A New Industrial Race Is Under Way

Across the world, governments are treating hydrogen not just as a climate solution but as an economic opportunity. National hydrogen strategies, multi-billion dollar investment programs, and competitive subsidy regimes are emerging from Europe to Asia to the Americas. Understanding the policy landscape helps clarify where the hydrogen economy is heading — and which regions are positioned to lead it.

Why Governments Are Investing in Hydrogen

The policy rationale for hydrogen support rests on several pillars:

  • Decarbonization: Hard-to-abate sectors like steel, shipping, and heavy freight require hydrogen to reach net zero.
  • Energy security: Domestic hydrogen production can reduce dependence on fossil fuel imports.
  • Industrial competitiveness: Nations want to lead in electrolyzer manufacturing, fuel cell technology, and hydrogen infrastructure — potentially the industrial backbone of the 21st century.
  • Export revenue: Resource-rich nations see green hydrogen as a new export commodity.

The European Union: The Most Ambitious Framework

The EU has been the most systematic in developing a hydrogen policy framework. Its REPowerEU plan and the EU Hydrogen Strategy set targets for 10 million tonnes of domestic green hydrogen production and 10 million tonnes of green hydrogen imports by 2030.

Key EU policy tools include:

  • The Hydrogen Bank — a subsidy mechanism to bridge the cost gap between green and grey hydrogen.
  • Important Projects of Common European Interest (IPCEI) — coordinated cross-border hydrogen infrastructure funding.
  • Mandatory green hydrogen quotas in industry and transport under the revised Renewable Energy Directive.

United States: The Inflation Reduction Act Effect

The US Inflation Reduction Act (IRA) of 2022 introduced the 45V clean hydrogen production tax credit — potentially worth up to $3 per kilogram of green hydrogen depending on lifecycle emissions. This is widely seen as one of the most powerful hydrogen policy instruments introduced anywhere in the world.

The US Department of Energy's Hydrogen Earthshot initiative set a goal of reducing clean hydrogen costs to $1 per kilogram by 2031 — the so-called "1-1-1" target. Seven Regional Clean Hydrogen Hubs (H2Hubs) have been designated to anchor hydrogen infrastructure development across the country.

Japan and South Korea: Fuel Cell Technology Leaders

Japan has been pursuing a hydrogen economy longer than most nations. Its Basic Hydrogen Strategy (updated in 2023) targets 12 million tonnes of hydrogen supply by 2040, with major investments in supply chains from Australia, the Middle East, and domestically. Japan is also a world leader in fuel cell technology, with Toyota's Mirai and extensive home fuel cell (ENE-FARM) deployments.

South Korea's Hydrogen Economy Roadmap targets 5.26 million FCEVs and 1,200 hydrogen refueling stations by 2040, supported by major industrial conglomerates including Hyundai and Doosan.

Australia and Chile: The Green Hydrogen Exporters

Nations with abundant renewable energy resources are positioning themselves as future green hydrogen exporters:

  • Australia targets becoming a top-three global hydrogen exporter by 2030, leveraging its solar resources and geographic proximity to Asian markets.
  • Chile has some of the world's best solar irradiance (Atacama Desert) and wind resources (Patagonia), targeting 25 GW of electrolysis capacity by 2030 for export-oriented production.

Key Economic Challenges Policies Must Address

Despite enthusiasm, the hydrogen economy faces real economic hurdles that policy must bridge:

  1. The green premium: Green hydrogen currently costs significantly more than fossil-based alternatives. Subsidies, carbon pricing, and mandates are needed to close the gap.
  2. Infrastructure investment: Pipelines, storage, and refueling networks require coordinated public and private capital.
  3. Demand certainty: Industrial users need long-term price certainty to switch from grey to green hydrogen.
  4. Certification and standards: Global hydrogen trade requires agreed-upon standards for what counts as "green" or "low-carbon" hydrogen.

Conclusion

The global hydrogen policy landscape is moving fast, with major economies competing to build hydrogen industries that could define energy and industrial competitiveness for decades. The combination of climate targets, energy security concerns, and economic opportunity is creating unprecedented levels of government support — the question now is whether that support can be translated into commercially viable, large-scale hydrogen systems quickly enough to matter for the climate.