Global Hydrogen Stalls, Mexico Bets Big on Clean Energy Future

Global hydrogen demand continued to grow in 2024, reaching almost 100Mt, a 2% increase compared with 2023 and broadly in line with global energy demand growth, according to the International Energy Agency’s Global Hydrogen Review 2025. But while consumption in traditional applications such as refining and industry expanded, demand from new uses, the kind expected to drive the clean energy transition, remained negligible, accounting for less than 1% of the total.

The IEA’s report highlights the paradox facing hydrogen. While it has been championed as a cornerstone of decarbonization strategies, its production and use remain overwhelmingly fossil-based. In 2024, hydrogen production consumed 290 billion m3 of natural gas and 90Mt of coal equivalent. Low-emissions hydrogen output grew by 10%, putting it on track to reach 1Mt in 2025, yet its share of total production remains below 1%.

The sector’s growing pains were further emphasized this year by the first-ever decline in potential low-emissions hydrogen production by 2030 based on announced projects. Delays and cancellations across Africa, the Americas, Europe, and Australia mean announced capacity has fallen to 37Mt/y by 2030, compared with 49Mt/y projected in last year’s review. Electrolysis-based projects were responsible for more than 80% of that drop.

Yet despite the setbacks, the IEA points to a sector that is still maturing. More than 200 projects have reached final investment decisions (FIDs) since 2020, compared with only a handful of demonstrations before that. Innovation is accelerating across the hydrogen value chain, and the number of projects with firm commitments grew by nearly 20% this year, now representing 9% of the total pipeline.

“While the uptake of low-emissions hydrogen is not yet meeting the ambitions set in recent years, there are still notable signs of growth,” the agency noted. “In the early stages of adopting new technologies, there are often moments of strong progress as well as periods of sluggish development.”

Policy Gaps and the Cost Challenge

The IEA’s analysis emphasizes that the cost gap between low-emissions hydrogen and unabated fossil-based hydrogen remains the most critical barrier. Falling natural gas prices since the 2022–2023 peak, combined with higher electrolyzer costs, have widened the gap in many regions, making government support indispensable.

However, the agency projects that by 2030, renewable hydrogen in China could be cost-competitive thanks to lower technology and capital costs. In Europe, high carbon prices and abundant renewable resources are expected to narrow the differential. In contrast, in the United States and the Middle East, where natural gas is cheaper, carbon capture and storage is likely to be the more competitive pathway for producing lower-carbon hydrogen.

Momentum for hydrogen offtake agreements slowed in 2024, with 1.7Mt/y in new deals compared with 2.4Mt/y in 2023. Refining, chemicals, and shipping continued to dominate demand creation. While tenders for hydrogen use in steelmaking stalled, successful tenders in refining and fertilizers underpinned new projects in Europe and India.

Against this backdrop, the IEA is urging governments to recalibrate their strategies. Among its updated recommendations are to focus support schemes on shovel-ready projects targeting existing applications; accelerate demand creation in sectors like refining, shipping, and fertilizers; expedite infrastructure development by streamlining permitting and regulation; strengthen public finance tools to de-risk early-stage projects; and ensure that emerging economies can climb the hydrogen value chain rather than remain export-dependent.

Latin America’s Untapped Potential

For Latin America, IEA’s global conclusions resonate strongly. The region boasts vast renewable energy resources, particularly in solar and wind, which could underpin globally competitive hydrogen production. But structural and policy barriers remain.

“In our region, the potential for adopting this technology is high, particularly given the abundant renewable resources in countries such as Mexico, Chile, Argentina, and Uruguay,” said Yolanda Villegas, Legal Director,Envases, and energy industry expert. “However, significant barriers remain, including the absence of specific regulations, low diesel prices due to subsidies, and limited financing mechanisms for pilot projects or fleet expansion.”

Villegas pointed out that multilateral institutions such as the World Bank and Inter-American Development Bank have begun supporting clean fleet initiatives in polluted urban centers. “Public transportation based on green hydrogen is a growing reality. Its combination of zero emissions, extended range, and operational efficiency makes it a powerful solution for cities seeking to decarbonize their mobility systems without compromising service quality,” she said.

