In 2024, hydrogen emerged as a climate-friendly alternative to fuel as well as electricity. Promising projects sparked to life on both the production and consumption fronts. Despite Trump’s pro-oil stance, analysts are optimistic about hydrogen’s future in this new year- 2025.
According to BNEF, clean H2 supply is projected to increase 30X and could reach 16.4 million metric tons annually by 2030. This surge is mostly attributed to supportive policies and a flourishing project pipeline.
As we step into 2025, several crucial moments await the low-carbon, clean hydrogen sector. They could be a mix of challenges and opportunities. Analysts also predict an increase in the fructification of significant projects and financial investment decisions this year.
Wood Mackenzie recently released a report identifying some crucial developments in the hydrogen sector for 2025 that one needs to scrutinize. Let’s study it here.
Blue Hydrogen to Dominate the U.S. Market in 2025
- In 2025, the U.S. hydrogen market will focus heavily on blue hydrogen, with over 1.5 million tons per annum (Mtpa) of capacity reaching the final investment decision (FID).
This marks a 10X increase compared to green hydrogen. The report revealed that at least three large-scale blue hydrogen projects are expected to mature this year. With this output, the U.S. has all the potential to become the world’s leading blue hydrogen producer.
Green Hydrogen to Face Strong Headwinds in 2025?
Conversely, green hydrogen projects are likely to face major challenges in 2025. FIDs for these projects are expected to fall short of expectations. This could be due to reduced government focus on clean energy under the Trump administration.
Green hydrogen could also face stiff competition for electricity resources from data centers. On top of that, lengthy delays in connecting projects to the grid can slow down the progress.
While some demand will come from companies working toward sustainability goals, short-term growth opportunities are expected to shrink. Many green hydrogen projects, especially those targeting transportation, and heavy industries like steel, and e-fuels, may be delayed or canceled altogether.
- MUST READ: Navigating the Green Hydrogen Hype: IRENA’s Take on the “Silver Bullet” vs. “Champagne” Strategies
Nonetheless, it will Shine Through the Storm…
If not in the U.S. green hydrogen will have its niche in emerging economies like South America, the Middle East, India, and China. Eventually, these economies can launch giga-scale projects in 2025. So how can these nations properly green hydrogen progress globally?
Well, these projects leverage cheap solar and wind power and government incentives that reduce costs and ensure financial viability. For instance, India’s Kakinada project utilizes existing ammonia infrastructure and enjoys government subsidies.
Meanwhile, Saudi Arabia’s Neom Helios project benefits from state-led support and a 30-year offtake agreement with Air Products. These factors add a bonus point to green hydrogen.
Emergence of Chinese Electrolyzers
Most importantly regions like Southeast Asia, the Middle East, and North Africa will benefit abundantly from low-cost renewable energy and affordable electrolyzers from Chinese manufacturers.
By 2025, China can supply at least one-third of orders outside North America and Europe. Competitive pricing, shorter delivery times, and strong manufacturing capacity give Chinese electrolyzers an edge. Moreover, China is also expanding its domestic manufacturing capacity and is most likely to add over 10 GW of capacity this year. This will further strengthen their global presence, especially in areas with fewer trade barriers.
However, entering Europe and North America is more challenging. Trade restrictions and regulatory hurdles, such as the European Union’s 25% content limit for Chinese-made electrolyzers, limit their opportunities. To overcome these challenges, some Chinese companies are localizing production through partnerships and technology licensing.
Green Hydrogen’s Stance in Europe and North America
While blue hydrogen dominates the U.S., green hydrogen is making headway in Europe and North America. The European Commission (EC) also launched a nearly €2 billion hydrogen auction as part of its broader €4.6 billion initiative to accelerate net-zero technologies. This marked a significant step in the EU’s push for renewable hydrogen.
In Germany, HydrogenPro partnered with J. Heinr. Kramer Group to develop green hydrogen projects ranging from 5 MW to 50 MW. They aim to advance green hydrogen projects in Germany, Austria, and the Benelux region. These projects will power industries and the grid, and fuel hydrogen-powered vehicles.
On October 30, 2024, Avina Clean Hydrogen announced its major green hydrogen project in Vernon, California, near the Port of Long Beach. The facility with a capacity of 4 metric tons of compressed green hydrogen daily can decarbonize heavy-duty transport and advance California’s clean energy goals.
Uncontracted Hydrogen Supply to Persist in 2025
The Woodmack report emphasized another interesting scenario that would prevail in this year’s hydrogen economy. It says uncontracted low-carbon hydrogen capacity will remain a challenge due to difficulties in securing offtake agreements. This means out of the 5.5 Mtpa of low-carbon hydrogen projects that have reached FID, ~ 2.5 million tons of hydrogen remains without contracts.
This issue is most common in the U.S. blue hydrogen sector and, to a lesser extent, outside China, where securing agreements is tougher. The Chinese green hydrogen market lacks transparency in offtake contracts. So, the real value of uncontracted investment is not clear.
Moving on European policies like the Emission Trading Scheme (ETS) and the Carbon Border Adjustment Mechanism (CBAM), make it a key market for blue hydrogen and its derivatives. So, developers may keep production uncontracted to benefit from higher prices in Europe.
The U.S. Treasury Simplifies Clean Hydrogen Tax Credit Rules
The U.S. Department of the Treasury and IRS released final rules for the section 45V Clean Hydrogen Production Tax Credit under the Inflation Reduction Act on January 3. These rules encourage clean hydrogen production from some nuclear power plants that are nearing retirement. The hydrogen will be used in fuel cells.
The new rules included some important changes and added flexibility for the clean hydrogen industry. These updates will propel projects ahead and ensure they comply with the emissions requirement laws to qualify for clean hydrogen.
Notably, they will also provide much-needed clarity, investment stability, and adaptability, especially for participants in the Department of Energy’s Regional Clean Hydrogen Hubs program.
The final rules clarify how hydrogen producers, using electricity from diverse sources, natural gas with carbon capture, renewable natural gas (RNG), or coal mine methane, can qualify for the tax credit.
Nuclear for Clean Hydrogen
As the fresh rules enable at-risk nuclear to produce clean hydrogen, it will subsequently boost nuclear energy demand in sectors like AI. S&P Global reported market optimism surged following the announcement, and energy companies saw significant gains.
For instance, Constellation Energy’s shares rose by 3.8%, closing at $251.74, while Vistra experienced a 7% jump, reaching $160.33. NextEra Energy and its renewable energy unit also saw increases of 1.2% and 3%, respectively. Plug Power recorded a 2.6% rise, closing at $2.39. These positive market movements were witnessed after Constellation announced a $1 billion contract to supply nuclear energy to 13 government agencies.
John Podesta, Senior Advisor to President Biden for International Climate Policy mentioned something very significant that sums up all for the U.S. green hydrogen future. He said,
“The extensive revisions we’ve made in this final rule provide the certainty that hydrogen producers need to keep their projects moving forward and make the United States a global leader in truly green hydrogen.”
The post Hydrogen in 2025: The Journey through Progress, Pitfalls, and Policy Shifts appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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