Low-emissions hydrogen "is no passing fad" and deployment could soon approach the "breakneck expansion" seen in solar and offshore wind in their early years, the Paris-based energy watchdog the IEA said.
The sector has seen "stark" corrections recently, but these are "typical in emerging sectors", the IEA said in its Energy Technology Perspectives 2026 report published today.
Progress has fallen short of expectations from the early 2020s. Many projects have been cancelled or delayed and numerous companies have gone bankrupt. This has led to production and consumption forecasts being cut sharply..
But it is common for technologies to "experience cycles of exuberance followed by consolidation before stabilising around the most viable opportunities", the IEA said. The hydrogen "bubble may be weakening, but it is far from bursting".
Investments in low-emissions hydrogen reached $8bn globally in 2025, an increase of 80pc from a year earlier, the watchdog said.
Global electrolyser capacity rose from 100MW in 2009 to 1GW in 2023. Capacity is expected to have reached close to 5GW by the end of 2025, and China will account for roughly 40pc of this, the IEA said.
Based on final investment decisions, global electrolyser capacity could reach 26GW by 2030, another fivefold increase. Projects with a "strong potential to be in operation by 2030" could lift this to about 65GW. That growth path would mirror the early scale-up of solar and offshore wind, the IEA said.
Including other low-emissions production routes, output could reach 4.2mn t/yr from projects with "committed investments", and about 10mn t/yr when likely plants are included.
Governments must offer more targeted support to unlock the project pipeline, the watchdog said. This includes stimulating demand in existing hydrogen applications and building enabling infrastructure. It warned of challenges for new projects, including competition from data centres and other energy-intensive sectors for power supply and for capital for supporting infrastructure.
The IEA said recent increases in electrolyser costs — driven by inflation and supply chain pressure — may reverse in the coming years thanks to larger scales and learnings. It sees some regions, most notably China, on track to close the gap between renewable hydrogen and conventional production by 2030. Even in parts of Europe, supportive policies could narrow the gap to below $1/kg by then, it said.
