Dr Emma Guthrie, Chief Executive of the Hydrogen Energy Association, outlines that the HEA’s recently published First Hydrogen Nation Report reveals that the limiting factor is no longer whether we can produce hydrogen, but whether we can generate profitable demand at the pace.
We are extremely proud of the breadth of information, statistical evidence and detailed case studies delivered by our work on the Hydrogen National Status Report, which is based on responses from 142 organizations across the UK hydrogen economy.
This certainly paints a picture of a sector that is resilient and still contributing to the UK.
However, it also highlights the dissatisfaction behind this, primarily indicated by the stop-start nature of deliveries.
On the positive side, over 84% of organizations expect UK hydrogen investment to increase or remain stable over the next 12 months. This is a meaningful indicator of continued appetite despite a difficult macro environment.
However, almost half of respondents feel that the government’s commitment to hydrogen has weakened compared to a year ago, due to a common set of concerns: delays, uncertain timelines and difficulty converting ambition into a pipeline of investable projects.
Perhaps most importantly, the report shows that the hydrogen debate is maturing. The industry is not looking for “more announcements.” We are looking for policy certainty, coordination and demand mechanisms that will enable projects to reach final investment decisions and proceed to delivery.
Frankly, hydrogen has moved from “strategy” to “execution” and execution requires clear and investable signals.
Demand is the bottleneck – and now it’s the priority
Demand creation remains the biggest constraint to UK hydrogen growth.
We have a department that develops capabilities across the production and supply chain. But the project has been hampered by a lack of clarity about where the hydrogen will be used, how demand will be supported and how the infrastructure will be planned.
This report takes a keen look at that challenge.
81% of organizations looking for offtakers say it is difficult to secure hydrogen offtake contracts, and 60% of potential end users say it is difficult to integrate hydrogen into their operations.
These are not abstract statistics. These are the differences between early-stage projects and those that can be financed, built, and operated.
Investors and boards need reliable earnings signals. End users need confidence that hydrogen is available at a planable cost, with a policy framework that supports deployment.
Often the problem is not a lack of interest from end users, but rather a lack of clarity in risk allocation. Who pays for price fluctuations? How are infrastructure gaps resolved? How do we ensure reliability of supply? And how do we align contract terms with real-world investment terms?
If demand is not released, there is a risk of a scenario where operational support exists on paper but deployment is slow in practice.
What policy changes are needed to free up demand?
Hydrogen policy is now at a critical stage. Moving from ambition to deployment requires demand-side mechanisms that allow end users to make the switch and suppliers to invest with confidence.
There isn’t a single lever. It’s a package. Based on industry opinion, the priorities are:
Stronger and clearer demand-side support
End users need incentives and frameworks that reduce “first mover” penalties. This means aligning policy with the realities of industry switching, vehicle transformation, and long asset lifecycles. Strengthen collaboration between departments and provider institutions
Hydrogen cuts across energy, industry, transport, planning, networks and carbon policy. If these are developed in silos, the market cannot integrate. Clearer and more coordinated pathways are needed to coordinate production support, infrastructure planning and demand mechanisms. Infrastructure clarity
Even willing end users will not be able to deploy hydrogen if local infrastructure is uncertain. We need more predictable planning for storage, transportation, and refueling, and a clearer understanding of where and how clusters will be enabled. Realistic contract structure
Feedback from the industry emphasizes the importance of project bankability and risk sharing. Policy mechanisms need to reflect the time period needed to finance and deliver infrastructure and industrial transformation.
Implementation is just as important as design. To deliver new policies, governments and regulators will need the capacity and authority to move at pace, and industry will need a clear understanding of timelines so they can make investment decisions.
Besides demand, what is holding the market back?
While demand is the biggest constraint, the report also points to broader issues that cannot be ignored if scale is desired. These include:
Delivery pace and predictability
Trust is strongly influenced by whether policy announcements lead to timely decisions and implementation. Slow and uncertain delivery times not only delay projects, but also increase costs, reduce headcount, and divert investments elsewhere.
