At What Price Does Hydrogen Become Profitable?

The race for low-carbon hydrogen is intensifying, and the question of its breakeven threshold is gaining momentum.

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The G7 countries and China are evaluating hydrogen production costs based on specific economic criteria to determine an acceptable breakeven price for industries and end-users. In the United States, for instance, the heavy transport sector in California sets a breakeven threshold of $5 to $7 per kilogram to compete with diesel, with prices at the pump reaching up to $9 per kilogram. In American petrochemicals, the benchmark is significantly lower: Gulf Coast producers report paying as little as $0.80 to $1 per kilogram for standard hydrogen, complicating the integration of costlier low-carbon options. The price gap between conventional hydrogen and low-carbon hydrogen is due to the technological maturity of amortized sites and the difficulty of passing on the added costs to the final consumer.

Competitiveness Gap in Europe and Japan

In Europe, the production of green hydrogen through electrolysis currently ranges from €2.50 to €5.50 per kilogram, depending on the electricity source (wind, solar, or nuclear). European targets aim for prices between €1.50 and €2 to compete with fossil fuels. Sector studies indicate that in Germany, supply costs for heavy transport can reach €9 per kilogram delivered, while in industry, some initiatives aim to offset the gap through subsidies. In Japan, where hydrogen is seen as a strategic pillar, production costs range between $10 and $12 per kilogram. However, stakeholders are targeting a threshold of around $6 to $7 per kilogram to compete with liquefied natural gas (LNG) and encourage adoption in heavy transport.
Factors influencing prices include the availability of renewable energy, production scale, and the ability to quickly amortize investments. In Japan, small-scale electrolysis projects and heavy reliance on imported fossil fuels keep prices higher than in Europe. The Japanese government supports subsidy programs and funds infrastructure to drive down these costs. For industry players, this represents an energy independence issue, justifying a higher price point compared to other regions.

United Kingdom, Canada, and Italy: Prospects for Cost Reduction

The United Kingdom is investing in blue hydrogen (from natural gas with COâ‚‚ capture) and green hydrogen to bring costs down to ÂŁ2 to ÂŁ3 per kilogram by 2030, compared to ÂŁ4 to ÂŁ6 today for the cleanest solutions. Initial projects, concentrated in industrial hubs such as Teesside and Humber, aim to make this energy vector competitive for steelmaking, petrochemicals, and transport.
Canada, meanwhile, benefits from abundant hydropower resources to produce green hydrogen at around CA$4 to CA$6 per kilogram. Its blue hydrogen, often cheaper, is priced between CA$2 and CA$3 per kilogram, supported by the proximity of gas fields and COâ‚‚ capture sites.
Italy, integrated into the European Union’s global strategy, applies the same price ranges as its neighbors for green hydrogen, around €2.50 to €5.50 per kilogram. The challenges lie in integrating hydrogen into the existing gas grid and establishing supply corridors to support industrial demand. Financial aid and the gradual reduction in the cost of electrolyzers are key factors enabling Italian industries to target lower prices in the coming years.

China’s Central Role and Competitiveness Goals

China, the world’s largest hydrogen producer by volume, is striving to lower the cost of green hydrogen, currently estimated at $3 to $4 per kilogram, through locally produced, lower-cost electrolyzers. Official targets aim for $2.50 per kilogram by 2030 to directly compete with diesel and LNG for heavy transport vehicles. The rapid development of refueling stations, already numbering over 450 nationwide, is accompanied by targeted initiatives in steelmaking and chemicals.
China’s hydrogen competitiveness is supported by its market size, declining equipment manufacturing costs, and government-driven momentum. Industries such as hydrogen-based steel production benefit from massive investments to accelerate the transition. However, questions remain about reducing emissions from gray hydrogen, which is cheap and widely used.

