Low Carbon Hydrogen Market

Market Definition

Low carbon hydrogen is generated through production methods that limit carbon emissions, such as renewable-powered electrolysis, steam methane reforming with carbon capture, and biomass gasification. It provides a sustainable energy carrier that supports decarbonization efforts across industries.

The technology is used for power generation, transportation, and industrial operations such as refining, chemicals, and steel production. Its role in clean energy transition is strengthening through government policies, infrastructure investments, and advancements in storage and distribution solutions.

Low Carbon Hydrogen Market Overview

The global low carbon hydrogen market size was valued at USD 28.02 billion in 2024 and is projected to grow from USD 32.31 billion in 2025 to USD 98.43 billion by 2032, exhibiting a CAGR of 17.25% over the forecast period. This growth is attributed to increasing investments in clean hydrogen production as a result of decarbonization targets and net-zero commitments.

Rising demand from transportation, power generation, and heavy industries is further accelerating adoption due to the need for sustainable energy carriers and reduced emissions.

Key Highlights

1. The low carbon hydrogen industry size was valued at USD 28.02 billion in 2024.
2. The market is projected to grow at a CAGR of 17.25% from 2025 to 2032.
3. Asia Pacific held a 34.72% share of the market in 2024, valued at USD 9.73 billion.
4. The steam methane reforming (SMR) (With CCS) segment garnered USD 11.69 billion in revenue in 2024.
5. The pipeline transportation segment is expected to reach USD 48.49 billion by 2032.
6. The transportation segment is anticipated to witness the fastest CAGR of 20.68% during the forecast period.
7. Europe is anticipated to grow at a CAGR of 16.90% through the projection period.

Major companies operating in the low carbon hydrogen market are Air Products and Chemicals, Inc., Plug Power Inc., Nel, Siemens Energy, ITM Power plc, Air Liquide Engineering & Construction, Linde PLC, McPhy Energy S.A., Bloom Energy, Infinite Green Energy, Equinor ASA, MITSUBISHI HEAVY INDUSTRIES, LTD., ENAPTER s.r.l., Acwa power, and FCHEA

Increasing focus on building large-scale infrastructure, efficient storage, and reliable distribution networks is promoting wider deployment of low carbon hydrogen across regions. Additionally, ongoing technological advancements, strategic partnerships, and cross-border collaborations are boosting market expansion.

• In November 2023, the World Bank introduced the 10 GW Clean Hydrogen Initiative to support the global transition to low-carbon energy. The initiative includes projects with capacities from 100 MW to 1 GW and establishes digital and capacity-building platforms to advance clean hydrogen development.

Market Driver

Government Policies and Net-Zero Commitments

The growth of the low carbon hydrogen market is primarily fueled by government policies and net-zero commitments aimed at reducing greenhouse gas emissions. National hydrogen strategies, subsidies, tax incentives, and funding programs are encouraging investments in low carbon hydrogen production, storage, and distribution. Consequently, energy, industrial, and transportation sectors are increasingly adopting hydrogen solutions to meet regulatory targets and sustainability goals.

Continued policy support and global decarbonization initiatives are also promoting technological advancements and large-scale deployment, positioning low carbon hydrogen as a key component of clean energy transition and fueling significant market growth.

• In September 2024, the U.S. Department of Energy (DOE) announced USD 15 million in funding to develop innovative hydrogen production systems. The program targets research on entrained flow and fluidized bed gasification technologies for alternative feedstock, supporting the DOE’s Hydrogen Shot goal to reduce hydrogen costs to USD 1 per kilogram.

Market Challenge

Slow Pace of Hydrogen Infrastructure Development

The slow development of hydrogen infrastructure poses a significant barrier to the growth of the low carbon hydrogen market. Limited pipelines, storage facilities, and refueling stations restrict large-scale distribution and adoption across industrial, transport, and energy sectors, often resulting in complex logistical challenges and higher operational costs. These challenges increase project timelines and capital requirements, making it difficult for smaller producers and emerging companies to participate effectively.

Industries and governments aiming to deploy hydrogen solutions face additional hurdles, as the establishment of reliable and safe infrastructure demands technical expertise, regulatory compliance, and coordination with multiple stakeholders. Limited access to advanced storage and transport technologies further exacerbates these challenges.