For Villegas, the road ahead requires scaling electrolyzer production, lowering renewable power costs, and developing logistics infrastructure, all while ensuring cooperation between governments and the private sector.

Mexico’s Hydrogen Pipeline

Mexico is fast emerging as a key player in this evolving landscape. According to the Energy Industries Council, the country is tracking more than US$16.7 billion in hydrogen investments, with projects ramping up toward the early 2030s.

“The pipeline begins with a US$330 million project in 2027, followed by three more in 2028 totaling US$2.7 billion, and another three in 2030 worth US$2.5 billion,” said Amanda Duhon, Vice President and Regional Director North and Central America, EIC. “The peak is expected in 2032 with two major projects representing an investment of US$11.25 billion.”

Leading the surge is Copenhagen Infrastructure Partners with its US$10 billion Helax Istmo Green Hydrogen Hub in Oaxaca, designed to run on 3.7GW of solar and wind to produce 900,000t/y of green ammonia for export. Aslan Energy Capital is advancing its ANEM Green Hydrogen and Ammonia Project in Sonora, with planned production of 1.2Mt of ammonia and an offtake contract already secured for 100,000t with a California buyer. Fermaca Networks is investing US$1 billion in a blue ammonia and urea project in Durango, aiming for 600,000t of output.

Beyond the megaprojects, smaller but symbolic initiatives reflect the diversity of Mexico’s portfolio. Ikal Solar’s project in Nuevo Leon aims to produce 124,000t/y of green hydrogen, while state utility CFE’s Puerto Peñasco Solar Plant expansion will add 300MW of solar generation in Sonora. Baja California is also seeing cross-border initiatives, including NH3 Baja’s La Rumorosa project, designed to export hydrogen to California.

A Sector in Search of Strategy

Despite the momentum, industry leaders stress that Mexico still lacks a coherent national hydrogen strategy, which could limit the country’s ability to capitalize on its advantages.

“Green hydrogen is emerging as a key player in the global energy transition, and Mexico is no exception,” said Israel Hurtado, President, Mexican Hydrogen, Storage, and Sustainable Mobility Association. “With a series of projects underway and significant investment, the country is seeking to position itself as a major player in the production and use of this clean energy source.”

According to Hurtado, there are 26 green hydrogen projects underway across 14 states, representing more than US$21 billion in investment. The association estimates these projects could generate 3 million jobs and prevent 53Mt of CO₂ emissions between 2030 and 2050. Investments could total US$60 billion by mid-century, he says.

The association has developed a roadmap and Clean Hydrogen Industrial Strategy that envision building a national value chain spanning electrolyzer manufacturing, hydrogen-powered turbines, and fuel cell vehicles. But for Hurtado, the absence of a national strategy is a pressing concern.

“Unlike other countries that have already drawn up concrete plans, Mexico still lacks a public policy that articulates the development of this industry,” he said. “Collaboration between the government and the private sector will be key. We have proposed specific commitments, from designing a clear regulatory framework and establishing fiscal and financial incentives to guaranteeing access to renewable energy for hydrogen production.”

According to Hurtado, current projects already represent nearly 10% of the funding announced in President Claudia Sheinbaum’s Plan México. “With the right policies, green hydrogen can become a lever for economic and sustainable development,” he said.

Outlook

IEA’s Global Hydrogen Review shows that hydrogen’s global trajectory is facing turbulence. Project delays, stubborn cost gaps, and patchy demand creation are slowing momentum. Yet the report also highlights how quickly the sector can move once enabling conditions fall into place, much like solar PV and wind before it.

Mexico and Latin America illustrate that potential vividly. With billions of dollars in projects announced, growing interest from global developers, and unmatched renewable resources, the region is poised to become a key supplier of low-emissions hydrogen and its derivatives. But as experts note, that promise depends on the ability of governments to provide regulatory clarity, financial support, and strategic coordination.