Regions and Sectors Fueling Today’s Green Hydrogen Growth

The green hydrogen sector has faced various headwinds over the past several years that have caused many countries and companies to take a step back from the industry. However, certain projects have still managed to progress, albeit fewer than were anticipated a few years ago. In this Insight, we look at which global regions and countries have managed to advance projects to mature stages as well as the sectors that are providing the demand for these projects.

Surge in Project Announcements Post-IRA Now Ancient History

In the U.S., green hydrogen project announcements surged after the passage of the Inflation Reduction Act and the associated 45V clean hydrogen production tax credit in August 2022. However, policy uncertainty (final 45V rules were not released until January 2025) and unfavorable revisions to the tax credit in the recently passed One Big Beautiful Bill Act (eligible projects must now start construction before 2028 instead of 2033) have caused many projects to stall. Additional obstacles for the green hydrogen sector in the U.S. and abroad include higher project costs due to inflation, lower-than-expected demand due to slow market maturation, trouble securing renewable electricity, and the rollback of national- and corporate-level decarbonization goals. Overall, these headwinds have caused the pace of new project announcements to slow over the past several years worldwide.

Two Regions Breaking Through Despite Headwinds

Similar issues have also slowed the progression of previously announced green hydrogen projects globally. However, two regions stand out in having managed to advance projects to mature stages (i.e. FID, construction, commissioning, or starting operations) despite the above-mentioned setbacks: Asia-Pacific (APAC) and Europe. APAC in particular has advanced a staggering 824 ktpa of hydrogen equivalent (H2e) capacity so far in 2025, while Europe has advanced 157 ktpa of H2e capacity. 

Green Hydrogen Project Development in APAC & Europe

India and China currently dominate the green hydrogen sector in APAC. In India, the vast majority of advanced-stage hydrogen capacity will go towards the creation of green ammonia, which is an important fertilizer feedstock. As a major producer and consumer of fertilizer for agricultural use, India is currently targeting the existing fertilizer sector to support much of its near-term green hydrogen demand. In comparison, mature projects in China have a more distributed product mix that aim to serve various sectors, such as refining, chemicals, and transportation. One notable sector that Chinese projects have targeted is marine shipping, where ammonia or methanol can be used as an alternative fuel to lower emissions. Major shipping companies, including CMA CGM, Hapag-Lloyd, and Maersk, have already started to invest in ammonia and methanol dual-fuel ships and established offtake agreements with several Chinese projects.

In Europe, mature projects are currently focusing on hydrogen as the final end-product, with most large-capacity projects looking to decarbonize existing refinery and chemical complexes throughout the region. However, the largest mature project in Europe is targeting the steel sector. Located in Sweden, Stegra’s Boden green iron and steel plant is currently under construction and plans to start operations in 2026 with an initial capacity of 2.5 Mtpa steel. Stegra has already secured agreements with various offtakers in the steel and automotive industry and most recently entered an agreement with Microsoft to supply steel for future data centers. 

Takeaways

Overall, India, China, and Europe have demonstrated notable progress in advancing green hydrogen projects over the past few years. It is worth nothing that all three areas benefit from policy support, access to renewable energy, and existing industry demand, which together help to offset the various headwinds that are hindering other projects worldwide. Looking forward, it is still unclear how big of a role green hydrogen will play in future decarbonization efforts. However, if the industry does gain momentum again and green hydrogen becomes a more widely used product, then India, China, and Europe stand to be the leaders in the sector due to their early adoption and the industry experience they have already started building.

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