Will the clean hydrogen sector end this year in better shape than 12 months ago?

On the face of it, recent evidence points to a resounding ‘no’, given project cancellations, plunging stock prices, very limited progress in reaching FID and widespread reluctance to commit to long-term offtake deals.

UK company Johnson Matthey added to the gloom in late November when it reported a 46% year-on-year drop in first-half sales of hydrogen technologies, citing the “the slowing buildout of supply chains and infrastructure due to a lack of clarity around regulation and incentives.” It has reduced capex and headcount in its hydrogen business, and delayed the startup of an £80m ($101m) fuel-cell component plant in the UK.

Siemens Energy, which recently launched a large-scale electrolyser factory in Berlin in a joint project with French industrial gases company Air Liquide, struck a similarly downbeat note at the Energy Intelligence Forum in London. The market for hydrogen has “completely stalled”, with less than 7% of projects reaching FID, Anne-Laure de Chammard, executive board member of Siemens Energy, told the forum.

Patrick Pouyanne, chairman and CEO of French energy major TotalEnergies, did not exactly champion green hydrogen either. Biofuels may be a better option than hydrogen in some markets, especially those without a carbon price, he told the forum.

In the US, the clean hydrogen sector has lost momentum in recent months on the back of continued uncertainty over the implementation of the 45V tax credit under the Inflation Reduction Act. The recent presidential election has added another, much larger, layer of uncertainty to an industry that was initially supercharged by the prospect of billions of dollars of support in the form of IRA tax credits. European electrolyser manufacturers tempted by the IRA to set up shop in the US may have some difficult decisions to make in the coming months, depending on the Trump administration’s approach to hydrogen.

“Hydrogen will only ever be a niche business,” a managing director at a US-based global investment firm told Hydrogen Economist on the sidelines of the forum.

Vir: Hydrogen Economist