IDTechEx experts assess the future of proton exchange membrane (PEM) technology in the hydrogen economy
The long-awaited development of a hydrogen economy is increasingly defined by the promise of a green tomorrow, but at the same time limited by economic constraints. Hydrogen production, particularly for green hydrogen, and hydrogen applications such as PEM fuel cells (PEMFCs) are progressing in parallel, but both face challenges that complicate near-term scalability and commercial success. IDTechEx provides extensive coverage of the hydrogen economy, providing details on every aspect of the value chain, from component suppliers to stack manufacturers and system operators, as well as assessing the challenges holding back this society-changing technology.
Regional trends in green hydrogen production
Hydrogen production, the upstream segment of the hydrogen value chain, is undergoing its own recalibration. Although green hydrogen has been widely promoted as a cornerstone of decarbonization, current market trends reveal a more complex picture. High production costs remain the main barrier to adoption, limiting demand and slowing project development. Gray hydrogen typically costs only $1 to $2 per kg, while green hydrogen production costs range from $5 to $10 per kg, making it economically uncompetitive for most applications. Even as renewable energy costs fall and electrolyzer technology improves, the overall economics of green hydrogen remain a challenge. This has increased the disconnect between announced project pipelines and actual implementation, with many initiatives facing delays or reconsideration.
According to IDTechEx Technology Analyst Dr. Cherie Wong, demand-side uncertainty is a key factor in this movement. Industrial users and other potential off-takers are often hesitant to commit to green hydrogen at current price levels, especially in the absence of strong policy incentives or regulatory obligations. This hesitancy influences investment decisions, creating a cycle where limited demand constrains supply expansion and vice versa.
Policy frameworks play a key role in shaping these outcomes, and their impact varies widely across regions. In some markets, evolving regulations and changing priorities create additional uncertainty and complicate project planning and financing. In other regions, sustained policy support continues to drive development, although not without cost and infrastructure-related challenges. Regional differences are a defining feature of the green hydrogen landscape. Differences in renewable energy availability, industrial demand, and policy support result in different market conditions in each region. As a result, the global hydrogen economy is developing not as a unified system but as a collection of region-specific ecosystems, each with its own constraints and opportunities, all of which are extensively covered by IDTechEx.
PEMFC’s reliance on platinum
These regional trends are also reflected in the PEM fuel cell market, with different adoption patterns and manufacturing capabilities. Some regions are emerging as adoption leaders, while others are focused on supply chain development and innovation. This fragmentation reflects the broader complexity of hydrogen technology expansion in diverse economic and policy contexts. However, Dr Conor O’Brien, principal technology analyst at IDTechEx, argues that high stack costs and limited supplies of high-purity, cheap hydrogen are limiting the adoption of PEMFCs.
At the core of PEM fuel cell performance is platinum, an essential catalytic material to enable the electrochemical reactions that produce electricity. Platinum plays a role in promoting both the hydrogen oxidation reaction at the anode and the oxygen reduction reaction at the cathode, making it essential within PEM systems for both electrolyzers and fuel cells. The difference in fuel cells is that they require the use of platinum in both the anode and cathode. However, this dependence creates significant cost sensitivity. As the price of platinum increases, the economic viability of PEM fuel cells becomes increasingly challenging, especially in applications where cost competitiveness is important.
Efforts are underway to reduce dependence on platinum, and this is one of the most active areas of innovation in the PEM fuel cell space. Advances in catalyst design have focused on increasing the activity of platinum at the atomic level, thereby reducing the total amount required per unit of production. Alloys of platinum and other metals have proven to be particularly effective, increasing catalyst performance while reducing overall loading requirements. Similarly, engineered catalyst structures, such as configurations that maximize active catalytic sites on the catalyst surface, have improved overall catalytic efficiency.
Meanwhile, research into alternative catalyst materials is also progressing. Non-platinum group metal systems offer a potential path to cost reduction, but currently do not match the performance and durability of platinum. As a result, these alternatives remain important elements of long-term research strategies, although they are not yet viable alternatives for most commercial applications. Manufacturing processes are also evolving to address cost pressures. More precise deposition techniques and scalable manufacturing methods reduce material waste and improve consistency across fuel cell components. Although these improvements are incremental, they contribute to broader efforts to reduce system-level costs and increase commercial feasibility.
Despite these advances, platinum remains a critical limitation for PEM fuel cells. Even if payloads decline, aggregate demand is expected to increase as deployment expands, especially in areas such as heavy-duty transportation where fuel cells offer clear operational advantages. This suggests that material constraints will continue to play a central role in shaping the pace and direction of market growth.
Advances in catalyst design focus on increasing the activity of platinum at the atomic level, thereby reducing the total amount required per unit of production.
The hydrogen economy is connected
The interdependence between PEM fuel cells and green hydrogen further complicates the outlook. While fuel cells require a steady supply of hydrogen to operate effectively, increased hydrogen production will depend in part on demand from fuel cell applications. When either side of this relationship encounters barriers, such as cost, infrastructure, or policy, the impact reverberates throughout the value chain. The success of the entire hydrogen economy depends on a coordinated effort to maximize efficiency across the value chain. For example, improving the efficiency of fuel cells and reducing the use of platinum could increase the attractiveness of hydrogen as an energy carrier. Similarly, lowering the cost of green hydrogen could expand the range of viable applications for fuel cells and support broader adoption.
However, the current state of both markets suggests that progress will be gradual rather than exponential. The initial wave of optimism surrounding the hydrogen economy has given way to a more cautious outlook that recognizes the complexities of achieving cost parity with established energy systems. While the long-term potential of hydrogen technology remains, challenges highlight the need for realistic expectations and sustained efforts.
For PEM fuel cells, the path forward depends on continued innovation in catalyst materials, system design, and manufacturing processes. Reducing dependence on platinum remains a core objective, not only for cost reasons, but also for supply chain resilience. Achieving meaningful progress in this field will require both scientific progress and industrial scale-up. The main challenge for green hydrogen is to match production costs to market demand. It will also require the development of infrastructure and supply chains that can store and supply hydrogen at competitive prices.
Ultimately, the future of the hydrogen economy will be shaped by how effectively challenges across both segments can be addressed. The relationship between PEM fuel cells and green hydrogen is interdependent, with advances in one field closely linked to developments in the other. A coordinated approach that considers the entire value chain rather than individual components is therefore essential.
For more information on demand, market trends, and emerging challenges for PEM fuel cell materials and components, see the IDTechEx market report, PEM Fuel Cell Materials 2026-2036: Technologies, Markets, and Players. Learn more about IDTechEx’s other reports and market intelligence products, including PEM electrolyser stacks.
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This article will also be published in the quarterly magazine issue 26.
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