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Production and Demand Challenges for ‘Green’ Hydrogen

| By Rudy De La Fuente, Industrial Gas Consultants LLC

Burgeoning demand for hydrogen to support decarbonization goals is straining existing supply chains for industrial gases and prompting companies to adapt quickly to the emerging net-zero-carbon economy

The increasing use of hydrogen as a clean energy carrier is causing a transformation in the industrial gas sector — putting the resiliency of supply chains to the test, posing a challenge to the gas-production dynamics of the past and sparking a need for new levels of adaptation and collaboration for the future.

Prior to the recent increase in hydrogen demand, the gas has been a critical feedstock for producing ammonia for over a century, helping to enable global population growth to more than 8 billion people. In addition, hydrogen has been key to vehicle fuel production and is important to the food and pharmaceutical industries.

The traditional methods for producing and utilizing hydrogen are inextricably linked to carbon emissions. Most past and current hydrogen production has been based on steam reforming of natural gas (gray hydrogen). In recent years, producing hydrogen with electrolyzers powered by renewable energy (green hydrogen) has become more important because of its ability to produce H2 from water without CO2 emissions.

Emerging trends in the mobility sector are rapidly increasing demand for green hydrogen, placing new constraints on the hydrogen supply chain. These trends extend to fuel-cell-powered vehicles and to sustainable aviation fuel (SAF), which looks to decarbonize via the power-to-liquids (PTL) route, for example. The greater demand creates additional pressure on a hydrogen market that is already short on molecules and equipment for producing green hydrogen (Figure 1). One thing is certain: while companies adapt their hydrogen strategies against a net-zero backdrop, it will be essential for all industry stakeholders who are looking to prosper in a constantly changing market to keep up with the latest advances.

FIGURE 1. Emerging trends, such as making sustainable aviation fuel via the “power-to-liquids” route, puts pressure on the hydrogen market, which is already short of molecules and equipment

Irrespective of the hydrogen production route (green, blue, turquoise, gray, or others), the gas plays key roles across multiple sectors, and continued demand pressure for this molecule should be expected (for more on the different “colors” of hydrogen, see Refs. 1–3). It is important to explore the implications of a hydrogen demand that outstrips supply, creating challenges in the market, especially via emerging markets in the mobility sector.

H2 supply chain: a complex web

The industrial-gas supply chain, which consists of a complex web of producers, distributors and storage manufacturers, has traditionally centered around a select group of major companies in the hydrogen arena. As nations adopt green hydrogen as part of their decarbonization efforts, these players are struggling to deal with such demand. The demand creates new challenges, such as delays in projects by new market entrants, while simultaneously placing the stability of new hydrogen supply in question. According to recent personal experiences, the lead times for industrial-scale electrolyzers have increased by as much as 50% over the past two years. The increase indicates that the supply chain is under substantial strain as green hydrogen production is scaled up.

Governments around the world are enacting policies and incentives to support the development of green hydrogen technologies, further catalyzing increasing demand. Governmental policies include financial incentives, subsidies, tax credits and regulatory frameworks aimed at promoting renewable energy deployment, electrolyzer manufacturing and hydrogen infrastructure development. Although the policies help to decarbonize economies, they nevertheless create pressure that materially impacts the green-hydrogen supply chain.

Particularly noteworthy is the fact that a new group of market actors, invigorated by the promise of hydrogen, is exerting supply pressure on hydrogen equipment manufacturers. The current spike puts a burden on the restricted manufacturer base (more on this topic is to come), which results in bottlenecks that reverberate across the supply chain. As a result, some orders are delayed for months, or even years. On the other hand, electrolyzers are not the only example of how these disruptions manifest. Case studies have shown that fuel-cell projects have been delayed recently due to a lack of high-purity hydrogen. This demonstrates the practical impact that these disruptions have.

