From Bold Ambition to Uneven Progress
Hydrogen has long been heralded as a revolutionary replacement for fossil fuels, but its trajectory has shifted toward a more pragmatic role. Today, the fuel is primarily viewed as a strategic solution for hard-to-abate industries such as shipping, steel, and fertilisers. The latest Maritime Strategies International (MSI) report, Patchwork Progress, highlights an uneven transition marked by ambitious plans colliding with the realities of cost, demand, and regulation.
Momentum has slowed, with Final Investment Decisions (FID) on projects still rare. Blue hydrogen is gaining ground, while green hydrogen faces headwinds due to high costs of renewables and electrolysers. Despite these barriers, three “green corridors” advanced in the first half of the year, though many other projects have faced delays, downsizing, or outright cancellation.
Costs, Demand, and Regulatory Shifts
The past six months have underscored both opportunity and constraint. Subsidies and incentives are supporting growth in some regions, but the rollback of clean energy support in major economies, including the US, is forcing recalibration. Demand remains slow to materialise, leaving producers with the challenge of balancing ambition against the realities of limited market appetite.
Out of 200 ammonia project announcements tracked by MSI, only about 70 are deemed executable by 2040. The sector’s inability to deliver at scale raises doubts about its capacity to meet lofty climate and energy transition goals.
Regional Divergences: US, Australia, India
Australia exemplifies the collapse in confidence, with roughly 80 percent of proposed projects abandoned, reflecting both speculative beginnings and harsh economic realities. In the US, the Inflation Reduction Act (IRA) initially positioned America as the global benchmark for green hydrogen pricing. But Trump-era cuts to clean energy support have thrown the sector into disarray, shifting momentum to blue ammonia projects, often backed by Japan.
By contrast, India has emerged as a bright spot, achieving exceptionally low costs for green ammonia production. In some cases, prices have neared parity with grey ammonia, a development expected to become more widespread by 2030. While this benefits fertiliser producers, fuel consumers still face high costs, underscoring the need for subsidies and regulatory frameworks such as FuelEU and IMO measures to bridge the gap.
Impact on Shipping and Global Trade
The shipping industry, one of the key markets for ammonia, finds itself constrained by both high costs and limited availability. Although pilot projects, offtake agreements, and green corridors are moving forward, they are insufficient to provide the demand signal needed to drive large-scale hydrogen adoption. Export availability from leading producers is falling short, leaving shipowners concerned about securing sufficient supply for ammonia-fuelled vessels.
Hydrogen’s story remains one of ambition meeting the realities of economics and policy. The coming years will reveal whether the industry can overcome its uneven progress and establish itself as a scalable clean fuel, or whether it will remain confined to niche applications.
