The global blue hydrogen market is surging, valued at US$ 25.78 billion in 2024 and projected to skyrocket to US$ 212.39 billion by 2050, growing at a CAGR of 19.50% during the forecast period 2025–2033. This rapid expansion is fueled by a global push for low-carbon energy solutions, with significant investments pouring in from both private and public sectors. The United Kingdom is set to make a final investment decision on its first blue hydrogen project this year, backed by government subsidies, underscoring the UK’s commitment to advancing blue hydrogen as a key component of its clean energy strategy. Meanwhile, in the United States, the Inflation Reduction Act (IRA) of 2022 has introduced crucial tax credits, making blue hydrogen projects more financially viable and attractive to investors. The IRA provides a Section 45V Tax Credit for clean hydrogen production and an enhanced Section 45Q Tax Credit for carbon sequestration, which could significantly boost the deployment of blue hydrogen technologies.
Major corporations are also making substantial investments in blue hydrogen infrastructure, with Air Products involved in a $4.5 billion blue hydrogen project in Louisiana. The U.S. Department of Energy (DOE) has announced $7 billion in funding for clean hydrogen hubs, including blue hydrogen projects, highlighting the strategic importance of blue hydrogen in achieving energy transition goals. These investments are not only about production but also about creating a robust supply chain to ensure blue hydrogen’s role in the future energy landscape.
The blue hydrogen market is increasingly being adopted in energy-intensive industries as a cleaner alternative to traditional fossil fuels. In the oil refining and ammonia manufacturing sectors, blue hydrogen is being used to reduce feedstock emissions, presenting a near-term opportunity for decarbonization efforts. Heavy industries such as refineries, petrochemical plants, steel, and cement production are also exploring blue hydrogen as an enabler for reducing their carbon footprint. These industries are significant emitters of greenhouse gases, making the adoption of blue hydrogen a crucial step in their sustainability efforts. The application of blue hydrogen extends to fertilizer and steel manufacturing, which are considered “no-regrets” applications due to their high energy demands and the potential for significant emissions reductions. In fact, more than 90% of the world’s hydrogen, which includes blue hydrogen, is used for industrial applications such as lowering sulfur content in diesel by refiners.
Beyond industrial applications, blue hydrogen is being explored in the transportation sector, with potential uses in fuel cell vehicles and as a transitional fuel in aviation. These diverse applications illustrate the versatility of blue hydrogen in addressing emissions across multiple sectors, positioning it as a cornerstone of the global energy transition. However, it’s important to note that while blue hydrogen offers significant potential for emissions reduction, its overall environmental impact depends on the effectiveness of associated carbon capture and storage technologies.
The production of blue hydrogen relies heavily on advancements in carbon capture and storage (CCS) technologies. Blue hydrogen is primarily produced through steam methane reforming (SMR) of natural gas, coupled with CCS to mitigate CO2 emissions. Recent technological advancements have seen the integration of autothermal reforming (ATR) with solid oxide electrolysis as a hybrid system for co-producing blue and green hydrogen. This hybrid approach represents a significant step forward in hydrogen production technology, potentially offering greater efficiency and flexibility. In terms of production scale, global hydrogen production reached 90 million metric tons per annum in 2020, with a significant portion produced via SMR and coal gasification. However, less than 1% of this production involved CCS, highlighting the nascent stage of blue hydrogen projects. In the United States, blue hydrogen projects produced 0.23 million metric tons of hydrogen in 2021, indicating ongoing efforts to scale up production.
The effectiveness of CCS systems is crucial for the sustainability of blue hydrogen, as they must capture CO2 emissions efficiently over the long term to maintain the “blue” designation. While CCS technologies are available, their implementation in blue hydrogen production faces challenges. The learning rate for CCS, which measures cost reductions as technology scales, is reported to be 11% for capital costs and 22% for operating and maintenance costs. This suggests that while there is potential for cost reductions, significant technological breakthroughs are still needed. To address these challenges, policies like the Inflation Reduction Act in the U.S. provide tax credits to stimulate the deployment of clean hydrogen technologies, including CCS, aiming to lower cost barriers and promote large-scale blue hydrogen production.
Transporting blue hydrogen from production sites to end-users remains a significant challenge due to its low energy density and high flammability. Several transportation modes are currently being developed and utilized to address these challenges. Pipelines are