To overcome these barriers, stakeholders are investing in large-scale infrastructure projects, modular storage solutions, and innovative transport systems. These efforts aim to accelerate network expansion, improve reliability, and support broader commercialization of low carbon hydrogen.

Market Trend

Advancement of Green Hydrogen Technologies

The low carbon hydrogen market is witnessing strong momentum in green hydrogen production, driven by rising demand for sustainable energy solutions across industrial, transport, and power sectors.

Electrolysis technologies are being optimized for higher efficiency, lower energy consumption, and improved integration with renewable energy sources, while large-scale production facilities are being designed to meet growing global demand. This shift has gained further traction as governments and industries accelerate decarbonization efforts to achieve net-zero targets and comply with climate regulations. 

In September 2025, the International Energy Agency reports that China leads global low-emissions hydrogen deployment, holding 65% of installed or committed electrolyzer capacity and nearly 60% of global manufacturing capacity.

Energy companies, technology providers, and research institutions are investing in advanced electrolyzers, modular production systems, and collaborative projects to scale green hydrogen deployment. Continuous improvements in green hydrogen technologies are expected to aid clean energy transition and support significant market growth over the forecast period.

• In June 2024, the World Bank approved USD 1.5 billion in additional financing to advance India’s low-carbon transition. The funding will support green hydrogen production, expand renewable energy capacity, and develop a national carbon credit market, targeting 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers annually.

Low Carbon Hydrogen Market Report Snapshot

Market Segmentation

• By Production Technology (Steam Methane Reforming (SMR) (With CCS), Electrolysis, Biomass Gasification, Methane Pyrolysis, Coal Gasification (With CCS), and Other Technologies): The steam methane reforming (SMR) (With CCS) segment earned USD 11.69 billion in 2024 mainly due to its widespread industrial adoption and established production infrastructure.
• By Distribution Mode (Pipeline Transportation, Bulk Liquid Hydrogen Transportation, and Compressed Hydrogen Transportation): The pipeline transportation held a share of 54.63% in 2024 due to its low cost, reliability, and suitability for large-scale hydrogen distribution.
• By Application (Transportation, Industrial Use, Power Generation and Energy Storage, and Residential & Commercial Heating): The industrial use segment is projected to reach USD 34.36 billion by 2032, owing to growing demand for low carbon hydrogen in refining, chemical production, and steel manufacturing.

Low Carbon Hydrogen Market Regional Analysis

Based on region, the market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and South America.

Asia Pacific low carbon hydrogen market share stood at 34.72% in 2024, and was valued at USD 9.73 billion. Favorable government policies, growing renewable energy capacity, and strong industrial demand for low carbon hydrogen are driving the region forward.

The region benefits from significant investments in green hydrogen production technologies and large-scale infrastructure projects, which are accelerating adoption across power, transportation, and manufacturing application.

Strategic partnerships between local and international companies, along with favorable regulatory frameworks, further strengthen growth prospects. Continuous improvements in electrolyzer efficiency, storage solutions, and distribution networks have made Asia Pacific a key hub for low carbon hydrogen development.

• In September 2024, TotalEnergies invested USD 400 million in capital in the Japan Hydrogen Fund to support the development of the low-carbon hydrogen value chain. The Japan Hydrogen Association (JH2A), with over 440 members, launched the fund to support sustainable hydrogen development in Japan’s industrial sector.

The Europe low carbon hydrogen industry is projected to grow at a CAGR of 16.90% over the forecast period. This growth is fueled by decarbonization targets, rising investments in green hydrogen projects, and the expansion of renewable energy capacity in the region. Government incentives, regulatory support, and cross-border collaborations are strengthening the low carbon hydrogen ecosystem in Europe.

• In August 2024, Technip Energies N.V. 2025 secured the FEED contract from BP for the H2Teesside project in the UK. The project will generate 1.2 GW of low-carbon hydrogen and capture over 2 million tons of CO₂ annually, contributing to the country’s 2030 hydrogen production goals.

Increasing industrial adoption in steel, refining, and chemicals sectors is creating strong opportunities for hydrogen integration and emissions reduction. In addition, advancements in electrolyzer technologies, modular storage solutions, and distribution networks are accelerating deployment, positioning Europe as a key growth engine for the market.

