5 Reasons Why Green Hydrogen is in Trouble

Green Hydrogen emerged as a great big hope when it was introduced as the fuel of the future with major economies and clean energy enthusiasts swearing big on the technology early into the start of this decade. However, the challenges identified in the initial years of debates still remain unsolved. With little progress, they can derail the efforts and the multi billion dollar investments the industry attracted over the years, especially in electrolyser production, the one area to see progress.

Here are the 5 reasons green hydrogen is stumbling and failing to compete with conventional as well as new energy alternatives. While some reasons are also a collective impact of underlying problems, others like the #4 are a no brainer.

#1 Oil Majors Pulling Back on Green Hydrogen

The industry, once considered a panacea to the ills of carbon emitting activities and attracted major oil and gas companies of the world, is now struggling to keep their interests intact. Big pushers like Shell and BP are giving up on green hydrogen operations, and the new entrants have none of the financing or experience that the oil majors had. 

Intriguingly, these firms have earlier made goals and promises for GH2’s future. Shell once put its name on hydrogen stations across California, worked with Toyota and Honda to promote fuel-cell cars, and promised a cleaner future for early adopters. So, what changed? 

Simply, the numbers didn’t add up, hinting toward the wide gap between ambitions and the harsh reality. As a result, Shell disbanded its hydrogen light mobility unit in 2023 and closed all of its hydrogen stations in California in 2024.

More recently, BP also dissolved its low-carbon mobility team after building hype for considerable time – announcing partnerships, promising 25 hydrogen refueling stations for trucks by 2030, etc. Japanese gas company Iwatani also pulled out of the troubled 3GW CQ-H2 green hydrogen project in Queensland, Australia.

Yet, there are others still in the game but not entirely at their own expense like Chevron and TotalEnergies. For instance, Chevron’s plans of building 30 stations is funded by California’s subsidy support. 

The rich oil majors pulling back is a clear indication of a weak case of GH2. The clean transportation is simply taken by electric alternatives.

#2 Storage Woes: A Major Problem

Even if it fared well on other fronts, storing green hydrogen is a mountain to climb. Hydrogen is not just expensive to store, but is also very risky due to low density and high flammability. In fact, the challenges in storing green hydrogen at scale are multifaceted. Not least of which is the energy expended in storing it.

Storage of hydrogen as a gas typically requires high-pressure tanks (350–700 bar [5,000–10,000 psi] tank pressure). Storage of hydrogen as a liquid requires cryogenic temperatures because the boiling point of hydrogen at one atmosphere pressure is −252.8°C.

Compressed hydrogen, whether in bullets or racks of containers, offers high-density storage but is plagued by leakage concerns and potential safety hazards, particularly in the event of mechanical failures. 

Storing hydrogen in pipelines faces regulatory hurdles and leakage risks. Underground cavity storage, while theoretically feasible, is hindered by leakage risks, geological limitations, and substantial upfront costs, making it an impractical option for immediate development. 

Liquefied hydrogen, while offering lower-pressure storage and reduced leakage risks, requires intricate temperature control measures to prevent heat loss, adding complexity to its implementation.

The challenges still remain after the years since it was first touted as the fuel of the future. This makes it very hard for GH2 to compete with others like RE based electric future.

#3 Transportation Setback: Major Use Cases Like Buses and More Are Being Given Up

From buses and trucks to ships and airplanes, green hydrogen was touted to offer a path to reducing the carbon footprint of the transportation industry, which still remains one of the largest contributors to global emissions. 

Bosch, a leader in fuel-cell technology, predicted that by 2030, fuel-cell electric vehicles (FCEVs) would hold a 3 percent share of the global market for newly registered commercial vehicles weighing over six tonnes, increasing to 10 percent by 2035. However, hydrogen fuel‐cell buses and other vehicles are now seemingly losing ground to battery electric models and hence getting rolled back.

In cities worldwide, expensive fuel‐cell bus trials have been canceled. For example, Canadian transit agencies abandoned planned fuel‐cell buses and refueling stations when operating costs proved far higher than diesel or electric alternatives. Vancouver’s winter‐Olympics hydrogen bus trial was discontinued due to high operational costs.

In Europe, several municipal hydrogen‐bus projects have been stalled by infrastructure delays and subsidies running out. Overall, high costs of electrolyzers, storage and fueling have made battery buses more cost‐effective in most markets.

On shipping, few large hydrogen‐fuel vessels have materialized; companies are favoring e‐fuels or ammonia instead. In sum, heavy industries are postponing hydrogen-based equipment until costs fall. 

