Introduction to Stimulating Demand
The Hydrogen Supply Boom — But Who’s Buying?
The hydrogen hype is real. From multi-billion-dollar electrolyzer plants to international green hydrogen corridors, the world is investing heavily in hydrogen production. But there’s a catch — supply isn’t enough. Despite the surge in capacity, hydrogen demand remains patchy, slow-growing, and in many cases, uncertain.
So why isn’t the hydrogen market taking off like we expect? The answer lies in the demand side of the equation, a side that has long been overshadowed by flashy production announcements. Let’s dig into the real challenges of hydrogen consumption and how smart strategies can unlock hydrogen market growth.
The Hydrogen Economics Disconnect
Hydrogen has impressive credentials: zero emissions at the point of use, versatility across sectors, and compatibility with existing infrastructure (in some cases). Yet, these benefits don’t always translate into viable economics for end users.
What’s Going Wrong?
- High End-User Costs: Even with falling production prices, hydrogen remains more expensive than fossil alternatives in most applications.
- Lack of Infrastructure: Without widespread fueling stations, pipelines, or storage, it’s hard for industries or transport sectors to commit.
- Policy Gaps: While many governments incentivize hydrogen production, far fewer subsidize hydrogen usage.
- Unclear Business Cases: For many sectors, hydrogen is still “nice to have” — not a must-have — in decarbonization plans.
Hydrogen Demand by Sector: Who Needs It (But Isn’t Using It)?
Heavy Industry (Steel, Cement, Chemicals)
These sectors are ideal hydrogen consumers due to their hard-to-abate emissions. Yet hydrogen uptake here is minimal.
Why? Existing fossil-based processes are cheaper and deeply embedded. The switch requires expensive retrofitting and stable hydrogen supply — which many plants can’t guarantee yet.
Real-World Example:
Sweden’s HYBRIT project is one of the few active hydrogen-based steel ventures, but its scale is still small relative to global demand.
Transport (Trucks, Trains, Shipping, Aviation)
Hydrogen’s energy density makes it attractive for long-range and heavy-duty transport. Still, adoption is slow.
Why? Electric alternatives are further ahead for short-range mobility, and hydrogen fueling infrastructure is almost nonexistent in many regions.
Real-World Example:
South Korea plans to deploy 200,000 hydrogen-powered commercial vehicles by 2040, but current numbers are in the low thousands.
Residential & Power Use
Hydrogen blending in gas networks and use in power generation are gaining interest — but these markets are still experimental.
Why? Technical and regulatory hurdles make hydrogen rollout slow, and consumer awareness is low.
Stimulating Hydrogen Consumption: What Needs to Change?
To realize the full promise of hydrogen, we need to aggressively stimulate demand — not just build supply. Here’s how:
End-User Incentives
Just like solar panels or EVs, hydrogen applications need consumer-side subsidies. That means tax credits, usage grants, and reduced hydrogen fuel prices to make adoption economically viable.
Mandates & Quotas
Governments can require minimum hydrogen use in specific industries — such as green steel quotas in construction or hydrogen-fueled shipping requirements in ports.
Contracts for Difference (CfDs)
CfDs can guarantee end-users a stable hydrogen price by covering the gap between green hydrogen and fossil fuel prices — encouraging long-term planning and investment.
Public Procurement
Governments can act as “first customers” by using hydrogen in public transit, infrastructure, or buildings — setting the tone for broader market adoption.
Global Signals of Change
Some regions are starting to get it right:
- Germany has launched a €900 million program to support hydrogen use in industry through competitive auctions.
- California offers credits for hydrogen-powered trucks under its Low Carbon Fuel Standard.
- Japan is subsidizing both hydrogen fuel and infrastructure, with a focus on commercial users.
These programs show that demand stimulation works — but needs scale, consistency, and international alignment.
Why is it a challenge to have a supply of hydrogen?
Maintaining a steady hydrogen supply is challenging due to the high costs and energy required for its production, especially through green methods like electrolysis. Hydrogen also needs specialized infrastructure for storage and transport, as it’s highly flammable and has low energy density by volume. Additionally, current production largely relies on fossil fuels, which undermines its environmental benefits. These factors make scaling up hydrogen supply both technically and economically complex.
What are the problems with hydrogen supply chain?
The hydrogen supply chain faces several issues, including limited infrastructure for production, storage, and transportation. Compressing, liquefying, or converting hydrogen for transport adds significant cost and energy use. Leakage during storage and transit also poses safety and efficiency concerns. Moreover, the lack of standardization and regulatory support slows down large-scale deployment.
What are some limitations of hydrogen fuel economy?
The hydrogen fuel economy faces limitations such as high production costs, especially for green hydrogen using renewable energy. Storage and transportation are also difficult due to hydrogen’s low density and flammability. Additionally, the lack of widespread refueling infrastructure limits adoption. Energy losses during production, conversion, and use further reduce overall efficiency compared to other clean energy alternatives.
What is the biggest problem with hydrogen?
The biggest problem with hydrogen is the cost and complexity of producing it in an environmentally friendly way. Green hydrogen, made using renewable energy, is still significantly more expensive than hydrogen derived from fossil fuels. Additionally, its storage and transport require advanced infrastructure due to its low energy density and high flammability. These challenges hinder its widespread adoption and scalability.
Conclusion: Building a Hydrogen Market from Both Ends
If we want a thriving hydrogen economy, production alone won’t cut it. The focus must now shift to hydrogen consumption — making it attractive, affordable, and accessible for users across industries.
Think of it like building a highway. You can pave the roads (supply), but unless people buy cars and drive (demand), traffic won’t flow. Without deliberate action to stimulate hydrogen demand, we risk creating a supply glut with no real market.
Let’s move from hype to habit — from supply obsession to balanced hydrogen economics. The future of clean energy depends on it.
Read More on Liquid Hydrogen Storage Technologies….
Resources:
Why Supply Isn’t Enough in the Hydrogen Economy