Cost and price uncertainty
The hydrogen economy remains sensitive, especially in early markets. Without clear policy support or long-term signals, end users and investors struggle to plan future price trajectories.
Expand your skills and supply chain
The UK has strong capabilities, but we need long-term confidence to scale up. Supply chains will invest when they believe the deployment is practical and sustainable.
People’s understanding and consent
Hydrogen is often discussed in technical terms. But implementation involves community, planning and public trust. Clear, fact-based communication is essential.
Net zero and what the findings mean for the UK’s goals
Hydrogen is not a silver bullet, but it is an important tool for parts of the system that are difficult to power.
This includes distributable power in certain industrial processes, long-distance transportation applications, and decarbonized systems where flexibility is becoming increasingly valuable.
The report’s findings are important because signals of policy delays and weak demand risk slowing progress in the very areas where hydrogen can deliver meaningful emissions reductions.
From a net zero perspective, the risk is not that hydrogen disappears, but that the UK misses the opportunity to build momentum early enough to capture the jobs, investment and industrial advantage that comes with a first wave of deployment.
From an energy security perspective, hydrogen can play a strategic role in diversifying energy vectors, enabling storage and supporting resilience, especially as we deploy more renewable energy and pursue low-carbon flexibility.
But to achieve that, the UK will need to move beyond pilots to repeatable deployments.
Environmental impacts: what should policies consider?
Hydrogen scaling must be done responsibly. Policy decisions should consider:
Carbon intensity of hydrogen: The value of climate change lies in producing low-carbon hydrogen and securing standards and certifications that support real emissions reductions. System impact: If electricity is used for electrolysis, it should support grid decarbonization, not hinder it. Water use and local impact: Electrolysis requires water, and planning should consider local availability and environmental conditions. Air quality and safety: The use of hydrogen in certain applications requires appropriate controls, standards and monitoring.
The direction of travel must be clear. We need to produce low-carbon hydrogen in the right places, for the right uses, to the right standards, and to do it transparently.
International competitiveness and partnerships
Internationally, the UK remains one of the world’s most attractive hydrogen investment destinations, ranking second only to Germany in respondents’ perceptions.
This is a strong position and reflects the UK’s capabilities, institutions and potential market size.
But charm alone is not enough. The report shows growing concern that competing countries are accelerating the transition from ambition to implementation. In global markets, capital and talent are fluid. Projects may be able to move if other countries provide a clearer demand framework and faster delivery times.
International partnerships can accelerate progress through technical cooperation, sharing standards, developing cross-border supply chains, or learning from market design.
The UK should be pragmatic and work together to strengthen domestic capacity and enable faster deployment, while ensuring policies support the growth of British jobs, skills and industry.
long term vision
Over the next 10-20 years, hydrogen is expected to evolve from a “new market” to a strategic and targeted component of the UK’s energy and industrial system.
The most successful hydrogen economy will be one that focuses hydrogen on the areas where it adds the most value (applications that are difficult to electrify), creates a stable demand framework rather than relying on intermittent funding rounds, develops infrastructure in a planned and coordinated manner, and creates investable pathways that move supply and demand forward together.
Prize money is high in the UK.
The report highlights the striking contrast between the current trajectory and the improved trajectory.
Under existing circumstances, respondents expect around 3,800 hydrogen-related jobs to be created in the UK by 2030.
If the policy environment improves, resulting in faster decision-making, clearer demand signals and better tailored provision, that figure will rise to around 17,000 jobs.
This is a four-fold difference, driven not by technological advances but by policy effectiveness and trust.
Hydrogen is ready to change gears. This field is dedicated, capable and ready to deliver. What we need now is adjustment and pace, and turning the framework we have into results on the ground.
The Hydrogen Energy Association stands ready to work with ministers, officials, MPs and the wider industry to make that happen.
This article will also be published in the quarterly magazine issue 25.
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