BLUE HYDROGEN MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024 - 2031)

Blue Hydrogen Market Size and Trends

The global blue hydrogen market is estimated to be valued at USD 20.65 Bn in 2024 and is expected to reach USD 45.55 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 12% from 2024 to 2031.

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Blue hydrogen is produced from natural gas through steam methane reforming coupled with carbon capture and storage. It can be a bridging technology for the development of a hydrogen economy. Stringent emission norms and rising demand for cleaner fuels are driving the adoption of carbon capture technologies. Many governments such as the Biden-Harris Administration are supporting projects to reduce the overall carbon footprint of hydrogen production from natural gas. Major industrial and energy companies such as Inpex are also investing in pilot projects to produce blue hydrogen at scale.

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Insights By Product Type - Economies of Scale Drive SMR Adoption

In terms of product type, Steam Methane Reforming (SMR) segment is expected to contribute 45.3% share of the market in 2024, owing to its advantages of scale. SMR technology benefits significantly from economies of scale, as larger plants allow for lower capital and operating costs on a per unit of production basis. Once a SMR plant reaches a certain threshold size, the unit costs decrease substantially. This scale effect has encouraged major hydrogen producers to develop very large SMR facilities thousands of miles from end users.

Insights By Application – Development of Hydrogen Pipeline Network Drives Application in Petroleum Refineries

In terms of application, petroleum refineries segment is expected to contribute 37.5% share of the market in 2024, due to its role driving development of the hydrogen pipeline network. For instance, according to Wood Mackenzie data reported in 2022, Low-carbon hydrogen demand in refining could reach 50 Mtpa by 2050. Their significant demand has led to the development of dedicated hydrogen pipelines, connecting production facilities to key refining hubs efficiently.

Insights By Transportation Mode - Transition to Renewable Methane Drives Pipeline Usage

In terms of transportation mode, the pipeline segment is expected to contribute 57.6% share of the market in 2024, owing to its role in delivering low-carbon “green” hydrogen. While tankers currently handle most hydrogen trade globally, pipelines are essential to unlock large-scale production of “blue hydrogen” via Steam Methane Reforming with Carbon Capture and Storage (SMR+CCS). Blue hydrogen produced through SMR of renewable natural gas or biomethane can achieve significant lifecycle emission reductions compared to using fossil gas.

Regional Insights

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Dominating Region: North America

North America is projected to lead the blue hydrogen market in 2024 with 39.5% of the market share, driven by supportive government policies, subsidies, and pilot programs in the U.S. and Canada. The region's strong industrial sectors, including oil, gas, chemicals, and manufacturing, have also fostered the development of established hydrogen infrastructure and expertise.

Fastest-Growing Region: Europe

Europe exhibits the fastest growth in the blue hydrogen market owing to rising energy demands and investments in related technologies. Germany has emerged as a leader with ambitious targets for hydrogen utilization and fuel cell vehicles. Major companies like Iwatani, JXTG, and Kawasaki Heavy Industries are contributing to the hydrogen value chain.

Blue Hydrogen Market Outlook for Key Countries

Blue Hydrogen Market in China: Growth Driven by Energy Security and Emission Reduction Goals

The blue hydrogen market in China is growing due to the country's focus on sustainable energy and its large natural gas reserves. Blue hydrogen, produced through natural gas reforming with carbon capture and storage (CCS), supports China’s goals of energy security and reducing carbon emissions. In March 2022, China set a target to produce 100 metric tons of hydrogen by 2060, with a significant portion coming from blue hydrogen as part of its clean energy transition strategy.

Germany’s Role in the European Blue Hydrogen Market: A Key Player in the Energy Transition

Germany is a significant player in Europe's blue hydrogen market, driven by ambitious climate goals and a commitment to reducing greenhouse gas emissions. The country's strategy incorporates both green and blue hydrogen as essential components of its energy transition. Germany is investing heavily in hydrogen infrastructure, including production plants and carbon capture and storage (CCS) technologies, to support blue hydrogen production. In July 2023, Germany updated its National Hydrogen Strategy, doubling the target for domestic electrolyzer capacity from 5 GW to at least 10 GW by 2030. This expansion aims to bolster green hydrogen production, which, alongside blue hydrogen, is integral to the nation's energy transition.

