Green Hydrogen Industry Faces Economic Challenges Amidst Massive Investments
London, Monday, 24 November 2025.
The green hydrogen sector grapples with economic hurdles as stricter ROI expectations lead to project halts. Innovative financing and partnerships are crucial for sustainable growth and net-zero goals.
Stricter ROI Expectations Lead to Project Halts
In 2025, the green hydrogen sector is facing what’s known as the ‘halving’ phenomenon. This term refers to the significant reduction in project completions due to stricter demands on return on investment (ROI). For instance, the National Energy Alxa High-tech Zone in China had to give up its construction quotas because the project’s economic viability did not meet expectations [1]. Similarly, Plug Power had to suspend several projects across the United States due to economic feasibility issues, reflecting a broader trend where many projects are stalled or cancelled [1].
Innovative Financing and Strategic Partnerships
To navigate these economic challenges, stakeholders are turning to innovative financing models and strategic partnerships. The European Investment Bank (EIB) recently granted €350 million to Transnet for green hydrogen development in South Africa, showcasing how financial backing from international bodies is crucial for sustaining momentum [2]. Meanwhile, companies like Plug Power are focusing on building a comprehensive hydrogen ecosystem, including plans for a ‘green hydrogen highway’ across North America and Europe [3].
Global Investment and Shifts in Strategy
Globally, investment in green hydrogen is seeing a shift in strategy. For instance, Masdar in the UAE is redirecting its green hydrogen investments towards AI and data centers, highlighting a pivot to projects promising quicker returns [1]. Similarly, Fortescue in Australia is cutting its hydrogen R&D spending domestically to focus on more promising international markets like Morocco and Brazil [1]. This strategic shift underscores the need for projects that align better with current economic conditions.
The Path to Net-Zero Remains Paved with Challenges
Despite these adjustments, the path to achieving net-zero targets through green hydrogen remains fraught with challenges. Green hydrogen currently costs about three times more than conventional grey hydrogen, making it a pricey alternative [1][4]. Moreover, the demand hasn’t scaled up as expected, leaving the sector with ‘capacity but no market’ [1]. This condition is coupled with policy changes that have shaken investor confidence, such as the early termination of the US 45V tax credit policy [1].
Conclusion: A Call for Adaptation
In conclusion, while the green hydrogen industry faces significant hurdles, it also stands at a critical juncture with immense potential. The ability to adapt through innovative financing and strategic partnerships could determine its success. As I see it, the challenge now is not just about generating green hydrogen but ensuring it is economically viable and widely adopted. The industry might just need a bit of a laugh and a lot of innovation to turn these growing pains into a sustainable future.