Hydrogen Generation Market Trends

Growth Drivers

• Growing demand from transportation: Hydrogen fuel cell vehicles, such as cars, buses, and trucks, are gaining traction as emission regulations keep tightening and electrification advances. This fuels demand in the hydrogen generation market to supply clean fuel for mobility applications.  In January 2026 Ministry of Climate, Energy, and Environment (MCEE) of South Korea reported that in 2025, the country witnessed a 182% year-on-year increase in hydrogen vehicle deployment, which surpassed 6,903 units, driven by new passenger vehicle models. The government also announced KRW 576.2 billion in 2026 funding to deploy 7,820 hydrogen vehicles, including buses, passenger vehicles, and freight trucks. To support this, hydrogen refueling infrastructure will expand with KRW 189.7 billion allocated to build over 500 stations, including a pilot for mobile refueling units, hence denoting a wider hydrogen generation market scope.

Hydrogen Vehicle Deployment and Refueling Station Statistics - South Korea (2024-2026)

Source: Ministry of Climate, Energy and Environment (MCEE) of South Korea

• Industrial demand & feedstock use: Beyond energy, hydrogen is highly essential in refining, ammonia and methanol production, metal processing, and petrochemicals sectors that are expanding and seeking cleaner inputs. This is providing encouraging opportunities for pioneers in the hydrogen generation market. In December 2025, Mitsubishi Heavy Industries reported that it successfully produced 99% pure hydrogen at its pilot plant in Nagasaki by cracking ammonia using steam heating, which is a world-first at pilot scale. This technology operates at lower temperatures than conventional combustion systems by reducing costs and enabling potential miniaturization. In addition, MHI aims to develop medium-scale, decentralized ammonia cracking systems near hydrogen demand sites, supporting the hydrogen supply chain and advancing decarbonization efforts in collaboration with NEDO and partners.
• Technological advancements in production: Continuous improvements in electrolyzers and other hydrogen generation technologies, such as solid oxide, advanced catalysts, are boosting efficiency and reducing costs, especially for green hydrogen produced from renewables. In this context, BASF in March 2025 announced that it has commissioned a 54 MW PEM electrolyzer at its Ludwigshafen site, producing up to 8,000 metric tons of green hydrogen annually for chemical production, which includes ammonia, methanol, and vitamins. It is built in collaboration with Siemens Energy and integrated directly into the plant’s hydrogen network, wherein the electrolyzer reduces greenhouse gas emissions by up to 72,000 tons per year. Furthermore, this project, supported by the German federal and Rhineland-Palatinate governments, represents a world-first industrial integration of electrolyzer technology to advance green hydrogen production, hence benefiting the hydrogen generation market.

Challenges

• Limited infrastructure and distribution networks: The absence of proper hydrogen infrastructure is a major obstacle hindering the expansion of the hydrogen generation market. Production sites are mostly located far from end users, and there are few pipelines, storage facilities, or fueling stations that are capable of handling hydrogen safely and efficiently. On the other hand, transporting hydrogen either as a compressed gas, liquid, or carrier involves very high costs, technical complexity, and safety risks owing to its low volumetric energy density and flammability. The presence of this infrastructure gap limits the scaling of industrial, mobility, and energy applications. Meanwhile, the hydrogen generation market growth relies mostly on investments in hydrogen pipelines, refueling stations, storage solutions, and international supply chains, wherein the lack of coordinated development of production and distribution networks will lead to a slower hydrogen generation market upliftment.
• Regulatory and policy uncertainty: This is yet another barrier to the progression of the hydrogen generation market. The aspect of incentives, subsidies, and carbon pricing mechanisms varies between countries, creating uneven hydrogen generation market conditions. In some regions, the absence of clear safety standards, certification processes, and grid integration rules complicates project approvals and financing. The existence of policy delays can stall electrolyzer deployment, infrastructure development, and international hydrogen trade. Moreover, long-term planning is difficult for private investors due to fluctuating government commitments to hydrogen roadmaps. Stable, transparent, and harmonized regulatory frameworks are highly essential to attract investment, scale production, and create global supply chains.