In 2023, nearly all hydrogen consumed in the European Union was still produced from fossil fuels, despite four years of increasingly ambitious hydrogen strategies and tens of billions of euros in pledged public support. This single data point captures the core tension shaping today’s hydrogen geopolitics: political momentum has accelerated faster than technology deployment, cost reduction, and demand formation.
Across major economies, hydrogen is no longer framed merely as a decarbonisation tool. It has become an instrument of industrial policy, energy security, and geopolitical positioning. Yet the strategies outlined by governments reveal structural contradictions between climate ambition, fiscal capacity, and the realities of global supply chains.
The politics of production pathways sit at the centre of these contradictions. While renewable hydrogen via electrolysis is widely presented as the end goal, most countries are hedging. The European Union formally prioritises renewable hydrogen but remains internally divided over the role of nuclear-powered electrolysis and fossil-based hydrogen with carbon capture. The United States and Japan have taken more permissive approaches, supporting multiple production pathways to accelerate scale. Fossil fuel exporters view blue hydrogen as a means to preserve existing gas value chains while adapting to decarbonisation pressures. These choices are not technical preferences alone; they shape competitive advantages and determine which countries can monetise existing assets during the transition.
Technology competition reinforces these geopolitical fault lines. Europe retains a strong position in advanced hydrogen engineering and system integration, but China has emerged as a dominant low-cost supplier of alkaline electrolysers. This mirrors earlier dynamics in solar photovoltaics and batteries, raising concerns over strategic dependence. At the same time, supply chains for critical inputs such as platinum group metals introduce new vulnerabilities. Proton-exchange membrane electrolysers offer operational advantages in variable power systems, yet their reliance on scarce materials exposes them to price volatility and geopolitical concentration risks. Technology choice, therefore, becomes inseparable from mineral security and industrial sovereignty.
Hydrogen trade and infrastructure add another layer of complexity. Unlike oil and gas, hydrogen’s transport economics are highly sensitive to conversion losses, infrastructure costs, and regulatory alignment. Pipelines, ammonia shipping, and synthetic fuels each imply different distributions of value creation along the chain. Ammonia, often promoted as the most viable shipping vector, shifts processing and risk upstream, favouring exporters with chemical industry capacity while locking importers into reconversion costs and safety challenges. Control over ports, pipelines, and certification regimes is already emerging as a strategic lever, particularly for large importers.
These supply-side ambitions collide with uncertainty on the demand side. Today, hydrogen is overwhelmingly consumed in refining and chemical production, with future demand projections varying widely depending on assumptions about electrification, policy mandates, and cost trajectories. Most energy system modelling converges on one conclusion: direct electrification is more efficient wherever technically feasible, constraining hydrogen’s role to hard-to-abate sectors such as steel, chemicals, and parts of heavy transport. Nevertheless, national strategies often assume broader hydrogen uptake, amplifying the risk of overcapacity and stranded assets if demand fails to materialise at scale.
This uncertainty raises a fundamental political economy question: who carries the risk. Early-stage hydrogen projects depend heavily on public subsidies, long-term offtake guarantees, and regulatory protection. Governments are effectively underwriting market creation while private actors seek to limit downside exposure. The allocation of these risks is becoming a source of domestic political tension, particularly as hydrogen costs remain higher than expected and compete with defence spending and social priorities.
Industrial decarbonisation strategies further complicate the picture. Access to low-cost renewable hydrogen could trigger relocation of energy-intensive industries, shifting steel, fertiliser, and chemical production toward resource-rich regions. While this offers opportunities for green industrialisation in exporting countries, it fuels fears of deindustrialisation in established manufacturing centres. As a result, many advanced economies are subsidising domestic hydrogen production despite higher costs, prioritising industrial retention over pure economic efficiency.
Sustainability and equity concerns cut across all these dimensions. Large-scale hydrogen production requires land, water, and grid capacity, often in regions that still face electricity access constraints. Export-oriented hydrogen strategies risk reproducing extractive trade patterns if local value creation is limited to energy exports rather than downstream manufacturing. These tensions are increasingly shaping negotiations between prospective exporters and importers, with governments demanding stronger guarantees on local benefits, jobs, and infrastructure investment.
Taken together, the geopolitics of hydrogen are less about a linear transition to a clean energy carrier and more about managing uncertainty in a fragmented global system. Hydrogen is unlikely to replicate the dominance of oil and gas, but it will influence industrial location, trade relations, and technology competition. The gap between strategic narratives and deployment data suggests that the decisive phase of the hydrogen economy will be defined not by announcements, but by how governments resolve cost, risk allocation, and industrial trade-offs under tightening fiscal and geopolitical constraints.