The U.K.'s Hydrogen Strategy: Leveraging Blue Hydrogen for Industrial Decarbonization

The U.K. is positioning itself as a leader in the hydrogen economy, with a clear focus on decarbonizing its industrial sectors. The U.K. government has committed to a hydrogen strategy that includes blue hydrogen alongside green hydrogen. The U.K. benefits from an established natural gas infrastructure and significant offshore CO2 storage potential, which makes it well-suited for blue hydrogen production. Blue hydrogen is seen as a transitional solution in the U.K., helping to reduce carbon emissions from industries like chemicals, cement, and steel. In July 2021, the government has set a target to produce 10 GW of low-carbon hydrogen by 2030, with blue hydrogen contributing a substantial share.

Blue Hydrogen in the U.S.: Expanding Market Driven by Natural Gas and CCS Technology

In the U.S., the blue hydrogen market is rapidly expanding, driven by the country’s abundant natural gas reserves and significant interest in CCS technology. The U.S. government has outlined plans to increase hydrogen production through both blue and green hydrogen, with blue hydrogen playing a key role due to the low cost of natural gas and advanced CCS technologies. Federal incentives, such as the Hydrogen Production Tax Credit, are further supporting the development of blue hydrogen. The U.S. aims to position hydrogen as a key part of its energy future, particularly in decarbonizing heavy industries and transportation.

Canada Blue Hydrogen Market: Leveraging Natural Gas and CCS for a Net-Zero Future

Canada is well-positioned to develop a strong blue hydrogen market, owing to its vast natural gas resources and expertise in CCS technologies. For instance, according to Government of Canada, data reported in 2023, The federal government has committed US$1.5 billion through the Clean Fuels Fund to boost domestic clean fuel production, including hydrogen. As of October 2023, approximately 10 hydrogen production projects have been selected for support, totaling over US$300 million in investments.

Market Concentration and Competitive Landscape

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Top Strategies Followed by Global Blue Hydrogen Market Players

• Established Players: Leading blue hydrogen companies are investing heavily in research and development to develop more efficient production techniques. For example, Air Liquide invested over US$ 100 million in 2020 to establish an innovation center focused on advancing electrolyzer technologies.
• Mid-Level Players: Mid-sized players are developing cost-competitive solutions to appeal to price-sensitive early adopters. ITM Power, for example, manufactures modular electrolyzers that can be tailored for various applications and budgets. Companies like Siemens Energy also offer standardized plug-and-play systems to simplify installations and reduce costs. They are well positioned to tap emerging demand as the market scales up.
• Small-Scale Players: Niche companies leverage targeted opportunities. France's utility company Engie emphasizes the use of locally produced renewable hydrogen for transportation, while Germany's H-TEC Systems specializes in utilizing carbon capture technology to generate blue hydrogen on-site at industrial facilities from their waste gases.

Emerging Startups in the Global Blue Hydrogen Market

Innovative Technologies: Several startups are bringing novel hydrogen solutions to market. For example, Anthropic develops AI systems to optimize electrolyzers for higher efficiency. Germany’s Sunfire builds industrial-scale high-temperature electrolyzers to reduce costs. Quantitative Energy Solutions applies big data analytics for production forecasting and supply chain optimization. These technologies have the potential to disrupt conventional production pathways.

Sustainable Solutions: Startups like Hy2gen in Spain and Hydrogenious LOHC Technologies in Germany focus on sustainability. Hy2gen develops renewable hydrogen trails for transport while Hydrogenious creates liquid organic hydrogen carriers as an energy dense storage medium.

Blue Hydrogen Industry News

• In August 2022, the Russian government announced a plan to develop blue hydrogen production within the country, with an investment of around USD 127 million allocated to advancing technologies for the production, transportation, and storage of blue hydrogen. In North America, the market is primarily driven by the plentiful supply of natural gas, which serves as the key feedstock for blue hydrogen production. Chevron Corporation and Exxon Mobil Corporation are the leading suppliers of natural gas in this region.
• In March 2022, Air Products Inc. revealed plans to build and operate a new liquid hydrogen production facility in Arizona, U.S. This plant will be a zero-carbon facility, with operations expected to begin in 2023.
• In January 2022, Linde plc entered into an agreement with Yara to design and supply a 24 MW hydrogen plant. Yara is a leading global chemical company specializing in the production and distribution of nitrogen-based mineral fertilizers and related industrial products.

