Green hydrogen was expected to become one of the most important clean fuels for decarbonising heavy industry, yet many projects across Europe, the United States and Australia are now slowing, shrinking or being cancelled altogether.
What Is Green Hydrogen?
Green hydrogen is produced by splitting water into hydrogen and oxygen using renewable electricity from wind, solar or hydropower. The process uses electrolysers, which sit between the electricity supply and the water source.
There are three main types of electrolyser, which are:
1. Proton Exchange Membrane (PEM) electrolysers (such as those built by Quest One in Hamburg), which offer fast response times and compact designs.
2. Alkaline electrolysers are a more mature technology with lower upfront costs.
3. Solid oxide electrolysers operate at high temperatures and can achieve greater efficiencies when integrated with industrial heat, although they are still emerging commercially.
Hydrogen is already widely used in fertiliser production and oil refining, but almost all of that supply is “grey” hydrogen made from natural gas without capturing emissions. The International Energy Agency says low emissions hydrogen, which includes both green and blue hydrogen, accounts for less than one per cent of today’s global hydrogen production. Scaling green hydrogen is seen as essential for heavy industries that cannot easily electrify, such as steelmaking, chemicals, shipping fuels and long duration energy storage.
Why Germany’s Expectations Have Not Yet Materialised
As a European example, Quest One’s Hamburg facility illustrates the disconnect between ambition and reality. The factory was built to support twice as many staff as it currently employs, yet orders for electrolysers remain well below capacity. Earlier this year, the company cut roughly 20 per cent of its German workforce. Its executive vice president for customer operations said the issue is not an inability to produce but a lack of demand.
Also, it seems that the price gap is a major barrier. For example, hydrogen made from renewable electricity remains significantly more expensive than hydrogen produced from fossil fuels. Companies such as Quest One estimate that costs may fall to around four euros per kilogram later this decade, which is roughly half current German prices, but only if production scales meaningfully.
Infrastructure (To Operate At Scale) Not Ready Until The 2030s
German policymakers are continuing to view hydrogen as essential for meeting climate targets. Large infrastructure is being planned, including hydrogen pipelines from the Port of Hamburg to industrial clients and new underground storage sites in salt caverns in northern Germany. It’s understood, however, that these assets will not operate at scale until the 2030s. In the meantime, companies must navigate today’s market conditions with little clarity on long term demand.
Hydrogen Better For Industry Than For Domestic Purposes
German researchers and industry advisers also highlight a second challenge, i.e., hydrogen is most valuable in heavy industrial settings with high temperature needs. It is far less efficient for heating homes or replacing petrol in passenger cars, where direct electrification performs better. However, early political debate often focused on these less suitable uses, creating public confusion and diverting attention from industrial applications that genuinely require hydrogen.
Similar Problems Across The Rest Of Europe
It seems that other European companies are encountering the same pressures. For example, ITM Power in the UK has undergone restructuring in response to losses and project delays, even as it reports growth in its order book. Its commercial progress has been held back by earlier fixed price contracts and the slow pace of customer decision making.
Also, Norway’s Statkraft, Europe’s largest renewable generator, announced earlier this year (2025) that it would stop developing new green hydrogen projects due to market uncertainty. The company said it would concentrate on a smaller set of existing projects and seek new investment partners before entering construction phases.
Norwegian electrolyser manufacturer Nel has also faced weakening order pipelines. It reports reducing planned investment, has postponed a new factory in the United States and acknowledged that customers are taking longer to commit to projects than previously anticipated.
In fact, more than 50 renewable hydrogen projects have been cancelled globally in the last eighteen months according to industry assessments, with most citing economics and unclear offtake agreements as the primary causes.
United States Developers Are Scaling Back
In the United States, the green hydrogen sector has benefited from generous tax credits through the Inflation Reduction Act, yet uncertainty remains, not least because of the Trump administration’s apparent opposition to green ideas. Plug Power, for example, one of the country’s most prominent hydrogen companies, has announced job cuts and a financial restructuring programme, pointing to tougher market conditions and slower than expected equipment sales.
Also, ExxonMobil recently paused development of what would have been one of the world’s largest blue hydrogen facilities at Baytown in Texas. Its executives said the company had not secured enough long term customers willing to pay for hydrogen at a commercially viable price.
