Green Hydrogen: Who is leading the worldwide race?

From Germany's ambitious plans for market leadership to Spain's exports and the major investments made by the United States, our comparison reveals which countries are on their way to becoming green hydrogen powers and which are still in the early stages of their efforts.

Green hydrogen on course for growth: 110 million tonnes by 2030

Climate change and the energy crisis are currently proving to the world the importance of developing alternatives to coal, oil and gas. Green hydrogen, obtained through the electrolysis of water, is a key technology to that end. With the energy used for the electrolysis originating from renewable sources, the production process for green hydrogen causes hardly any CO2 emissions. It is therefore considered indispensable for effective climate protection.

According to a Roland Berger analysis, a global production volume of around 110 million tonnes of green hydrogen is to be expected by 2030. McKinsey estimates the required electrolysis capacity at up to 345 gigawatts (GW). By comparison, only around 0.5 million tonnes of green hydrogen were produced worldwide in 2023 – a good reason to fully invest in the international ramp-up of the hydrogen economy now. Initiatives such as the European Hydrogen Strategy or the American Inflation Reduction Act (IRA) are therefore promoting this commitment.

In our comparison of several countries, we take a closer look at production capacities planned, the number of projects already implemented, and the funding volumes available.

Germany’s hydrogen strategy: On track for market leadership?

Industrialised nations such as Germany are not relying solely on the import of green hydrogen from countries such as Australia and Chile, which act as export nations and convert their abundant renewable energy into hydrogen. Germany is also aiming to become a leader in this newly emerging market itself, so there is a clear need for action here.

Planned production capacities: The German government plans to build ten gigawatts of electrolysis capacity for green hydrogen by 2030, which corresponds to around 1 million tonnes of green hydrogen. At 25%, this is the lion's share of the 40 gigawatts planned across Europe by 2030.
Implemented projects: However, according to a McKinsey study, only around 0.06 GW of electrolysis capacity has been installed to date. A final investment decision (FID) will only be made for 3% of the projects in 2024.
Funding volume: The German government and the respective federal states have provided around 4.6 billion euros for IPCEI hydrogen infrastructure projects in Germany. IPCEI is one of the central funding instruments. In Europe, more than 18 billion euros are flowing into important projects of common European interest (IPCEI).

Green hydrogen “Made in Spain”: Paving the way for Europe's energy transition

Spain can rely on ideal conditions to produce green hydrogen, as there is plenty of sun and wind power here. The country wants to become a leading exporter of green hydrogen and is therefore also playing a key role in the European energy transition.

Planned production capacities: Spain has significantly raised its ambitions in the field of green hydrogen production and plans to produce 2.5 million tonnes per year by 2030. This is according to a statement by the CEO of the Spanish gas network operator Enagas (ENAG.MC). The substantial increase will be made possible by the expansion of electrolysis capacity to 23.3 gigawatts.
Implemented projects: According to a McKinsey study, around 25 MW (0,025 GW) of electrolysis capacity has been installed to date.
Funding volume: The Spanish government has approved subsidies of almost 800 million euros for major green hydrogen production projects, Energy Minister Teresa Ribera told Reuters.

America's hydrogen strategy: Gigantic goals and massive investments

The US Department of Energy (DOE) has identified green hydrogen as a key technology for decarbonising sectors such as steel, ammonia, energy storage and heavy-duty transportation. Clean hydrogen is critical to the DOE's strategy to achieve President Joe Biden's goal of net-zero emissions by 2050. The government aims to reduce production costs to $1 per kilogram of green hydrogen within a decade. With 5 million tonnes of CO2 equivalent in 2022, the US is considered the second largest CO2 emitter in the world.

Planned production capacities: The US government has set itself the goal of increasing the production of clean hydrogen to 10 million tonnes per year by 2030 and 50 million tonnes by 2050. An electrolysis capacity of approx. 100 gigawatts (GW) is required per 10 million tonnes.
Implemented projects: According to a McKinsey study, around 50 MW (0,05 GW) of electrolysis capacity has been installed to date.
Funding volume: Over the next ten years, hydrogen producers in the USA will receive substantial subsidies of around USD 100 billion under the IRA. Producers of green hydrogen can receive up to $3 for every kilogram of renewable hydrogen. The Inflation Reduction Act, or IRA for short, is a USD 738 billion investment program with an emphasis on climate protection in the USA.

