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Almost 60 major low carbon hydrogen projects including by oil groups BP and ExxonMobil have been cancelled or put on hold this year, as the industry is hit by spiralling costs, policy uncertainty and a lack of buyers.

The projects that have been cancelled or paused had a combined annual output of 4.9mn tonnes, according to data from S&P Global, equivalent to more than four times the world’s installed clean hydrogen capacity.

BP last week pulled out of planned investments in hydrogen plants in Oman and Teesside in north-east England, having abandoned this year a green hydrogen facility that was set to be built in Australia. Exxon last month paused a hydrogen plant in Texas that would have been one of the world’s largest.

Equinor, ArcelorMittal and Vattenfall are among companies that have cancelled or delayed hydrogen plants in the past 18 months, while Shell scrapped an early-stage project in Norway.

The delays highlight issues in scaling up a technology that has long-held promise as a key way of cutting carbon emissions. Low carbon hydrogen — made with either renewable energy and water or gas and carbon capture and storage — has struggled to secure upfront contracts from buyers, with so-called green and blue hydrogen more expensive than the “grey” version derived from fossil fuels without its emissions being captured.

“It’s been a challenging year or two for any company trying to develop [clean] hydrogen projects,” said Murray Douglas, head of hydrogen research at Wood Mackenzie. “The willingness to pay any sort of green premium across all low-carbon technologies has evaporated.”

The consultancy has tracked more than 300 cancelled, stalled or inactive low-carbon hydrogen schemes since 2020, though Douglas said many were speculative or of low quality.

The prospective industry has also been set back by US President Donald Trump’s hostility towards renewable energy projects, leading to cuts in subsidies promised by Joe Biden’s administration, while European nations have been slow to implement their plans.

Low carbon hydrogen attracted attention in the early 2020s as a way to fuel sectors that are hard to decarbonise such as aviation, steel and long-distance trucking, and to clean up major sources of pollution including oil refining and fertiliser manufacturing.

More than 2,600 projects had been announced globally by the end of 2024, according to the International Energy Agency, including big plants in places with abundant solar and wind energy such as Australia, Mauritania and Egypt.

The agency, which estimates that clean hydrogen needs to increase 10-fold by 2035 to meet net zero emission goals to limit global warming, has said just a quarter of projects in the pipeline for 2030 will probably be built by then.

The Hydrogen Council, backed by major industrial groups as well as oil and gas majors such as ExxonMobil, Aramco, Adani and Adnoc, noted that more than $110bn had been committed to about 500 projects globally.

Chief executive Ivana Jemelkova said: “What we are seeing is a natural, expected phase of market maturation — similar to what wind, solar and battery industries experienced in their early scale up, where roughly one in 10 projects ultimately came online.”

But cost remains a problem and green hydrogen made using even cheap renewable energy can cost about double that produced with fossil fuels without the emissions being captured, largely due to the cost of developing the new infrastructure as well as distribution.

Steel maker ArcelorMittal in June cancelled two green hydrogen plants in Germany despite €1.3bn of support from the government, saying green hydrogen was not yet a viable fuel source.

Lagging storage and transport infrastructure saw Vattenfall withdraw from an EU subsidy for an electrolyser scheme in the Netherlands earlier this year, after a pan-European pipeline was delayed.

Policy support is still uncertain in many markets, despite hydrogen receiving at least $10bn in public research and development funding worldwide between 2020 and 2024, according to IEA figures.

Brussels has set a goal for renewable hydrogen to meet 10 per cent of the bloc’s energy needs by 2050 and allocated more than €20bn in subsidies. But member states have been slow to adopt legislation setting shorter-term binding targets, adding to uncertainty, analysts said.

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