This Report Provides In-Depth Analysis of the Grey Hydrogen Market Report Prepared by P&S Intelligence, Segmented by Distribution Channel (Cargo, Pipelines), End Use (Methanol Production, Ammonia Production, Petroleum Refining, Transportation, Power Generation), and Geographical Outlook for the Period of 2019 to 2032
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Grey Hydrogen Market Future Prospects
The global grey hydrogen market size in 2024 is USD 134.5 billion, and it is expected to advance at a CAGR of 1.9% during 2025–2032, to reach USD 156.5 billion by 2032.
Grey hydrogen is produced from natural gas through steam–methane reforming (SMR), without any carbon capture. SMR, the cheapest technique to produce H2, removes carbon from methane, though it produces copious quantities of carbon dioxide. However, despite the environmental problems it causes, grey is the leading hydrogen variant in terms of consumption. The easy availability of natural gas is a key reason grey hydrogen is produced in high volumes.
As a feedstock, it is mainly used in petroleum refineries, chemical plants, and fertilizer factories for processes such as hydrogenation and desulfurization. With the growth in the rate of industrialization, particularly in emerging economies, industrial facilities remain the dominant consumer of hydrogen. In industries, the most-common application of this feedstock is the synthesis of ammonia, a key source of nourishment for plants.
Additionally, the market is driven by the growing need for cleaner fuels for cars and aircraft. The burgeoning space exploration sector is another key reason for market growth as H2 serves as a main fuel for rockets. As per the World Economic Forum, by 2035, the global space economy will value USD 1.8 trillion.
Grey Hydrogen Market Trends and Growth Drivers
Adoption of Carbon Capture and Storage Technology Is a Rising Trend
The adoption of carbon capture, utilization, and storage (CCUS) technology to mitigate environmental concerns is a major grey hydrogen market trend.
The production of grey hydrogen via SMR, even though cost-effective, generates a high carbon footprint, which increases the environmental challenges.
To overcome this, numerous companies are implementing CCUS for the CO₂ that is released during hydrogen production.
This way the carbon dioxide is not directly released into the atmosphere and can be used as a feedstock in the chemical industry.
This trend is gaining traction because industries are increasingly finding ways to balance the economic merits of grey hydrogen and their carbon footprint.
The adoption of CCUS technology reduces emissions, while responding to the rising demand for cleaner energy solutions.
Progress in this technology can potentially make a significant contribution to sustaining hydrogen production in the future transition to clean fuels.
New uses of CO2 for producing synthetic fuels, chemicals, and building materials are on the rise.
Considering the current CCUS projects in operation or development, the IEA expects that by 2030, about 15 million tonnes of CO2 per year could be captured for such purposes, including 8 million tonnes for producing synthetic fuel.
Growing Industrial Demand Is a Key Driver
The major drive for the grey hydrogen market is the increasing demand for this commodity for petroleum refining, power generation, transportation, and chemical manufacturing.
It is an important feedstock in petroleum refining processes and ammonia production, both of which are vital for the worldwide supply of fuel, fertilizers, and numerous chemicals.
Grey hydrogen offers an economic advantage because being mainly produced from natural gas through SMR, it is always more affordable for these industries.
As per the International Fertilizer Association, apart from LATAM, nitrogen-based fertilizers are the most-widely used of all in every region.
Since these products are majorly made from ammonia, the growing farming activities would drive the demand for H2 in ammonia plants.
Moreover, 37 hydrogen fuel stations in Europe, 7 in North America, 12 in Japan, and 29 in South Korea became operational in 2023, encouraged by the growing demand for FCEVs.
Methanol is another key product for which hydrogen is the feedstock.
The rising emission concerns in the shipping industry are driving the development of methanol-fueled vessels.
In this direction, A.P. Møller–Maersk A/S has already launched 6 of its 18 methanol container ships, the latest of which was named Alexandra Maersk in October 2024.
Further, the established infrastructure for the distribution of natural gas and hydrogen fuels the growth of the market.
With further industrialization in developing countries, the consumption of this commodity in such vital industries will also increase.
Grey hydrogen, though harming the environment, is still more economical and widely available than the green variant and other renewable fuels.
Environmental Concerns Hamper Market Growth
The major factor restraining the growth of the grey hydrogen market is the negative environmental impact related to the production of this commodity.
The SMR method used for this purpose releases large quantities of carbon dioxide, which leads to climate change.
As per studies, every kg of H2 produced via this method yields 8–10 kg of CO2.
With the increasing emphasis on sustainability and carbon reduction by governments and industries, the environmental issues related to grey hydrogen are gaining importance.
Strict regulations and the pressure to switch to cleaner alternatives, such as green hydrogen, produced from renewable sources; and blue hydrogen, a variant produced with CCUS, are prevalent worldwide.
This, along with the long-term costs of carbon emissions, threatens grey hydrogen's dominance in both the energy and industrial facilities.
Grey Hydrogen Market Analysis
Distribution Channel Analysis
Pipelines constitute the larger category in the market as they are generally the cheapest and most-efficient way of transporting gaseous and liquid fuels over long distances. Pipelines also provide a steady and reliable supply of hydrogen, which is an important factor in industrial applications. Europe already has 1,600 km of hydrogen pipelines, and another 3,000-km-long pipeline, known as the SoutH2 Corridor, is being laid to connect Germany, Austria, North Africa, and Italy. Moreover, by 2040, Europe aims for a 40,000-km hydrogen pipeline network.
