Green Hydrogen Recalibration: Boom, Bust, and What’s Next

Green hydrogen (GH2) has emerged in the past few years as a beacon of sustainable fuel. Touted as a way to decarbonise industries where abatement was tough due to limitations of solar an wind energy, it was championed as a versatile clean energy carrier for everything from cars and trucks to ships, planes, and heavy industries - applications where direct electrification is difficult. However, the gap between aspirations and reality is now hitting hard for the green hydrogen industry and its proponents.

Governments and businesses around the world rushed to announce ambitious projects, sensing a boom. Back in 2021, the hype was immense. For instance, BlackRock’s CEO Larry Fink predicted the next wave of billion-dollar startups would be in “green hydrogen, green steel, and green cement.” Fast forward a few years, and the narrative has shifted dramatically. By 2025, even some early cheerleaders sounded a note of scepticism. “Everyone talks about the opportunity with hydrogen… but is anybody willing to pay the cost?” Fink quipped in 2023. 

The once-roaring green hydrogen boom appears to be fading, with projects stalling and companies pulling back as the harsh realities sink in. This article explores how the green hydrogen promise went from boom to bust – examining global ambitions, the wave of project cancellations and exits, why the sector is stumbling, and what to expect going forward.

Global Ambitions for Green Hydrogen

At the peak of the hydrogen hype, major economies set lofty targets and rolled out national strategies to harness green hydrogen:

The United States’ Department of Energy’s Hydrogen Roadmap also aimed for 10 MMT of clean hydrogen production per year by 2030, rising to 20 MMT by 2040 and 50 MMT by 2050. Massive investments are promised, including USD 9.5 billion for regional hydrogen hubs, to drive down costs to USD 1 per kg. Similarly, India also launched a National Green Hydrogen Mission (NGHM), aiming to make India a global hub, hoping to produce 5 million metric tons (MMT) of GH2 annually by 2030.

Like the US, the European Union’s (EU’s) hydrogen strategy also sets an ambitious goal to produce 10 MMT of renewable hydrogen and import another 10 MMT by 2030. This 20 Mt total supply by 2030 is part of the bloc’s Green Deal to cut carbon. Europe also planned for 40 GW of electrolysers by 2030 to make green hydrogen, backed by funding programs and mandates such as a requirement that 1.2 percent of aviation fuel be synthetic e-fuel by 2030.

China is a leader when it comes to renewable energy and clean transportation, especially EVs and solar power. In 2022, China also unveiled a long-term hydrogen plan, which includes deploying 50,000 fuel-cell vehicles by 2025. Interestingly, China’s industry forecasts see hydrogen demand soaring to 35 million tons by 2030, about 5 percent of its energy supply.

India of course has a 5 MMTA target for 2030, along with a price target as well of $1 per k.g, by some accounts. Backed by a national green hydrogen mission , no less.

These targets underscored the extraordinary expectations for green hydrogen. In addition to public support, legacy energy companies, industrial giants, and startups alike leapt into the fray, planning multi-billion-dollar projects to produce, export, or utilise green hydrogen. 

From Hype to Reality: Projects Stalling and Companies Retreating

A few years on, the green hydrogen sector has hit serious turbulence. High costs and slower-than-expected demand are forcing many flagship projects to be delayed or cancelled, and some big-name players are scaling back their hydrogen plans. 

Europe

In Germany, energy firm LEAG  postponed its plan indefinitely to build one of Europe’s largest green hydrogen hubs on a former coal plant site. 

Despite being offered EUR 1.3 billion in subsidies, Steelmaker ArcelorMittal also shelved a EUR 2.5 billion plan to convert two steel plants to green hydrogen. Spain’s Iberdrola, one of the pioneers in this space, scaled back its 2030 green H2 production target by almost two-thirds – from 350,000 tons to about 120,000 tons per year – after funding delays crippled some projects. 

Oil major Shell scrapped plans for a low-carbon hydrogen plant in Norway in late 2024, citing a ‘lack of demand', just days after Norway’s Equinor cancelled a similar project. Even BP – which had once trumpeted hydrogen’s potential – shut down the division that was exploring hydrogen-for-transport fuels in 2023.

Australia

Similarly, in Australia, the green hydrogen “boom” is fizzling with big names falling back. In 2023, Origin Energy decided to exit its planned investment in a major hydrogen hub project in New South Wales, while the Global trader Trafigura abandoned an A$750 million green hydrogen project at a South Australia smelter. Billionaire Andrew Forrest – an early hydrogen evangelist – had to dial back his company Fortescue’s bold plan to produce 15 million tons of green hydrogen by 2030,

Even a government-backed mega-project wasn’t spared. The Queensland state government pulled funding for a A$12.5 billion hydrogen plant, prompting Japanese partners Kansai Electric and Iwatani to quit.

United States

In the US, where federal incentives are generous, some high-profile projects still faltered. Startup Hy Stor Energy, aiming to build a large hydrogen hub in Mississippi, cancelled its order for over 1 GW of electrolysers in late 2024 after failing to secure government funding in the first round of hydrogen hub grants. 