From carbon to hydrogen: China's ambitious plans

China is also relying on hydrogen to achieve its climate policy goals and to benefit from the market's potential. The People's Republic is currently regarded as the world's largest consumer and producer of hydrogen, but still mainly produces it using fossil fuels. With 11 million tonnes of CO2 equivalent in 2022, China is considered the largest CO2 emitter in the world.

Planned production capacities: As part of its national plan, China is aiming to produce 200,000 tonnes of green hydrogen per year by the end of 2025, but an analysis by energy research company Rystad Energy shows that this amount could already be exceeded by the end of this year. The China Hydrogen Alliance is calling for an electrolysis capacity of 100 GW for the production of green hydrogen by 2030.
Implemented projects: According to the McKinsey study, projects with 12 GW of electrolysis capacity have completed final investment decisions (FID) worldwide. With more than 50% or 6.6 GW of electrolysis capacity, the majority of that is located in China.
Funding volume: According to Global Times, China's investment in the green hydrogen industry has reached 300 billion yuan (approx. 39 billion euros) in 2023.

India in the race for hydrogen: Global aspirations

India has set itself the major target of achieving net-zero emissions by 2070 and considers green hydrogen as a key to this vision. Asia's third-largest economy plans to decarbonise CO2-intensive industries through the use of green hydrogen produced with renewable energy. The country aims to use green hydrogen both for its own energy needs and for export. With almost 3 million tonnes of CO2 equivalent in 2022, India is the third largest CO2 emitter in the world.

Planned production capacities: The National Hydrogen Mission launched in 2021 aims to achieve production capacities of at least 5 million tonnes of green hydrogen or 60 - 100 GW of electrolysis capacity by 2030.
Implemented projects: India has the highest relative growth in investments by global comparison (around 140%), which corresponds to around 40 projects.
Funding volume: The USD 2.1 billion “Strategic Interventions for Green Hydrogen Transition” (SIGHT) program forms the basis for India's plan to become a green hydrogen power by focusing on the country's access to affordable renewable energy.

Comparing the countries by data: Who is in the lead and what is yet to come?

The global race for green hydrogen supremacy has intensified as leading nations recognise how crucial this energy carrier is for the energy transition and climate protection. Our comparison shows that various countries are pushing ahead with ambitious targets and significant investments in the production and use of green hydrogen, although the current state of implementation often falls short of the plans made. According to McKinsey, so far only projects with a total electrolysis capacity of around 12 GW have reached a final investment decision (FID). That remains but a fraction of what is needed.

Germany plans to achieve substantial capacities by 2030, but is struggling with slow project implementation. A final investment decision (FID) will only be made for 3 percent of projects in 2024. Overall efficiency in the planning and implementation of hydrogen projects should be improved to minimise further delays. Bureaucratic hurdles for the approval of hydrogen projects should be reduced to improve project schedules. Furthermore, incentives should be created to encourage private investors to take part in hydrogen projects. Spain, on the other hand, is making optimal use of its natural resources and leverages this advantage to pursue ambitious production targets. The USA is following an aggressive subsidisation policy to reduce costs and massively increase production. China is investing heavily in expanding its capacities and could even reach its targets ahead of schedule. India is also leading the way, recording the highest relative growth in investments compared to other countries.

Green hydrogen is currently still up to six times more expensive than grey hydrogen produced with natural gas. Funding is therefore urgently needed. In addition to existing subsidies, further sources should be tapped to support green hydrogen production projects. This is the only way to ramp up production capacities and reduce production costs.

Overall, the comparison shows that green hydrogen plays a central role in national strategies to reduce carbon emissions. However, more effort is needed to put these ambitious plans into practice globally.