Wood Mackenzie’s report on Hydrogen: 5 things to look for in 2025 reveals the rise of blue hydrogen in the US, a giga-scale green project reaching FID, increased deployment of Chinese electrolysers, the mismatch between project FIDs and offtake contracts and a surge in low-carbon ammonia investments.
“We predict that the 45Q tax credit will remain in place due to strong support from the oil and gas lobby, and its importance in facilitating US exports of blue ammonia,” said Greig Boulstridge, research analyst for Wood Mackenzie. “As a result, we predict that a surge in blue hydrogen investment – with at least three large-scale blue hydrogen projects reaching FID – will see the US emerge as the world’s leading blue hydrogen producer.”
Dominance of Blue Hydrogen in the US
Blue hydrogen investments will surge in the US, supported by the 45Q tax credit and strong oil and gas lobbying.
At least three large-scale blue hydrogen projects, totaling over 1.5 Mtpa, are expected to reach Final Investment Decision (FID).
The US will solidify its position as the leading global producer of blue hydrogen, while green hydrogen faces significant challenges.
- A Giga-Scale Green Hydrogen Project to Reach FID
Despite obstacles like securing offtakers and favorable regulatory conditions, at least one giga-scale green project (+1GWe) is projected to reach FID.
To date, only two projects larger than 1GWe have achieved FID, out of a proposed pipeline of over 150 projects.
- Chinese Electrolysers Expanding Market Share
Chinese electrolyser manufacturers are set to capture over one-third of markets outside North America and Europe by the end of 2025.
Competitive pricing, manufacturing capacity, and shorter delivery times are driving their global expansion.
- Persistent Mismatch Between Project FIDs and Offtake Contracts
A gap between FIDs and offtake agreements risks cancellations, particularly in the US, which accounts for a significant portion of uncontracted capacity.
Acceleration of agreements in Japan, South Korea, and Europe could help bridge this mismatch.
- Surge in Low-Carbon Ammonia Investments
Investments in low-carbon ammonia are projected to double in 2025, reaching $8 billion.
Upstream: $5 billion targeting hydrogen applications in maritime and aviation sectors.
Downstream: $2 billion for ammonia storage terminals and $1 billion for large ammonia carriers.
Japanese firms are expected to lead, with increasing activity in export markets like Asia and Europe.
These themes signal a transformative year for the low-carbon hydrogen and ammonia sectors, with shifts in investment patterns, technological deployment, and global market dynamics.