The global grey hydrogen market is on the brink of a major transformation. As countries step up efforts to decarbonize their energy systems, grey hydrogen is positioned as a crucial transition solution. Produced primarily from fossil fuels, this hydrogen leverages existing infrastructure while seeing a surge in investments aimed at laying the foundations for cleaner forms of hydrogen. It is expected to boom from USD 152.5 billion to USD 206 billion in 2024-2033, growing at a CAGR of 3.4% .
Grey hydrogen is produced by burning coal and reforming natural gas. It accounts for around 94% of hydrogen demand, followed by blue and green hydrogen. It is the lowest cost method of producing hydrogen.
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The economic drivers behind grey hydrogen
The primary driver of the grey hydrogen market is economics. As industries seek cost-effective alternatives to traditional energy sources, grey hydrogen has emerged as a viable option due to its scalability and established production technology. Affordable natural gas prices support the economics of grey hydrogen, especially in resource-rich regions like North America and the Middle East. This economic attractiveness is crucial for industries where low-cost hydrogen is paramount, such as refining, ammonia production and methanol production, which account for a significant share of global hydrogen consumption.
Technological advances in manufacturing
Technological innovation plays a key role in shaping the grey hydrogen landscape. Traditionally, grey hydrogen production is associated with high carbon emissions, but advances in carbon capture and storage (CCS) technologies will significantly mitigate this drawback. The integration of CCS into the grey hydrogen production process will not only help reduce carbon dioxide emissions but also align with global carbon dioxide reduction targets. Such technological improvements will increase the market appeal of grey hydrogen and position it as a transitional energy source to bridge the gap to greener energy alternatives.
Regulatory and policy framework
The emergence of hydrogen as a key element of the energy transition has led to an evolution of regulatory frameworks around the world. Governments are implementing policies to encourage the production and use of hydrogen, including grey hydrogen, through subsidies, tax incentives and direct investment. For example, the European Union’s (EU) Hydrogen Strategy highlights the role of grey hydrogen in achieving early decarbonization targets, especially in sectors where other renewable alternatives are not yet viable. Such regulatory support is crucial to scale up production capacity and drive down costs.
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List of major companies:
- Air Liquide
- Air Products & Chemicals, Inc.
- China National Petroleum Corporation
- Exxon Mobil Corporation
- Indian Oil Corporation Limited
- Iberdrola SA
- Linde plc
- Messer Group GmbH
- Orsted A/S
- Praxair Technology, Inc.
- Reliance Industries Ltd.
- Sinopec
Market expansion and geographic dynamics
The expansion of the grey hydrogen market will also be influenced by geographical and regional dynamics. The Asia-Pacific region, led by countries such as China, India, and South Korea, is expected to witness significant growth due to rising industrial activity and energy demand. Similarly, Europe’s strategic energy diversification policy supports the development of a robust hydrogen economy with grey hydrogen as the primary transitional fuel. Differences in access to natural resources, technological expertise, and regulatory frameworks among these regions will determine the pace and scale of market growth.
Sustainability challenges and environmental impacts
Despite its economic and technological advantages, grey hydrogen faces sustainability challenges, mainly due to its carbon-intensive production process. If not managed with effective CCS technologies, the environmental impacts of grey hydrogen production could undermine its role in the sustainable energy transition. This paradox highlights the need for continuous improvement of production methods and rigorously enforcing policies to reduce emissions. The industry’s response to such environmental challenges will have a significant impact on the industry’s future trajectory and acceptability.
Segmentation Overview
The global grey hydrogen market is segmented based on source, application and region.
By Source
- Natural Gas
- coal
- others
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用途別
- 石油精製
- Chemical
- others
Strategic collaborations and partnerships
To maximize the grey hydrogen market’s potential, strategic collaboration and partnerships are needed. Stakeholders across the value chain, from energy producers to technology developers to government agencies, are joining forces. These partnerships are crucial to share innovations, scale up production capacities and build an integrated hydrogen ecosystem across multiple sectors. Such collaborative efforts are crucial not only to increase the efficiency of grey hydrogen production, but also for the sector to be integrated into the broader energy system.
By region
North America
- America
- Canada
- Mexico
Europe
- Western Europe
- England
- Germany
- France
- Italy
- Spain
- Western Europe there
- Eastern Europe
- Poland
- Russia
- Eastern Europe there
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Asia Pacific
- China
- India
- Japan
- Australia and New Zealand
- South Korea
- ASEAN
- Other Asia Pacific
Middle East and Africa (MEA)
- Saudi Arabia
- South Africa
- UAE
- Other MEAs
south america
- Argentina
- Brazil
- Other South America
Moving Forward: Transitioning to a Hydrogen-Fueled Future
Looking ahead, the role of grey hydrogen in the global energy mix is expected to evolve dynamically. As green hydrogen technologies advance, grey hydrogen is expected to play a key enabler role, providing the necessary infrastructure and market size. The dual focus of expanding grey hydrogen capacity while promoting cleaner forms of hydrogen will shape the sector’s trajectory towards a more sustainable and resilient energy future.
Each of these aspects represents a complex yet promising global grey hydrogen market. As players overcome economic, technical and regulatory challenges, grey hydrogen’s strategic importance continues to grow, highlighting its role in the global effort towards energy sustainability and economic resilience.
Key long-term challenges for the global grey hydrogen market
- What strategies can Chinese hydrogen producers adopt to reduce carbon emissions while remaining cost competitive?
- How will the evolving regulatory landscape and carbon prices affect grey hydrogen market dynamics over the next decade?
- What technological innovations (e.g. advanced CCS and methane pyrolysis) can make grey hydrogen production more sustainable?
- How could the scaling up of green hydrogen production and/or falling renewable energy costs disrupt the long-term viability of the grey hydrogen market?
- What role will emerging markets and developing countries play in sustaining demand for grey hydrogen, given their industrial growth and infrastructure constraints?
Key Data of the Global Grey Hydrogen Market
- Market Growth and Value: The global grey hydrogen market is projected to grow from USD 152.5 billion in 2024 to USD 206 billion in 2033, at a CAGR of 3.4% from 2025 to 2033.
- Production advantages: Grey hydrogen, produced by reforming natural gas, has lower production costs than green and blue hydrogen, and currently accounts for approximately 70% of the world’s hydrogen production.
- Industrial applications: Main demand is in areas such as ammonia production, oil refining, methanol synthesis and steelmaking, where hydrogen is essential for various chemical processes.
- Emissions challenge: Despite its advantages, grey hydrogen production emits 9-12 kg of CO2 per kg of hydrogen, posing a major challenge as the industry aims to transition to net-zero carbon emissions.
- Technology shifts and policy pressures: Governments around the world are tightening carbon regulations, encouraging industry to invest in carbon capture and storage (CCS) and switch to greener fuel alternatives such as blue and green hydrogen.
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