Asia

Delivering a blow to the country’s highly publicised National Green Hydrogen Mission, India’s Solar Energy Corporation (SECI) recently pulled the plug on previously announced two hydrogen hubs, each expected to produce a minimum of 100,000 tonnes of green hydrogen annually. Under the original plan, SECI had earmarked a total budget of INR 2 billion (~USD 23.3 million) to support these projects.

Notably, some companies have been willing to swallow substantial losses to exit hydrogen ventures. Industrial gas supplier, Air Products, was prepared to incur over USD 3 billion in charges rather than move forward with certain projects. Similarly, when energy giants like BP, Shell, and Equinor publicly retreat from high-profile hydrogen commitments, it sends a powerful and chilling signal to the entire market.

Why Is Green Hydrogen Falling Back?

Industry insiders and analysts point to multiple converging factors that have made many projects economically or logistically unviable in the near term.

Prohibitive Costs

Green hydrogen remains far more expensive than fossil alternatives. The initial assumption was that costs would quickly plummet with scale, but that didn’t happen. While many hoped for USD 1 per kg hydrogen by 2030, production costs alone currently range from about USD 4 to USD 12 per kg, making it hard to compete with cheap natural gas or coal. Thus, GH2 is still a high-cost industry which heavily reliant on subsidies. Remove the subsidies, cost becomes the biggest eyesore for the investors.

Offtake Issues

A chicken-and-egg dilemma plagues the sector - developers can’t secure financing without committed buyers, but buyers won’t commit to pricey hydrogen that isn’t produced yet. The result, many announced projects never locked in long-term sales contracts for their hydrogen.

In the absence of carbon prices or mandates, industries like shipping, aviation, or steel often find it cheaper to stick with fossil fuels or “grey” hydrogen. This unwillingness or inability of end-users to pay a premium has led to dozens of projects being shelved because they simply couldn’t find bankable customers.

Policy and Subsidy Uncertainty

Government incentives like U.S. tax credits and EU grants initially fueled a wave of green hydrogen projects. But slow rulemaking, complex EU rules linking hydrogen to dedicated renewables, and drawn-out approvals have caused delays. Political uncertainty - such as the risk of future subsidy rollbacks—has also rattled investor confidence. The IEA warns that current government support remains too limited for hydrogen to meet global climate targets. Importantly, the incoming Trump administration with its love for oil and gas and clear disdain for green energy chilled quite a few plans even before it was sworn in, and has gone on to add momentum to many fence sitters on future plans. With the current administration, with the carrot and stick policies that were to back a green hydrogen expansion no longer in place, some of the biggest backers, notably global private sector oil giants have quietely pulled back on funding and plans. 

Technological, Infrastructure, and Logistics Challenges

Green hydrogen’s success hinges not just on production but on large-scale transport, storage, and use—areas still constrained by limited pipelines, storage caverns, and fueling networks. Its volatility makes handling costly and complex, with pipeline conversions facing high expenses and regulatory hurdles. Global refuelling stations remain sparse - just 1,160 by end-2024, mostly in East Asia - hindering adoption. 

Regions ideal for cheap hydrogen often lack water, adding costly desalination. According to hydrogen experts, freshwater is crucial in the hydrogen production process, requiring approximately nine litres to produce one kilogram of green hydrogen and 12-19 litres for one kilogram of blue hydrogen. This is particularly relevant for arid Gulf countries positioning themselves as key hydrogen hubs, such as Oman, Saudi Arabia, and the UAE.

Scaling electrolysis to gigawatt levels and integrating production, conversion, and end-use remains nascent, making large projects risky and execution far more complex than anticipated.

Looking Forward

Is this the end of the road for green hydrogen? Maybe not, but a recalibration is underway. The current downturn is seen not as an outright death knell, but as a severe but necessary market correction after the overestimation of the past few years.  More importantly, progress is continuing on intermediate options like Green Ammonia, where price drops indicate a strong chance of revival in green hydrogen plans in due course. Perhaps long term plans could still fructify with a 2-3 year lag.  

In the coming few years, we can expect a more pragmatic and focused approach in the hydrogen sector:

The projects that are moving forward now tend to have strong fundamentals, tied to guaranteed offtakers in hard-to-abate industries, situated near industrial clusters or ports where demand is pooled, and bolstered by hefty government support or incentives. Policymakers may introduce demand-side mandates and subsidies to break the chicken-and-egg impasse. For example, the EU’s quotas for green fuels in aviation and shipping will force some uptake. This kind of demand pull, rather than just throwing money at suppliers, would be the difference that may decide whether Green Hydrogen stays or dissipates. 

Furthermore, building hydrogen infrastructure has to be high on the agenda, as hydrogen won’t scale without the equivalent of an “H2 highway” network. Last but not least, the costs need to fall down closer to USD 1/kg as soon as possible.