The inaugural Global Hydrogen Compass report: how far has hydrogen come, and where is it going?

This month the Hydrogen Council, a global CEO-led initiative including steering members such as Linde, Hyundai Motor Group, Aramco and ExxonMobil, have released their inaugural Global Hydrogen Compass Report for 2025 (the “Report”). The report provides an overview of the current status and trajectory of the hydrogen industry, aiming to guide business leaders and policymakers. 

The report comes at an interesting turning point for the industry, as the first wave of mature clean hydrogen projects comes online. Following a few years of surge investment, committed investment in clean hydrogen, according to the Report, now exceeds $110 billion across 510 projects, up $35 billion in the past year alone. Total committed capacity now exceeds 6 million tonnes per year (mtpa), of which 1 mtpa is already operational. The hydrogen industry is poised to unlock significant clean energy capacity but sits at a threshold as it enters a phase of maturity.

Key Themes 

• Demand-Side Policy as the Critical Enabler: Demand is the key challenge for scaling the hydrogen industry. While 3.6 mtpa of binding offtake has been secured globally, further infrastructure investment and cost reductions depend on timely policy implementation. CEOs surveyed were optimistic that the existing supply pipeline could capably meet demand once it firms up, but that supply alone won’t drive uptake.

Europe stands out as a policy-driven demand centre, ranking third globally in committed investment ($19 billion), yet accounting for nearly two-thirds of expected global clean hydrogen demand by 2030. This is largely due to the EU’s policy framework, including the Carbon Border Adjustment Mechanism (CBAM), Emissions Trading System (ETS), and Renewable Energy Directive III (RED III), which sets volume targets for non-biological renewable fuels such as hydrogen. RED III alone could support 1.6 mtpa of refining demand in Europe. Top-down factors such as regulations are clearly central to enabling demand; Europe is transitioning from local supply via small/mid-size projects to becoming a net importer, dependent on trade infrastructure. Similarly, China’s leadership in electrolysis deployment is driven by top-down policy and state-owned enterprise support.

In the UK, the government continues to fund Hydrogen Allocation Rounds (HARs). HAR1’s grant-supported projects are due to become operational within the next year, and 27 projects are shortlisted under HAR2. The Hydrogen to Power Business Model is expected to launch next year, as part of the government’s Industrial Strategy, which should boost policy-driven demand. We know however, that there have been delays to the initial intended roll out of Government support and this has slowed the pace of deployment.

• Project Pipeline Maturation and Strategic Selection: Since 2020, the industry has seen a hype phase, with over 1,700 projects announced globally and investment growing at 50% annually. However, the rate of increase has slowed in the last year as the focus has shifted toward the mature end of the pipeline A natural attrition process is underway, with less commercially viable projects being culled; at least 50 projects have been publicly canceled in the last 18 months. The macroeconomic environment—high interest rates, rising energy and equipment costs, and slow climate policy implementation—has forced renewable hydrogen projects to streamline designs and explore creative operating models to maximise resource use and revenue. 
   
• Infrastructure and Import Readiness: Production and distribution investments have driven a 45% increase in committed investment since last year. Before 2021, offtake was mostly local to production sites, but now, domestic output and offtake are increasingly supported by broader infrastructure networks. Europe is investing in import terminals and hydrogen networks, such as Germany’s €18.9 billion Hydrogen Core Network and Yara’s Brunsbüttel ammonia terminal. These are vital for connecting production with demand centres and enabling international trade. The UK’s port infrastructure and proximity to North Sea wind resources position it well for similar developments.
   
• Increasing Regulatory Clarity: EU policies like RED III, CBAM, and ETS are expected to be enforced at the Member State level and potentially adopted by the UK. This will offer greater certainty for investors and developers, helping more projects reach Final Investment Decision (FID). Regulatory uncertainty has previously hindered development, contributing to delays and cancellations. For 38% of publicly canceled projects, developers cited policy and market uncertainty as the main reason.

Conclusion: What’s next for the hydrogen industry?

Despite recent attrition in the project pipeline, the Report takes the view that the hydrogen sector continues to expand. 83% of surveyed leaders according to the Report, believe mature clean hydrogen projects will advance, and the industry will continue to grow. 97% see hydrogen as a critical decarbonisation solution for hard-to-abate sectors and mobility, steel, maritime, and aviation are emerging as key areas. The US and Canada are likely to remain low-carbon leaders in the near term, while China continues to lead in hydrogen technology development. 

In the UK, from what we, Burges Salmon, see in terms of providing legal advice to the sector, there is progress albeit slower than the developers would have liked.  The key will be seeing some of the early HAR projects reach FID and be built out. This will renew impetus in the sector and will reassure government and see a readiness for the UK Government to support upcoming projects at a greater speed. If you would like any further information, or advice related to any of the information in this article, please contact Ross Howells or your usual Burges Salmon contact. 

This article has been written by Ross Fairley, Ross Howells and Sophie Pace-Bonello.