Hydrogen (H₂) has long been a staple of industrial processes, but its potential as a decarbonization tool remains the subject of intense debate. While its role in refining, steel production and heavy transport is increasingly recognized, fundamental challenges persist—chief among them cost, infrastructure and investment uncertainty.

Speaking at StocExpo 2025, industry leaders and energy transition experts examined H₂’s future, addressing both its promise and the obstacles hindering widespread adoption.

H₂’s role in decarbonization. Low-carbon H₂ is widely viewed as a critical enabler of net-zero ambitions, particularly in sectors where direct electrification is impractical. Eugenia Belloni Pocorob, Lead H₂ and CCUS for the Netherlands at BP, highlighted its importance in reducing refinery emissions.

“Decarbonizing refinery fuel is essential, and low-carbon H₂ provides a clear pathway,” she said. However, she acknowledged the formidable hurdles. “The technical and financial challenges remain substantial, but the opportunity for emissions reduction is undeniable.”

The transport sector is also exploring H₂’s potential. Amit Rao, principal consultant at S&P Global, noted its long-standing use in industrial applications but pointed to new areas of demand. “We are seeing airline manufacturers investigating pure H₂ solutions beyond sustainable aviation fuel (SAF). It may seem far-fetched now, but technological advances happen rapidly,” he observed.

Investment and policy uncertainty. Despite its promise, the high cost of carbon capture and storage (CCS) and H₂ projects remains a significant barrier. “The scale of capital required for CCS projects is enormous,” said Rao. “We have already seen major industry players reconsider their green commitments. The question is: where will the funding come from, and who will drive the transition?”

Investor hesitation is another factor slowing progress. Belloni Pocorob pointed out that traditional investors are reluctant to engage in projects with long payback periods. “The appetite for quick returns does not align with the realities of H₂ investment. We need a different type of investor—one willing to take a long-term view.”

Government intervention has played a decisive role in advancing early-stage projects. Matt Wilson, Head of New Energy Markets at Navigator Terminals, cited the UK’s approach, where government-backed competition frameworks have helped de-risk investments. “By aligning the entire value chain, these initiatives have made projects more viable,” he explained. “Future developments will build on this foundation.”

Geopolitical headwinds and the U.S. factor. The trajectory of H₂ investment is increasingly being shaped by global political dynamics. Rao warned that shifts in U.S. policy could have far-reaching consequences. “We need to wait out the Trump presidency to gain clarity on the long-term outlook. Over the next 4 yr, we are likely to see renewed trade conflicts—not just with China, but across the board. The U.S. is moving towards decoupling from global markets, which will have profound implications for European industry,” he said.

Rising defense spending in Europe could also reshape energy transition priorities. “If governments allocate 3% or more of GDP to defense, other sectors will inevitably face budgetary constraints,” Rao cautioned.

Cautious optimism amid market adjustments. Despite these challenges, the panel remained cautiously optimistic. Belloni Pocorob noted that while the number of H₂ projects has declined, awareness and momentum have grown. “We may have gone from 30 projects to fewer than five, but the fact that some are now moving into construction is significant. The energy transition is not just theoretical—we are starting to see real implementation,” she said.

Wilson echoed this sentiment, highlighting progress in the UK. “The projects we have in place are gaining traction. The policy framework is set, and the risk profile has improved. This momentum will carry through to SAF and other H₂-linked sectors,” he concluded.

H₂ may not yet be the silver bullet for industrial decarbonization, but its role in the energy transition is becoming clearer. Whether it can fully deliver on its promise will depend on sustained investment, policy support, and the resolution of geopolitical uncertainties.