• In September 2024, Hycamite TCD Technologies opened Europe’s largest methane-splitting plant in Kokkola, Finland. The facility can produce 2,000 tonnes of low-carbon hydrogen and 6,000 tons of high-quality carbon annually, using LNG or biomethane to reduce CO₂ emissions and demonstrate scalable, emissions-free hydrogen production.

Regulatory Frameworks

• In the European Union, the Hydrogen and Gas Decarbonisation Package (Directive 2024/1788 and Regulation 2024/1789) regulates hydrogen infrastructure, market access, and cross-border trade. It facilitates the integration of low carbon hydrogen into the EU energy system and supports decarbonization of the gas sector.
• In India, the National Hydrogen Energy Road Map (NHERM) regulates hydrogen production, storage, transport, and applications. It aims to bridge technological gaps, reduce dependence on petroleum imports, and promote sustainable energy solutions.
• In the U.A.E., the National Hydrogen Strategy 2050 regulates the hydrogen sector. It aims to position the U.A.E. as a producer and supplier of low-emission hydrogen by 2031 through the development of supply chains, hydrogen hubs, and a national research and development center.
• In the U.S., the Clean Hydrogen Production Tax Credit (Section 45V of the Internal Revenue Code) regulates tax incentives for low-carbon hydrogen production. It provides financial credits for hydrogen produced with carbon intensity of 4 kg CO₂e per kg or less, supporting investment in clean hydrogen projects and encouraging the scale-up of low-emission production.

Competitive Landscape

Companies operating in the low carbon hydrogen industry are maintaining competitiveness through investments in advanced electrolysis technologies, carbon capture integration, and modular storage and distribution solutions. They are focusing on expanding production capacity and improving operational efficiency to meet rising demand across industrial, transportation, and power sectors.

Key players are broadening their portfolios to include green hydrogen, blue hydrogen, and integrated hydrogen solutions, supported by strategic collaborations, joint ventures, and infrastructure partnerships.

• In September 2024, Mitsubishi Corporation and ExxonMobil entered into a Project Framework Agreement to establish a low-carbon hydrogen and ammonia facility in Texas. The facility is planned to produce up to 1 billion cubic feet of low-carbon hydrogen per day and over 1 million tons of low-carbon ammonia annually, capturing approximately 98% of CO₂ emissions.

The market is emphasizing strengthening ties with governments, research institutions, and technology providers to accelerate project deployment and reduce commercialization timelines. Additionally, companies are improving technical skills, digital monitoring, and integrated services, while using automation and smart energy systems to maintain a competitive edge.

Top Key Companies in Low Carbon Hydrogen Market:

• Air Products and Chemicals, Inc.
• Plug Power Inc.
• Nel
• Siemens Energy
• ITM Power plc
• Air Liquide Engineering & Construction
• Linde PLC
• McPhy Energy S.A.
• Bloom Energy
• Infinite Green Energy
• Equinor ASA
• MITSUBISHI HEAVY INDUSTRIES, LTD.
• ENAPTER s.r.l.
• Acwa power
• FCHEA

Recent Developments (Agreements/Partnerships)

• In November 2024, Topsoe and Aramco signed a Joint Development Agreement to advance low-carbon hydrogen production using Topsoe’s eREACT technology at Aramco’s Shaybah plant in Saudi Arabia. The 3 MW unit is expected to produce 6 tons of low-carbon hydrogen daily, building on their October 2023 collaboration to demonstrate the technology’s scalability
• In June 2024, ExxonMobil and Air Liquide agreed to advance a low-carbon hydrogen project at Baytown, Texas. The project is expected to produce 1 billion cubic feet of low-carbon hydrogen per day, capture over 98% of CO₂ emissions, and utilize Air Liquide’s pipeline network along with four modular air separation units.
• In November 2023, Air Liquide and ENEOS Corporation signed an MoU to advance low-carbon hydrogen development in Japan. The partnership will focus on hydrogen production using CCUS and electrolysis, developing a liquid hydrogen supply chain, and supporting hydrogen mobility and refueling infrastructure