Research Nester, Noida, India

The global gray hydrogen (H₂) market is estimated to grow at a compound annual growth rate (CAGR) of approximately 3.2% from 2025─2037. The market is estimated to garner nearly $227.52 B by the end of 2037, up from about $151.07 B in 2024.

Gray H₂’s role as a transitional solution in the broader H₂ economy is one of the primary drivers for the market’s growth. Gray H₂, derived from fossil fuels like natural gas or coal, serves as a bridge between conventional fuels and cleaner alternatives. In the Net Zero Emissions by 2050 scenario, novel uses in heavy industries and long-distance transport account for one-third of the global H₂ demand by 2030, compared to less than 0.1%. Its widespread use stems from established infrastructure and cost-effectiveness, meeting immediate industrial demands for H₂.

As nations and industries aim for carbon neutrality and sustainable energy solutions, gray H₂ acts as a steppingstone, allowing for a smoother transition. Additionally, advancements in technologies like carbon capture and utilization (CCU) enhance its environmental credentials, making it more attractive as a solution. The transitional role positions gray H₂ as a crucial growth driver by supporting the initial stages of H₂ adoption until cleaner technologies mature and become more widespread.

The global demand for fertilizers will increase  to boost market growth. To produce ammonia, which is used to make fertilizers, gray H₂ is used. Due to the desire to reduce production costs and boost crop yields and nutritional content, there is a substantial global demand for fertilizers. Global population increases, rising purchasing power and disposable income, particularly in developing nations, are to blame for the rise in food consumption. This is anticipated to increase the global need for fertilizer by driving the food business. This is expected to accelerate market expansion. In the petrochemical industry, it is primarily employed in hydrocracking to create petroleum products.

Furthermore, it is used to remove impurities, such as sulfur, to create methanol. The H₂ economy is gaining momentum, as it is utilized in various sectors. Clean H₂ can contribute to reducing the petroleum industry’s carbon footprint, as carbon neutral H₂ could provide low-carbon fuel to heat steam furnaces and, in the long-term, offer feedstock to manufacture petrochemicals. Thus, chemical and petrochemical industries are anticipated to provide significant business opportunities. Industries such as refining, ammonia and methanol production heavily rely on H₂, especially gray H₂ derived from natural gas or coal. As these sectors grow and evolve, the demand for gray H₂ increases, driving market growth.

The global gray H₂ market is segmented into five major regions including North America, Europe, Asia-Pacific, Latin America and the Middle East and Africa region.

Industrial expansion and H₂ demand to drive the market growth in the Asia-Pacific region. The gray H₂ market in the Asia-Pacific region is estimated to garner the largest revenue by the end of 2037. This region presents a dynamic landscape for the market. Countries like China, India, South Korea and Australia drive substantial demand owing to their burgeoning industrial sectors. With its rapidly increasing renewable capacity, China is already the biggest producer and consumer of H₂ in the world. This country's H₂ output is approximately 33 MMtpy, with a capacity of 40 MMtpy. Rapid industrialization fuels the reliance on gray H₂, derived predominantly from coal and natural gas, to meet energy needs. Furthermore, several nations in the region are actively investing in research and development to enhance H₂ production efficiency and reduce emissions through carbon capture technologies. Governments in the Asia-Pacific region are setting ambitious emission reduction targets, driving the exploration of technologies, including carbon capture and storage (CCS).

Growing environmental concerns to propel the growth in the North America region. North America’s gray H₂ market is estimated to garner the highest CAGR by the end of 2037.¹ The U.S. and Canada are key players, leveraging abundant natural gas reserves to produce gray H₂. Historically, industries such as refining, chemicals and ammonia production have relied on gray H₂ due to its cost-effectiveness. Furthermore, in recent years, environmental concerns and a growing focus on reducing carbon emissions have prompted a shift in the H₂ landscape.

Moreover, government incentives and policies supporting clean energy initiatives are driving a gradual transition towards blue and green H₂. Partnerships between public and private sectors, along with advancements in cleaner production methods, are shaping the North American gray H₂ market toward greater sustainability while maintaining energy security and economic stability. As per our analysis, in the U.S., around 10 MMtpy of H₂ are manufactured, which amounts to about 1 quadrillion British thermal units (BTUs) at a yearly consumption rate of just under 1% of America's energy demand.

Amongst these segments, the natural gas segment is anticipated to hold the largest share over the forecast period. In the context of the energy transition, natural gas is often considered a transition fuel due to its lower carbon intensity compared to coal and oil. As countries strive to reduce carbon emissions, the use of natural gas can serve as a bridge between high-emission fossil fuels and renewable energy sources. Policymakers and industries may prioritize natural gas to achieve emissions reduction targets in the short to medium term. According to the International Energy Agency (IEA), natural gas accounted for 23% of global energy-related carbon dioxide (CO₂) emissions in 2020, significantly lower than coal and oil.

Natural gas is a crucial feedstock for various industrial processes, including chemical manufacturing, steel production and petrochemicals. Industries rely on natural gas for heat and power, making it indispensable for processes such as steam methane reforming in H₂ production, ammonia synthesis and other high-temperature applications. Accessible and well-developed infrastructure is crucial for the widespread use of natural gas. Ongoing investments in pipeline networks and liquified natural gas (LNG) facilities enhance the reach and flexibility of natural gas supply, supporting its growth.

Amongst these segments, the ammonia production segment is anticipated to hold a significant share over the forecast period. The development of green ammonia, produced using renewable energy sources, is gaining momentum as a sustainable and low-carbon alternative. According to the Ammonia Energy Association, global green ammonia capacity reached 120,000 metric t in 2020, with ongoing projects aiming to scale up production. Green ammonia is produced through a process that utilizes renewable energy, such as electrolysis of water to produce H₂ for the Haber-Bosch process.

The growth of green ammonia aligns with efforts to reduce the carbon footprint of ammonia production. Ammonia production is closely linked to H₂ production, with green and blue ammonia playing a significant role in the emerging H₂ economy. H₂ is a key input in ammonia production, and as interest in cleaner H₂ sources grows, the ammonia segment stands to benefit from advancements in green and blue H₂ technologies. Industries utilize ammonia as a raw material for the production of various chemicals and materials, driving demand beyond its use in agriculture. Growth in industrial applications contributes to the overall expansion of the ammonia production segment.

Few of the well-known market leaders in the global gray H₂ market that are profiled by Research Nester are Air Products and Chemicals, Inc., Exxon Mobil Corp., Iberdrola, S.A., Air Liquide, Reliance Industries Ltd., Indian Oil Corp. Ltd., Messer SE & Co. KGaA, Ørsted, China National Petroleum Corp., JERA Co., Inc., and other key market players.

Recent developments in the H₂ market. The first H₂ refueling system for passenger trains was introduced by Linde. It is anticipated to refill 14 passenger trains fuelled by H₂, enabling each train to travel 1,000 kilometers without emitting any emissions on a single refuelling. With a daily total capacity of 1,600 kg of H₂, the plant is among the biggest H₂ refueling systems ever constructed. The facility is outfitted with cutting-edge technology to incorporate green H₂ production onsite in the future.

To generate H₂ from natural gas, Air Products and Chemicals Inc. intends to construct a $1.3-B plant in Edmonton. The company has signed a construction-related memorandum of understanding. The deal is still contingent on additional talks for incentives from the federal and Albertan governments, including a $15 MM contribution from the province's emissions reduction fund.

LITERATURE CITED

¹ Research Nester, “Global market size, forecast and trend highlights over 2025-2037,” online: https://www.researchnester.com/reports/grey-hydrogen-market/5477