US Blue Hydrogen Projects Set for Major Boost in 2025
United States, Monday, 13 January 2025.
Wood Mackenzie predicts a surge in blue hydrogen projects in the US for 2025. Despite challenges like cost and regulation, this marks a significant shift in low-carbon energy.
The Blue Hydrogen Surge
I’m excited to share that we’re about to witness a remarkable transformation in the US hydrogen sector. According to Wood Mackenzie’s latest analysis, over 1.5 million tonnes per annum (Mtpa) of blue hydrogen capacity is expected to reach final investment decision (FID) in 2025 [1]. This surge significantly outpaces green hydrogen developments, largely thanks to strong support from the oil and gas sector and the continuation of the 45Q tax credit [1].
Market Dynamics and Challenges
The current uncontracted FID volume exceeds 2.5 Mtpa, with the US market leading this trend [1]. As a sector analyst, I find it particularly interesting that while we’re seeing these impressive numbers, there are still hurdles to overcome. Companies are actively working to secure offtake agreements, with potential acceleration expected from markets in Japan, South Korea, and Europe [1]. Despite these challenges, the sector’s growth trajectory remains strong, supported by robust regulatory frameworks and industry backing.
Global Context and Future Outlook
Looking at the broader picture, 2024 showed modest progress, but 2025 is shaping up to be truly transformative [1]. I’m particularly intrigued by how this fits into the global effort to reduce carbon emissions, especially considering that conventional hydrogen production currently emits over 800 million tonnes of CO₂ annually [5]. The shift toward blue hydrogen represents a crucial step in addressing these emissions while maintaining economic viability.
Investment and Infrastructure
The sector is witnessing significant financial momentum. According to Wood Mackenzie’s research analysts, we’re expecting to see substantial investments in related infrastructure, particularly in the ammonia sector, with projections of US$8 billion in deals for 2025 - double the activity seen in 2024 [1]. This includes US$5 billion in upstream investments and US$2 billion for ammonia storage terminals [1].