The ambitious plans for hydrogen‐powered aircraft are now also seeing setbacks. For instance, Airbus delayed its flagship ZEROe programme by between five and 10 years and the budget for the programme has been cut by a quarter, delivering a major blow to the GH2 industry. The programme planned to launch a hydrogen-powered commercial airliner by 2035. 

Moreover, the European aviation industry recently published a roadmap which downgraded the contribution of hydrogen aircraft to its Net Zero by 2050 target. Several other manufacturers have similarly put widebody hydrogen planes on the back burner, citing immature technology and lack of hydrogen infrastructure. This reflects broader consensus that hydrogen propulsion remains decades away for most airline use.

#4 Infrastructure-Demand Dilemma

Green hydrogen faces a classic dilemma – without buyers or fueling stations, projects won’t move forward, and without a network of stations investors fear there will be no market. 

For example, a 2023 Reuters analysis on US policy concludes that a chicken and egg situation remains in the hydrogen fueling sector, only eased by matching vehicle deployment with station build-out, via tax credits, grants, etc. In short, potential adopters (e.g. fleet operators) are reluctant to buy fuel-cell trucks if stations are scarce, and station-builders hold back until they see committed demand. The condition hasn’t changed in almost 2 years. 

 

As per latest figures from LBST’s H2stations.org report highlighting the global infrastructure gap, Global hydrogen refueling networks are still thin and uneven – 1,160 stations worldwide. Asia leads with roughly 748 stations by the end of 2024, almost concentrated in the East Asian region in China, South Korea, and Japan. In comparison, Europe and North America are much behind underlining sparse distribution of the needed infra. This is further hampering the confidence of potential adopters. 

This dynamic particularly hinders transportation and logistics. Heavy-duty fleets need reliable long-range fueling. Because of the infrastructure gap, logistics companies continue to favor diesel or battery trucks over fuel cell models, slowing decarbonization of freight and transit.

#5 Fading Policy Backing

Government policy support and subsidies are crucial if green hydrogen can even be considered to compete with other options. As per a study published in Nature Energy, without carbon pricing, GH2 projects would require subsidies of about USD 1.3 trillion (USD 0.8-2.6 trillion range) globally, far exceeding announced subsidies. However, there’s been a general trend of fading policy support for GH2 worldwide.

Under President Biden (2021–24) the US launched a USD 7 billion hydrogen hub program and generous tax credits to spur clean Hydrogen, but support has since waned. In early 2025, the new Trump administration moved to “pause” and review these initiatives. Reuters reports DOE is weighing deep cuts to four of seven Biden-era hydrogen hubs (about USD 4 billion). The abrupt changes have injected uncertainty into project timelines and cooled investor enthusiasm. This is not just a case of the US but also beyond.

Across 2023–25 many large GH2 projects were canceled or stalled. A Westwood Insight survey found over 20 percent of planned EU projects (about 29 GW capacity) were shelved by end-2024. In short, the dream of a Green Hydrogen future is in deep trouble. The UK government shelved a planned “hydrogen town” heating pilot in 2024 and shifted focus to heat pumps, delaying any decision on hydrogen heating to 2026. 

In the Asia-Pacific region, investors are facing headwinds too. Major Japanese firms are walking away from Australian GH2 ventures due to bureaucratic hurdles and uncertain returns. 

In Australia, despite an AU$ 8  billion pledge for hydrogen, several big projects collapsed in 2024–25, showing a need for more favorable policy measures. For example, Origin Energy pulled out of a NSW hydrogen hub, Queensland scrapped AU$ 1 billion in H2 project funding, and South Australia reallocated ~AU$ 600 million away from a planned facility, all citing cost and demand concerns.

These policy shifts have cooled the green hydrogen hype. The IEA warns the global hydrogen pipeline is at risk due to unclear demand signals, financing hurdles, regulatory uncertainty and incentive delays. From 2023–25 governments continue to .profess support but are trimming or reprioritizing hydrogen programs. The result is slower deployment and a more skeptical investment climate than earlier optimism had assumed.

 

Conclusion: In effect, the best use case for Green Hydrogen remains the most obvious one. produce it, and use it where it is needed the most , to reduce the cost of storage, transportation. That means oil refineries, steel firms, methanol production, ammonia and other sectors that use Hydrogen. A combination of credits, and the imperative of reducing emissions will build a case for using green hydrogen there, hopefully before 2030.