Hydrogen Market Trends in 2025: A Closer Look at Key Developments

The hydrogen and low-carbon ammonia sectors are gearing up for a transformative year in 2025.

Wood Mackenzie, a leading provider of data and analytics, recently released its report, “The Hydrogen: 5 Things to Look for in 2025,” outlining critical trends to watch.

From a surge in U.S. blue hydrogen investments to breakthroughs in giga-scale green projects, these developments could shape the future of sustainable energy.

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The U.S. Leads in Blue Hydrogen Investment

The United States is solidifying its role as a global leader in blue hydrogen, largely due to supportive policies and tax credits like the 45Q initiative.

Wood Mackenzie projects that at least 1.5 million tonnes per annum (mtpa) of U.S. blue hydrogen capacity will reach the final investment decision (FID) in 2025, a tenfold increase over green hydrogen.

GREIG BOULSTRIDGE, a Research Analyst at WoodMac, highlighted the policy-driven growth: “We predict that the 45Q tax credit will remain in place due to strong support from the oil and gas lobby. This will facilitate U.S. exports of blue ammonia and drive at least three large-scale blue hydrogen projects to FID in 2025.”

Challenges and Milestones for Green Hydrogen

While blue hydrogen gains momentum, green hydrogen faces headwinds. So far, 16 GWe of green capacity has reached FID, but only two projects exceed 1 GWe. Despite this, at least one giga-scale green hydrogen project is expected to move forward next year.

MONICA TRILHO, another Research Analyst at WoodMac, noted the complexities of advancing green hydrogen: “The path to successful large-scale FIDs is not straightforward. Securing offtakers, renewable energy access, and favorable regulatory environments are key for these projects to succeed.”

WoodMac predicts continued investment in giga-scale projects, with over 150 proposals in the pipeline. However, many remain speculative or long-term.

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Chinese Electrolyzer Manufacturers Expand Globally

The report also highlighted the growing influence of Chinese electrolyzer manufacturers in international markets.

By the end of 2025, Chinese equipment is expected to account for over a third of the market outside North America and Europe. Their competitive pricing, shorter delivery times, and production capacity make them strong contenders.

This trend reflects the rising demand for green hydrogen globally and could reshape competition in the electrolyzer market.

Addressing the Offtake Contract Gap

A persistent challenge for the hydrogen sector is the gap between project FIDs and offtake contracts. Many projects move forward without secured agreements, risking cancellations and straining developers’ resources.

WoodMac’s data shows that 2.5 mtpa of uncontracted FID capacity exists, with the U.S. accounting for a significant portion. Acceleration of offtake agreements in regions like Japan, South Korea, and Europe could help close this gap in 2025.

DANISH SUNASRA, a Research Associate at WoodMac, explained: “Although some current uncontracted capacity may unwind, overall uncontracted volumes are expected to edge up due to anticipated FIDs for blue hydrogen projects.”

Surge in Low-Carbon Ammonia Investments

Low-carbon ammonia is another area to watch. With demand rising in industries like maritime and aviation, WoodMac anticipates an $8 billion surge in investments in 2025.

This includes $5 billion in upstream projects and $3 billion in downstream initiatives such as storage terminals and large ammonia carriers.

THOMAS PELLEGRINELLI, Senior Research Analyst at WoodMac, highlighted the strategic focus: “Investors are targeting new energy markets for hydrogen, positioning themselves to secure long-term offtake agreements as the market scales.”

Japanese firms are leading the way, capitalizing on export opportunities in Asia and Europe.

The Road Ahead for Hydrogen

The hydrogen and low-carbon ammonia sectors are poised for significant advancements in 2025.

With the U.S. driving blue hydrogen investments, challenges for green hydrogen persisting, and global competition heating up, the coming year will be pivotal for the industry.

These developments underscore the dynamic nature of the market, driven by policy, innovation, and increasing global demand.