Why Almost Nobody Is Buying Green Hydrogen

Hydrogen’s potential as a carbon-free fuel has provoked no end of excitement. From the deserts of Australia and Namibia to the wind-blasted straits of Patagonia, companies and governments worldwide plan to build almost 1,600 plants to make it. The gas can be produced cleanly by using wind- or solar-powered electricity in a process that splits the molecule from water. There’s only one problem: The vast majority of those projects don’t have a single customer stepping up to buy the fuel.

Among the handful with some kind of fuel purchase agreement, most have vague, nonbinding arrangements that can be quietly discarded if the potential buyers back out. As a result, many of the projects now touted with great fanfare by countries vying to become “the Saudi Arabia of hydrogen” will likely never get built. Just 12% of hydrogen plants considered low-carbon because they avoid natural gas or mitigate emissions have customers with agreements to use the fuel, according to BloombergNEF.