The increasing focus on reducing carbon emissions and transitioning towards cleaner sources of energy are key drivers promoting the demand for blue hydrogen. Many countries and major energy producers have announced ambitious targets and investments to develop blue hydrogen economies. At the same time, the high capital costs involved in production via steam methane reforming with Carbon Capture, Utilization and Storage (CCUS) and developing storage and transport infrastructure pose challenges to the wider adoption of blue hydrogen.

• North America is expected to dominate the blue hydrogen market during the forecast period given the strong policy support and funding being directed towards the development of hydrogen vales. Countries like the U.S. and Canada are leading large-scale pilot and demonstration projects that can aid commercialization. The Europe region also offers promising growth opportunities led by Germany, the U.K., and France.
• Collaborations across energy companies, governments, and research institutions will be crucial to leverage expertise and share risks involved in piloting new technologies such as methane pyrolysis. Developing international standards for the transportation and storage of blue hydrogen can further optimize cross-border trade opportunities. While blue hydrogen may not be the long-term solution due to challenges with carbon storage, it can play an important transitional role in helping decarbonize industrial and transport sectors.

Market Report Scope

Market Dynamics

Market Driver - Increasing demand for low-carbon hydrogen solutions in various industries

The transition towards low-carbon and sustainable energy solutions has been gaining significant momentum across various industries globally. Hydrogen is emerging as one of the most viable options to mitigate carbon emissions especially in hard-to-abate sectors like steel, cement, chemicals, and long-haul transportation. Blue hydrogen produced via natural gas reforming along with carbon capture and storage allows the utilization of existing gas infrastructure while enabling decarbonization. With stricter environmental regulations and commitments towards net-zero emissions, industries are under increasing pressure to lower their carbon footprint.

Market Challenge - High costs associated with blue hydrogen production and carbon capture technologies

One of the major challenges currently faced by this market is the high costs associated with the production of blue hydrogen and the carbon capture technologies involved. Producing blue hydrogen at scale requires natural gas as the primary feedstock which is then processed through steam methane reforming to produce hydrogen and capture carbon emissions. However, the carbon capture, utilization, and storage technologies needed to capture these carbon emissions from natural gas processing are still quite expensive.

Market Opportunity - Technological advancements enhancing the efficiency of hydrogen production methods

One of the major opportunities for the future growth of the market lies in continued technological advancements that can enhance efficiency and lower the costs of hydrogen production methods, especially those involving carbon capture. The adoption of emerging technologies like carbon capture and utilization that convert captured carbon into value-added products can boost the business case for carbon capture investments.

Market Segmentation

• By Product Type Insights (Revenue, USD Bn, 2019 - 2031)
• • Steam Methane Reforming (SMR)
  • Gas Partial Oxidation (POX)
  • Auto Thermal Reforming (ATR)
• By Application Insights (Revenue, USD Bn, 2019 - 2031)
• • Petroleum Refineries
  • Chemical Industry
  • Power Generation Facilities
  • Others
• By Transportation Mode Insights (Revenue, USD Bn, 2019 - 2031)
• • Pipeline
  • Cryogenic Liquid Tankers
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
• • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East
    • GCC Countries
    • Israel
    • Rest of Middle East
  • Africa
    • South Africa
    • North Africa
    • Central Africa
• Key Players Insights
• • Air Products and Chemicals, Inc.
  • Linde plc
  • Shell Global
  • Chevron Corporation
  • Equinor ASA
  • Siemens Energy AG
  • Mitsubishi Heavy Industries, Ltd.
  • TotalEnergies SE
  • BP plc
  • RWE AG
  • ENGIE S.A.
  • Iwatani Corporation
  • Aker Solutions ASA
  • Wood plc
  • thyssenkrupp AG