Market Growth 2024-2028 |
USD 92.35 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
6.5 |
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Regional analysis |
APAC, Europe, North America, Middle East and Africa, and South America |
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Performing market contribution |
APAC at 56% |
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Key countries |
US, China, Japan, Germany, and France |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Air Liquide SA, Air Products and Chemicals Inc., BayoTech Inc., Caloric Anlagenbau GmbH, Ceres Power Holdings plc, Chart Industries Inc., Chevron Corp., Iwatani Corp., Linde Plc, Mahler AGS GmbH, Messer SE and Co. KGaA, Nel ASA, Orsted AS, Oxygen Service Co., Plug Power Inc., Resonac Holdings Corp., Saudi Arabian Oil Co., Shell plc, Siemens AG, and Uniper SE |
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Market dynamics |
Parent market analysis, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the market forecast period. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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