Cargo is the faster-growing category in the market, at a CAGR of 2% during the forecast period. This is largely because of the growing demand for hydrogen in areas that do not have an established pipeline infrastructure. Additionally, cargo solutions are flexible in transporting hydrogen to remote regions, especially trucks. As more hydrogen is used in locations far from the pipeline network, emerging markets, and smaller industrial plans, cargo methods, such as tanker trains, trucks, and ships and cylinders, are gaining popularity.
The distribution channels analyzed here are:
Cargo (Faster-Growing Category)
Pipelines (Larger Category)
End Use Analysis
Petroleum refining has the largest revenue share in the market. Hydrogen is widely utilized in refineries for hydrocracking and hydrotreating operations to remove impurities from crude oil, including sulfur, and improve the quality of refined fuels. In 2020, the International Maritime Organization revised its previous limit of 3.5% sulfur mass by mass for in ship fuel oil to 0.5 m/m. The consumption of grey hydrogen in petroleum refining has been supported by the easy availability of natural gas, the feedstock used to produce it, and the voluminous demand for refined petroleum products worldwide.
Transportation is the fastest-growing category in the market due to the increase in the popularity of hydrogen-powered trucks, buses, and trains. Hydrogen fuel cells provide relatively more-efficient and less-polluting energy for long-distance and heavy-duty transportation when compared to traditional fossil fuels. Government policies and incentives also promote the transition to hydrogen-driven vehicles. This will create opportunities for hydrogen refueling infrastructure and expand the adoption of grey hydrogen across the transport industry. Encouraged by these efforts, BMW and Toyota are collaborating to launch FCEVs by 2028. Honda, Hyundai, and many more OEMs also offer these automobiles or are working to launch them within this decade.
The end uses analyzed here are:
Methanol Production
Ammonia Production
Petroleum Refining (Largest Category)
Transportation (Fastest-Growing Category)
Power Generation
Others
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Grey Hydrogen Market Geographical Outlook
Europe is the largest regional market for grey hydrogen.
This region strongly focuses on sustainability and carbon reduction via the decarbonization of industries.
The EU is focusing on increasing hydrogen usage through the European Green Deal and the Hydrogen Strategy for a Climate-Neutral Europe.
Infrastructure is well-established in the region for the production, distribution, and storage of this chemical. Europe's industrial sectors, such as refining and chemicals, are major consumers of hydrogen, which further strengthens its market position.
Asia-Pacific is the most rapidly growing region in the market, with a CAGR of 2.5%.
This growth is fueled by the rapid industrialization in China, India, and Japan, which are large customers of hydrogen for various purposes, including refining, as well as chemical and ammonia production.
APAC countries are also extensively investing in energy transition projects, such as hydrogen infrastructure.
The region sources natural gas both domestically and via exports, which leads to the availability of appreciable quantities of the feedstock for SMR.
The support of the regional governments and the capability to manufacturing on a large scale drive the consumption of cleaner industrial feedstock and transportation fuels.
As per studies, China produces almost 25% of the world’s hydrogen, and the actual volume here continues to rise.
The geographical breakdown of the market is as follows:
North America
U.S. (Larger Country Market)
Canada (Faster-Growing Country Market)
Europe (Largest Regional Market)
Germany (Largest Country Market)
U.K.
Spain
Italy
France (Fastest-Growing Country Market)
Rest of Europe
Asia Pacific (APAC) (Fastest-Growing Regional Market)
China (Largest Country Market)
India (Fastest-Growing Country Market)
South Korea
Japan
Australia
Rest of the APAC
Latin America (LATAM)
Brazil (Largest Country Market)
Mexico (Fastest-Growing Country Market)
Rest of LATAM
Middle East and Africa (MEA)
South Africa
Saudi Arabia (Largest Country Market)
U.A.E. (Fastest-Growing Country Market)
Rest of MEA
Grey Hydrogen Market Share
The grey hydrogen market is highly consolidated as a result of a few numbers of global players catering to various sectors. This is mainly due to limited availability of natural gas throughout the world, variable industrial demand, and difference in the scale of production across countries.
Major Companies in Grey Hydrogen Market:
Linde plc
Air Products & Chemicals Inc.
L'AIR LIQUIDE S.A.
Siemens Energy AG
BASF SE
China National Petroleum Corporation
ExxonMobil Corporation
Indian Oil Corporation Limited
BP plc
Shell plc
China Petroleum & Chemical Corporation
Equinor ASA
Grey Hydrogen Market News
In November 2024, L'AIR LIQUIDE S.A. announced its plan to invest EUR 50 million in a hydrogen supply chain along the Seine Axis in France, to support low-carbon mobility.
In May 2024, Siemens-backed start-up, FertigHy announced the construction of a low-carbon hydrogen and fertilizer plant worth USD 1.4 billion in northern France by 2030. Utilizing renewable electricity, it will yearly produce 500,000 tonnes of nitrogen-based fertilizers, such as ammonia, contributing to sustainable agriculture and energy transition.
In February 2024, Air Products and Chemicals Inc. announced that it is developing energy transition projects worth USD 15 billion in low-carbon hydrogen schemes, under the target set for 2027.
Frequently Asked Questions About This Report
What will be the size of the grey hydrogen market in 2032?+
The size of the market for grey hydrogen will be USD 156.5 billion in 2032.
What are the factors driving the grey hydrogen industry?+
Th growing industrial demand is a major factor driving the grey hydrogen industry.
What is the grey hydrogen market competitive analysis?+
The market for grey hydrogen is consolidated.
Which region generates the highest revenue in the grey hydrogen industry?+
Europe generates the highest revenue in the grey hydrogen industry.
Which is the largest end use in the grey hydrogen market?+
Petroleum refining is the largest end use in the market for grey hydrogen.
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