S&P and bp: The Current State of Hydrogen Manufacturing
2025 is set to be a pivotal year for hydrogen, with cross-sector stakeholders interested in the fuel's ability to decarbonise.
However, the hydrogen economy remains far from mature.
The economic feasibility and sustainable production of hydrogen fuel have yet to be ironed out, meaning the energy source is taking far longer to scale than was initially anticipated.
Business leaders and industry experts are being forced recalibrate their expectations, with much work to be done on actual implementation as the market edges from theory into application.
The decarbonising power of hydrogen
The trajectory of the hydrogen production industry has evolved in recent years.
The sector saw a sharp decrease in new project announcements in 2024, dropping by over 80% worldwide.
This pull-back represents a moderation from earlier ambitious projections as industry players refocus on effectively advancing existing projects and capital commitments.
"Decarbonising refinery fuel is essential and low-carbon hydrogen provides a clear pathway," said Eugenia Belloni Pocorob, bp's Lead H2 and CC(U)S for the Netherlands, during her speech at StocExpo 2025.
"The technical and financial challenges remain substantial, but the opportunity for emissions reduction is undeniable."
The transport sector sees hydrogen's promise too.
Amit Rao, Principal Consultant at S&P Global, highlights hydrogen's long-established industrial uses and its burgeoning appeal in the aviation sector.
"We are seeing airline manufacturers investigating pure hydrogen solutions beyond sustainable aviation fuel (SAF)," he notes.
"It may seem far-fetched now, but technological advances happen rapidly."
However, the substantial cost linked with hydrogen projects, including Carbon Capture and Storage (CCS), is particularly challenging.
"The scale of capital required for CCS projects is enormous," Amit explains.
"We have already seen major industry players reconsider their green commitments. The question is: where will the funding come from, and who will drive the transition?"
Traditional investment frameworks are also under scrutiny as investors typically favour shorter payback periods.
"The appetite for quick returns does not align with the realities of hydrogen investment," says Eugenia. "We need a different type of investor - one willing to take a long-term view."
Government policy has crucially bolstered early-stage projects in the UK, setting up competition frameworks that enhance the entire value chain's alignment.
"By aligning the entire value chain, these initiatives have made projects more viable," explains Matt Wilson, Head of New Energy Markets at Navigator Terminals.
"Future developments will build on this foundation."
How geopolitics is impacting hydrogen strategies worldwide
Worldwide political landscapes significantly shape the course of hydrogen investment and project advancement.
Potential adjustments in US policy and increased trade conflicts could profoundly influence the sector.
"We need to wait out the Trump presidency to gain clarity on the long-term outlook," Amit says.
"Over the next four years, we are likely to see renewed trade conflicts—not just with China but across the board."
In Europe, the redirection of funds towards defence could reshape priorities within the energy transition, potentially sidelining budgets meant for hydrogen projects.
"If governments allocate 3% or more of GDP to defence, other sectors will inevitably face budgetary constraints," says Amit.
Optimism in the hydrogen sector
Despite these challenges, the hydrogen sector experiences a cautious but persistent optimism.
While the number of projects has significantly reduced, the sector's momentum and general awareness around it continue to grow.
"We may have gone from 30 projects to fewer than five, but the fact that some are now moving into construction is significant," says Eugenia.
"The projects we have in place are gaining traction," Matt explains.
"The policy framework is set and the risk profile has improved. This momentum will carry through to SAF and other hydrogen-linked sectors."
While hydrogen might not solve all industrial decarbonisation challenges, its role in the broader energy transition is becoming increasingly evident.
The extent of its impact will depend on sustained investment, supportive policies and the resolution of geopolitical uncertainties.
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