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, a more mature technology with lower upfront costs.
3. Solid oxide electrolysers, which 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 1% of today’s global hydrogen production. Blue hydrogen is made from natural gases, with emissions captured and stored. 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% 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.

It seems that the price gap is a major barrier. 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.

Large scale infrastructure in 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: 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.

The rest of Europe

It seems that other European companies are encountering the same pressures. 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.

Norway’s Statkraft, Europe’s largest renewable generator, announced earlier in 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 US 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 18 months according to industry assessments, with most citing economics and unclear offtake agreements as the primary causes.

US developers are scaling back

In the US, 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, 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.

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. 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.

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. 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 US 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. 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 US 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.

The post Why Green Hydrogen’s Global Rollout Is Struggling appeared first on Quayside Technical Services.

The Advantages of Hydrogen 

The great advantages of hydrogen as a fuel include dramatically reduced greenhouse gas emissions, it only produces water vapour as a by-product when burned, it has a high energy density, and it can be produced from renewable sources, thereby making it a cleaner and more efficient fuel option for various applications.

The Challenges 

Extracting hydrogen at scale through the electrolysis of water using renewable energy is a little used (1 per cent of global production) but very promising way to produce green hydrogen. However, its production comes with some key challenges which are:

• The need for powerful wind turbines and plenty of wind to power the desalination plant.
• The need for abundant water resources from which to extract the hydrogen.
• The high costs of some current methods of converting energy at sea and bringing it in a cable to shore: the cable is the costly part.

The Answer? Offshore Wind Farms Connected to Electrolysers

German company Lhyfe believes the answer to these challenges is to use high capacity offshore floating wind farms with turbines connected to electrolysers that utilise seawater, using the green energy to power the separation process.

Using powerful wind turbines, offshore wind farms harness abundant wind energy, and by connecting them to electrolysers which utilise seawater, plus a hydrogen production plant, the process overcomes the previous challenges because:

• Seawater is an abundant source of hydrogen.
• Converting the electricity to hydrogen using the seawater and an offshore production plant beneath the turbines, means the hydrogen can be piped ashore using the many existing North Sea pipelines. This is much less costly than using expensive electric substations and cables.

Two Plants Commissioned Following Successful Pilot 

With this in mind, in September 2022, Lhyfe installed the world’s first renewable green hydrogen pilot plant at sea, capable of producing up to 400 kilos of hydrogen a day off the Atlantic coast.

The success of Sealhyfe has led to the commissioning of the first floating platform for green hydrogen production off Le Croisic, directly connected to a floating wind turbine, with a second, much larger project planned called HOPE, this time off the coast of Belgium. Its 10 MW production unit, due for commissioning in 2026, will have the capacity to produce up to four tonnes of green hydrogen per day.

Is Hydrogen Dangerous As A Fuel Source? 

Anyone who’s watched the black and white film of the hydrogen filled Hindenburg airship exploding will be aware of how flammable hydrogen is. It also has a low ignition point, and is odourless and colourless, making leaks difficult to detect. That said, other fossil fuels we use, for example petrol and gas, also come with similar risks but are generally used safely. Also, with hydrogen, dispersal in air can mitigate the risk of explosion, and various safety measures can be employed to handle and store it safely.

Oxygen 

One other beneficial aspect of extracting hydrogen from seawater is that oxygen is also produced as a byproduct. Lhyfe is developing ways to reinject this oxygen byproduct back into aquatic environments, which, due to global warming and polluting industrial activities, are increasingly depleted of oxygen, in order to reoxygenate them. This is particularly important since 50 per cent of the oxygen on earth originates in the ocean. Scientists have observed declining dissolved oxygen levels in the global ocean since the 1950s, predicting a further decrease of up to 7 per cent by the year 2100 as a result of ocean warming and nutrient pollution.

What Does This Mean For Your Organisation? 

Not only is there a well publicised need for urgent CO2 emission reduction and decarbonisation of our lifestyles and industries, but there’s also a need to find ways to stabilise and restore the functioning of ecosystems in order to limit global warming to 1.5°C.

Lhyfe’s idea for sustainable green hydrogen production appears to address both issues: by producing a sustainable green fuel and by putting the oxygen byproduct of the process back into the ocean.

The hydrogen from offshore farms produced at sea, using just seawater and wind energy, could count towards decarbonising known high emitters of CO2 on land, for example lorries, buses, and waste collection vehicles, and industry. Industrial production of chemicals, metals, glass, steel, and more emits gases which contribute to global warming.

As such, green hydrogen could have a significant and positive impact on many industries and could create new opportunities as a new industry of its own. That said, extracting hydrogen at scale through the electrolysis of water using renewable energy is still relatively new and little used, making up only 1 per cent of global hydrogen production. Investment and some considerable scaling up will be needed to help increase its impact and it may also take some time to deploy more of these green hydrogen windfarms in more places around the world.

However, the technology now exists, has proven successful in trials and looks set to be one of many methods that can be used to tackle the climate crisis and targets related to it. Offshore wind offers more additional scale than most other renewable power sources, meaning that that linking hydrogen producing units to turbines does at least have the potential to be scaled up and could prove to be a realistic way to help reduce our reliance on natural gas in the future.

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