To effectively handle the surge in demand for H2, it is necessary for the industrial-gas supply chain to facilitate collaboration and quickly react to the changing landscape. Potential strategies include increasing the scope of manufacturing capabilities, making investments in technological advancements and cultivating a more diversified supplier network. There have been instances of such successful industry-wide moves beginning to emerge, such as partnerships between gas suppliers and renewable-energy corporations to stabilize the supply of hydrogen. In other situations, businesses that specialize in the distribution of electrons are also following the molecule. An example of this is the renewable-energy company NextEra Energy (Juno Beach, Fla.;, which announced plans for a green hydrogen project last year [4] and reportedly plans to invest $20 billion in the hydrogen market [5].

This is a notable example of how companies that have access to renewable energy, such as NextEra, can effectively carve a path to produce hydrogen that diverges from the industrial gas majors. This is due to the fact that electricity places a heavy burden on green hydrogen projects from an operational expenditure standpoint. Thus, companies that have historically focused on electricity, but have access to renewable electricity can enter the market to supply additional streams of green hydrogen while controlling the bankability of their projects from an expenditure perspective. As a result, companies like NextEra have the ability to supply hydrogen to not only conventional markets, but also new ones that are emerging in the hydrogen mobility sector, for instance.

FIGURE 2. Making sustainable aviation fuel made from carbon dioxide requires pure hydrogen

Demand from mobility sector

In the same way that there are only a few producers of electrolyzers, there are also only a few manufacturers of fuel cells. The market for hydrogen fuel-cell vehicles is beginning to gather pace, particularly when it comes to heavy-duty transportation. It is true that there are new producers of fuel cells, but only a small number of these manufacturers have a lengthy history of being able to produce a trustworthy final product. This can restrict alternatives, given that selecting a company that has been tried and tested reduces investing risks. When it comes to its heavy-duty transportation fleet, truck manufacturer Kenworth Trucks Co. made the decision to implement Toyota’s fuel cell technology as part of their debut. Cummins Inc. (Columbus, Ind.;, a well-known name in the diesel market, recently acquired Hydrogenics, a developer and manufacturer of fuel cell components and hydrogen production equipment. The acquisition has enabled Cummins to have access to both fuel cells and electrolyzers. This alternative method of derisking heavy-duty transportation is a result of Cummins’ strategic acquisition of Hydrogenics.

Additionally, as a result of the developments in this area, a knock-on effect is occurring, in which the demand for fuel cells for heavy-duty transportation is driving the need for carbon-fiber storage containers. Critically, these vessels are essential for reducing the weight of a vehicle, as well as the amount of hydrogen it carries. Nikola Corp., maker of fuel-cell commercial vehicles, has a heavy-duty fleet that represents an example of the ongoing trend toward higher pressure requirements. The fundamental goal of high-pressure hydrogen storage is to give a vehicle a greater range before it is necessary to refill it with hydrogen. Because of this, there is an increased strain placed on the supply of high-pressure equipment. Several new suppliers are increasing their efforts to manufacture carbon fiber vessels in a more expeditious manner to meet the high-pressure requirement being witnessed.

Hydrogen compression-focused businesses are likewise making attempts to fulfill this requirement.

Furthermore, the aviation industry, which also falls under the mobility sector, is displaying an increased requirement for SAF, an essential element of the aviation industry’s attempts to minimize its carbon footprint. The manufacture of SAF is dependent on green hydrogen when using the PTL pathway (there are various means of creating SAF apart from this pathway, however, PTL requires pure hydrogen). Synthesis gas (syngas) can be produced by converting incoming streams of hydrogen and carbon dioxide into syngas, typically in a ratio of 2:1 H2 to CO.

It is essential to detail that the process of manufacturing SAF through the PTL route can be accomplished by the reverse water-gas-shift method, which is a new technological advancement being developed by key industry players, such as Technip Energies. Following this, additional steps, such as Fischer-Tropsch (F-T) synthesis and hydrocracking, are carried out to generate SAF. Currently, SAF accounts for only 3% of the total fuel used in aviation [6]. The aviation sector is under increased pressure to reduce its carbon emissions and make the transition to less carbon-intensive fuels, so demand for SAF among aircraft builders and airlines is increasing.

A recurrent pattern emerges: as the use of SAF becomes more widespread, the demand for the environmentally friendly hydrogen required to manufacture it also rises. However, SAF is just one example of what can be created by the PTL route when utilizing the F-T process, as other derivatives can equally be generated, such as naphtha (which serves many industries), and sustainable diesel for vessels and vehicles.

