It feels like a mirage now. Germany’s Chancellor stood in the White House with the US President and extolled the virtues of hydrogen. Not only was hydrogen to replace natural gas in Europe’s largest economy, he said, but it would happen quicker than people expected. It would form part of an industrial strategy that was to modernize German industry and wean the country off imported natural gas.

As Olof Schultz and Joe Biden talked to the media in February 2022, Russia’s armed forces were gathering along the borders of Ukraine. The imminent war became a catalyst for energy security, and hydrogen became a path to energy independence, not just a means of decarbonization. Given that energy security continues to be a strategic imperative, an obvious question follows: where is all the hydrogen?

The priorities of their successors go a long way to explaining why that ambition has not been realised. Renewable energy has been sidelined under Donald Trump’s America First agenda, narrowing the path for green hydrogen. Although the government has supported low-carbon blue hydrogen projects, that backing does not match the billions in investment promised under President Biden’s Inflation Reduction Act.

Germany has tough strategic decisions to make given the proximity of the Ukraine war and its reliance on imported energy. Friedrich Merz has a very different outlook to his American counterpart, but his continued focus on policy “realism” also provides challenges for hydrogen. With government budgets under pressure, his pragmatic approach translates to a more gradual implementation. His government is also more open to blue hydrogen, which is in part a recognition that it is required for essential parts of Germany’s economy, including the expanding military.

New reality for hydrogen

That realism is reflected in the numbers of our latest deep dive report into the hydrogen industry. We forecast the amount of hydrogen produced in 2050 will be 35% lower than we forecast in 2022. Clean hydrogen will see an even bigger decrease of 45%. Like most mainstream forecasters of the energy transition, the high cost of hydrogen and the lack of policy implementation have led us to revise our outlook.

At the same time, this is far from an industry that is standing still. There are around 1500 pilot projects that have been announced across the globe and cumulative hydrogen investment is forecast to be $3.2 trillion by 2060. And from a low base, renewable green hydrogen from electrolysis will grow 100-fold in the same time period.

What now for hydrogen and derivatives?

The closure of the Strait of Hormuz has highlighted the importance of hydrogen and its derivatives to products essential to our society, such as aviation fuel and fertilizer. In the short term, geopolitical events will accelerate final investment decisions in hydrogen projects as governments seek to protect supply chains. This will mean more clean hydrogen in Europe and China, although the later will also turn to coal to meet hydrogen demand.

There is no hiding from the fact that clean hydrogen sits at the expensive end of decarbonization. It requires carrot and stick polices; subsidies and mandates including a credible carbon price to help the industry thrive. In China, hydrogen is gaining momentum thanks to policy support in the 15th Five-Year Plan and the rapid scaling of domestic power generation. Whilst in Europe the case for hydrogen in buoyed by the world’s highest carbon price. Both Europe and China are likely to produce large amounts of clean hydrogen by 2040. That will happen not because clean hydrogen is competitive on its own, but because it will receive the support it needs.

In recent years the Middle East has been building capacity and positioning itself as an export partner to Europe and Asia. It is difficult to predict whether the potential export partners are willing to risk outsourcing their hydrogen production to that region again. In March this year Saudi Arabia’s Neom project, which will become the largest green hydrogen plant, was estimated to be 90% finished and has since signed a commercial deals to distribute its product. The question for the region more broadly is whether there is risk appetite to put shovels in the ground for other largescale projects if energy resilence continues to drive investment decisions.

De-risking hydrogen

De‑risking hydrogen will be an important step in moving the industry from pilots to industrial scale. The challenge is whether it can be delivered at scale with sufficient certainty to attract capital. A confidence gap remains between technical capability and investor willingness, and closing it is essential not only to unlock investment but also to build broader societal acceptance.

Scaling hydrogen is not a matter of copy and paste. As projects move from megawatt pilots to gigawatt facilities, new risks emerge around system integration, safety, and operational complexity that are not visible at smaller scale. At scale, risk no longer sits within individual components, but in the interaction between systems such as power supply, electrolysers, compression, storage, and end use. Closing this gap requires early, structured risk management and greater standardisation.

While much of the public debate focuses on hydrogen production targets and the pace of deployment, the industry's next challenge is building investor confidence. Hydrogen projects are moving from small demonstration plants to industrial-scale facilities that will underpin energy security, industrial decarbonization, and clean fuel production. Yet many developers still face uncertainty around permitting, regulation, standardization, and future demand. Addressing these issues is critical because hydrogen's future depends not only on technological progress, but on creating the confidence required to unlock large-scale investment. As projects mature and operational experience grows, financing costs are expected to fall, helping clean hydrogen compete more effectively and accelerating its role in the energy transition

The transcript of the press conference that day in the White House is like a note in a time capsule, when multilateralism and globalization were still the policy driver. Even if the full ambition has not been met, there is no doubt that clean hydrogen requires the full attention of our policymakers to decarbonize hard-to-electrify sectors and increasingly provide energy and food security.