Green Hydrogen Dreams Deflated by Economic Hurdles

2025-07-23 industry

London, Wednesday, 23 July 2025.
Many green hydrogen projects face cancellations due to high costs and low demand, posing a challenge to global emission targets. The unexpected retreat highlights the economic reality behind green ambitions.

Economic Pressures Force Project Cancellations

Developers of green hydrogen projects are facing intense economic pressures, leading to a wave of cancellations and postponements across the globe. Companies like LEAG and ArcelorMittal in Germany have delayed major projects, citing inflated production costs and lukewarm market demand [1]. This downturn puts a spotlight on the fragile balance between green innovation and financial viability [2].

Global Scale-Backs and Strategic Retreats

Globally, companies such as Iberdrola and Repsol have drastically reduced their future production targets, acknowledging the steep climb required in what was once touted as energy’s green knight [1][3]. It seems the enthusiasm for hydrogen is more ‘huff-puff’ than ‘hurray’, at least for now. Even in hydrogen-friendly environments like Australia and Spain, the story is the same: grand plans shelved due to eye-watering cost estimates [1][4].

Subsidies and Market Demand: A Catch-22

A heightened reliance on government subsidies reveals a Catch-22 situation. While subsidies could theoretically power the sector, the insufficient market demand and high cost bottlenecks present formidable barriers. CEO of Repsol, Josu Jon Imaz, has highlighted the industry’s precarious dependence on these government aids [4]. Meanwhile, companies like BP have moved away from hydrogen for transport, exacerbating skepticism regarding hydrogen’s economic sense [5].

Future Prospects

Frankly, it feels like green hydrogen is caught between ambition and reality. Experts predict only 20% of Europe’s planned hydrogen projects will be operational by 2030, achieving just 12 GW capacity against a hoped 40 GW [3][6]. Without a robust framework for demand and infrastructure, hopes for green hydrogen could remain an academic exercise. Infrastructure is crucial; without it, as Enagás CEO Arturo Gonzalo suggests, hopes of market proliferation might remain an open-ended question [6].

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green hydrogen market challenges