IEA reduces its 2030 forecast for low-emissions hydrogen production by almost 25%.

A wave of cancellations, cost pressures, and policy uncertainty has reduced the low-emissions hydrogen project pipeline, cutting the projected development for 2030 by nearly 25%, according to the International Energy Agency (IEA) on Friday.

The IEA's Global Hydrogen Review states that around 37 million metric tons per year of low-carbon fuel is expected to be produced by 2030, down from 49 million projected a year ago as developers have postponed or shelved plans.

Actual production is likely to be even less since not all announced projects will be completed. However, existing, under-construction, or final investment decision capacities are anticipated to exceed 4 million tons per year by 2030, more than five times the 2024 levels.

If governments enact effective demand-creation policies and expedite infrastructure development, an additional 6 million tons could be realized by then, the IEA noted.

Cost competitiveness is a major challenge, as decreasing natural gas prices have widened the gap favoring fossil-based hydrogen, while rising electrolyser prices have hindered low-carbon initiatives.

The IEA predicts that this cost gap will narrow by 2030 as technology costs decrease and regions with robust renewable growth implement new regulations to improve cost structures.

China dominates the hydrogen electrolyser market, holding 65% of global installed capacity and nearly 60% of global electrolyser manufacturing capacity. Low-carbon hydrogen is produced via electrolysis, which splits water into hydrogen and oxygen using electricity, often from renewable sources.

Manufacturers in other regions are experiencing financial difficulties due to rising costs and slow adoption rates, while Chinese firms may face challenges as over 20 gigawatts of existing production capacity outstrip current demand.

An IEA analysis revealed no significant cost advantage for Chinese-made electrolysers outside China when transportation costs and tariffs are considered.

Southeast Asia is emerging as a notable hydrogen market, with announced projects projected to produce around 430,000 tons of low-emissions hydrogen annually by 2030, up from about 3,000 tons today.