Although interest in hydrogen production hubs continues across the US, it seems that many industrial buyers remain cautious about committing to expensive new fuels when electricity prices, carbon pricing and regulatory frameworks remain unsettled.
Australia’s Export Plans Hit Obstacles
Australia once positioned itself as a major exporter of green hydrogen and green ammonia to Asia and Europe but now several projects have been delayed or cancelled. For example, Fortescue (a large mining and green energy company) has stepped back from hydrogen developments in Queensland and Arizona and announced significant write downs. The company has said it will refocus on projects with clearer commercial pathways, including green iron and battery materials.
Also, a global commodities trading and logistics company Trafigura has halted its Port Pirie hydrogen project in South Australia after rising costs and difficulty securing guaranteed demand from industrial buyers. Analysts in the region have noted that early expectations for exporting hydrogen at large scale were likely unrealistic without stronger international commitments from importers.
Where Hydrogen Could Succeed
Energy agencies and research groups now broadly agree on the sectors where hydrogen is indispensable. Steelmaking is the most prominent example, with several companies testing direct reduction processes that use hydrogen instead of coking coal. Chemical producers are exploring lower carbon routes to ammonia and methanol. Shipping and aviation are studying hydrogen derived fuels that can integrate with existing global energy infrastructure.
These applications can offer meaningful emissions reductions and play to hydrogen’s strengths. The challenge, however, seems to be that these industries require large volumes of low cost hydrogen delivered reliably and safely. Most are not prepared to sign long term contracts until prices fall and infrastructure is in place.
Price Remains A Central Issue
Multiple European analyses estimate that green hydrogen still costs between three and five times as much as grey hydrogen produced from fossil fuels. For example, the EU’s energy regulator reported that green hydrogen in Europe was around four times the cost of fossil based hydrogen in 2024. Electrolyser prices are falling, helped in part by strong Chinese manufacturing, but electricity costs and financing remain high.
Risk Reduction Needed
Project developers say that large scale deployment will only happen once governments introduce mechanisms that reduce risk for both suppliers and buyers. Proposals include long term contracts for difference, industrial quotas that require certain sectors to buy low carbon hydrogen and funding for hydrogen hubs where production and demand can grow together.
Other Key Growth Factors
Industry leaders argue that the next phase of hydrogen’s development depends less on technology, which has largely matured, and more on policy clarity, market stability and credible industrial demand. Despite the downturn, investment continues to rise and an increasing number of projects are progressing from early design to construction.
What Does This Mean For Your Organisation?
It seems that progress now hinges on whether governments and industry commit to clear, bankable demand rather than just broad ambition. The technology is no longer the barrier, yet producers and buyers remain stuck without the conditions they need to move forward. Developers say they can’t cut prices without large scale deployment, while industrial users say they can’t commit to long term contracts until prices fall. This loop is slowing projects across Europe, the United States and Australia and is shaping whether hydrogen becomes a major industrial fuel or stays confined to small, specialist uses.
The policy environment will help decide how quickly this gap closes. Companies need predictable frameworks, stable pricing signals and clarity over infrastructure timelines before moving beyond pilots. The current pattern of cancellations and delays shows how fragile large hydrogen investments can be without these foundations.
For UK businesses, these global setbacks really matter. For example, UK electrolyser manufacturers rely on worldwide demand to scale production, reduce costs and stay competitive. Heavy industrial users in the UK, including steel, chemicals and shipping, will also track these developments closely because their own decarbonisation plans depend on affordable low carbon fuels rather than costly niche products. Slow international progress risks higher operating costs and delayed investment decisions at home.
Energy firms, investors and policymakers face similar pressures. Building pipelines, storage and import terminals requires long term confidence in the market. Financing large hydrogen hubs demands regulatory stability. Governments must balance fiscal constraints with the need to support industries that can deliver major emissions reductions. The examples emerging from Germany, Norway, the United States and Australia illustrate how easily momentum can falter without that certainty.
The wider picture here appears to be that hydrogen still offers a credible route for cutting emissions in the hardest to electrify sectors. The potential remains significant, but the path to commercial reality is proving slower and more complex than early forecasts suggested. This is the stage at which consistent policy, coordinated infrastructure planning and targeted support for genuine industrial use cases will matter most, particularly for countries like the UK aiming to compete in future low carbon markets.