SAF has proven that it can be utilized as a drop-in replacement fuel, as shown in a recent SAF-powered flight in Japan orchestrated by Velocys plc [7]. More recently, the first transatlantic flight on 100% SAF was recently achieved, which creates a scenario where this market continues to see an uptick. Consequently, the attraction of sustainable fuels using hydrogen coupled with carbon dioxide is increased, since they are able to function within existing mobility infrastructure as a drop-in replacement fuel.

The next ten years will be extremely important to monitor since drop-in fuels have the potential to supply fuels not just for the land and road sectors, but also for the maritime sector. Because drop-in fuels are compatible with the infrastructure, their use in existing vehicles and engines has significant advantages.

While many automobile manufacturers are considering electric vehicles, automaker Porsche is pursuing the use of sustainable synthetic fuels in its internal combustion engines through a process known as methanation [8].

Drop-in fuels can be utilized in traditional combustion engines, turbines and other applications without requiring significant modifications. This compatibility promotes the feasibility and scalability of drop-in fuel adoption across a variety of industries, which in turn makes it easier to make a seamless shift to energy sources that are more environmentally friendly. Such an approach counters that of some developing nations, in which internal combustion vehicles will be banned, representing a seismic shift for the automotive industry, which has relied on combustion engines for over a century. In the case of synthetic e-fuels as drop-in replacements, automobile manufacturers would not have to entirely retool their production lines, nor overhaul their supply chains to meet the growing demand for electric vehicles.

Wave of transformation

The emergence of hydrogen is causing a reevaluation of methods and models that have been in place for a particularly extended period. This, in turn, is creating a wave of transformation to sweep through the hydrogen sector, its supply chain and the future use cases for hydrogen. Currently, the industry’s horizon is teeming with opportunities, as well as challenges (Figure 3). The journey of green hydrogen is still in progress, and each step discussed here contributes to the development of future economies, including a future net-zero economy. Observers and professionals in the sector alike ought to take note of these changes, as they will play a significant role in this decade, and those to come.

FIGURE 3. The hydrogen industry is characterized both by challenges and opportunities

Edited by Scott Jenkins


1. Bailey, M.P., Low-Carbon Hydrogen: Considerting Scale, Chem. Eng., August 2023, pp. 16–20.

2. Ondrey, G. S., Methane Reforming: Solving the Hydrogen Blues, Chem. Eng., October 2023, pp. 13–17.

3. Jenkins, S.C. and Fromm, C., Commercial Progress on Turquoise Hydrogen, Chem. Eng., November, 2023, pp. 12–16.

4. Next Era Energy, Company press release, Apriil 24, 2023,

5. Blunt, K., The Most Valuable U.S. Power Company is Making a Huge Bet on Hydrogen, Wall Street Journal, May 9, 2023,

6. Washington, T., SAF production to triple to 1.5 mil mt in 2024 but progress slow: IATA, S&P Global, December 6, 2023,

7. Velocys, Press release, June 21, 2021,

8. Motor Authority, Porsche fills 911 with first drops from synthetic fuel plant, Classic Cars Journal, December 27, 2022,, an alternative to the F-T approach.


Rudy De La Fuente is vice president at Industrial Gas Consultants LLC (IGC; Dallas, TX; Phone: 713-440-8101; Email: [email protected]). De La Fuente is an accomplished commercial and technology specialist in the industrial sector, with an emphasis on industrial gases, including hydrogen, CO2 and other application niche gases. Additionally, he is highly versed in carbon capture utilization, related to the industrial and chemical sectors. He holds a bachelor’s degree from from the University of Texas-Pan American, and an MBA from DeSales University. Prior to launching IGC, De La Fuente was a commercial manager with Air Products, and actively managed accounts and personnel that bolstered a cash-generative division. After Air Products, he joined WestAir Gases and Equipment, where he successfully launched a new nitrogen services business division. Recently, De La Fuente expanded IGC with a European and American coalition to address net-zero and low-carbon projects.