Sectoral Impacts and Industrial Trade-Offs

Several industries in the G7 and China see low-carbon hydrogen as a future lever, but the main obstacle lies in the price gap compared to natural gas or other traditional fuels. The heavy transport and chemical sectors are sensitive to even minor cost increases, requiring a precise breakeven threshold. In the U.S., Gulf Coast petrochemicals favor gray hydrogen priced between $0.80 and $1 per kilogram, making it difficult to integrate a green option that can cost double or triple. In Japan and Canada, subsidies are deemed essential to encourage industries and municipalities to adopt hydrogen solutions.
Public policies play a significant role in guiding investments and setting target prices, particularly through tax credits, guaranteed rates, or demand-support mechanisms. Industrial stakeholders hope to amortize their facilities more quickly and justify higher breakeven costs. Potential benefits could include massive COâ‚‚ emission reductions, more diversified energy supplies, and better resilience to fossil market volatility.

Viridien takes a strategic stake in Mantle8 to boost natural hydrogen exploration across Europe, the Middle East and Africa by combining geological data and seismic detection technologies.
A partnership between AquaVentus and Hydrogen Scotland aims to connect Scottish offshore wind farms to a cross-border green hydrogen production and export infrastructure in the North Sea.
Electric Hydrogen announces the acquisition of Ambient Fuels and an alliance with Generate Capital to offer up to $400 mn in hydrogen project financing worldwide starting in 2026.
Hynfra PSA strengthens its presence in West Africa with a $1.5bn green ammonia project, backed by the Mauritanian government, with commercial operations expected to start by 2030.
Over 500 hydrogen projects are now under construction or operational worldwide, with total committed investments reaching USD110 billion, representing an increase of USD35 billion in one year.
From 2029, Verso Energy will supply hydrogen produced in Moselle to steel group SHS, supported by a cross-border pipeline and an industrial investment exceeding €100mn.
The success of SGN’s test on a gas pipeline converted to hydrogen confirms Terra Firma Energy’s technological choices, with sites already equipped to accommodate this type of energy investment.
Lhyfe has started supplying Essent with renewable green hydrogen under a multi-year contract, marking a major commercial debut in the Netherlands for the French producer.
The Dutch government grants major funding to RWE to develop an offshore wind-powered electrolysis facility, marking a key step in the OranjeWind project.
ScottishPower pauses its renewable hydrogen projects in the United Kingdom, despite receiving public subsidies, citing a lack of commercial viability under the HAR1 programme.
thyssenkrupp nucera has completed the purchase of key assets from Green Hydrogen Systems, strengthening its position in pressurised alkaline electrolysis for industrial hydrogen production.
GH2 Solar Ltd partners with AHES Ltd to build an electrolyzer plant in Gwalior, targeting 500 MW capacity by 2030 with $19mn government support.
A cooperation agreement, a bilateral carbon-credit mechanism and converging standards lay the ground for India→Japan hydrogen and ammonia flows, with volume targets, price-support schemes and first export projects scaling up.
Hydrogen offtake agreements are multiplying, with Germany and Japan leading, mobilizing producers and industrial buyers in a still nascent but already highly competitive market.
Vema Hydrogen mobilise des experts internationaux pour accélérer la mise sur le marché de son hydrogène minéral, alors que l’entreprise prévoit de forer ses premiers puits pilotes en Amérique du Nord d’ici la fin de l’année.
First Public Hydrogen Authority opens a request for proposals to transport gaseous and liquid hydrogen across California, with a deadline set for September 12.
US-based manufacturer Ohmium unveils a new generation of modular electrolysers integrating all production systems within a reduced footprint, aiming to lower installation and operating costs for green hydrogen.
ABO Energy and Hydropulse join forces to develop decentralised green hydrogen production units in Europe, with Spain and Finland as priority markets.
Next Hydrogen secures two separate loans, including one from its executives, to consolidate liquidity and continue operations while evaluating long-term financial solutions.
Metacon receives EUR 14.9 million from Motor Oil Hellas for the approved delivery of ten electrolysis units, marking the first stage of a strategic industrial project in Greece.

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