- IDTechEx forecasts global blue hydrogen market value of US$52bn by 2036 at 22% CAGR.
- Less than 1% of global hydrogen supply is currently low carbon, creating strong growth potential.
- Policy support in the US and EU underpins investment despite project delays and cost pressures
Blue hydrogen is emerging as a critical transitional solution in the shift toward a hydrogen-based economy, particularly as heavy industry and long haul transport seek viable decarbonisation pathways. According to a new report by IDTechEx, the global blue hydrogen market is projected to reach US$52bn by 2036, expanding at a compound annual growth rate of 22%.
The spectrum of hydrogen colors. Source: IDTechEx
Low carbon hydrogen is widely regarded as essential for decarbonising hard to abate sectors including iron and steel, chemicals and heavy mobility. However, less than 1% of global hydrogen production today qualifies as low carbon. In this context, blue hydrogen offers a near term solution by leveraging existing fossil-based production infrastructure while significantly reducing emissions through carbon capture technologies.
Blue hydrogen is produced using conventional methods such as steam methane reforming, autothermal reforming, partial oxidation and coal gasification, combined with carbon capture, utilisation and storage. While grey hydrogen releases CO2 directly into the atmosphere, blue hydrogen captures and stores or utilises most of these emissions, lowering its carbon intensity.
Although green hydrogen produced via electrolysis using renewable electricity remains the long-term objective, high electrolyser costs and increasing competition for renewable power constrain rapid scale up. Blue hydrogen therefore provides a pragmatic bridge, enabling industries to reduce emissions while hydrogen markets and infrastructure mature.
The report titled Blue Hydrogen Production and Markets 2026 to 2036 Technologies Forecasts Players also highlights the growing interest in turquoise hydrogen. Produced through methane pyrolysis, turquoise hydrogen generates solid carbon rather than CO2, eliminating the need for carbon capture. The solid carbon by product can be used in applications such as tyre manufacturing and energy storage materials, positioning turquoise hydrogen as a complementary low carbon pathway.
Steam methane reforming with carbon capture remains the dominant blue hydrogen production route. However, autothermal reforming is gaining traction due to its higher efficiency and greater carbon capture rates. Emerging technologies including methane pyrolysis, biomass-based hydrogen and novel processes such as eSMR are also attracting attention, although they currently account for a small market share.
Policy frameworks are playing a central role in shaping market growth. More than 60 governments have incorporated hydrogen into their energy transition strategies. In the United States, incentives such as the 45V clean hydrogen production tax credit and 45Q carbon capture credit are supporting project development, alongside additional measures aimed at industrial carbon capture. In Europe, mechanisms including the EU Emissions Trading System, the CCS Directive and the Dutch SDE++ scheme are providing further backing.
Despite strong policy signals, the sector faces headwinds. High levelised costs of hydrogen and weak offtake demand have led to delays and cancellations of major projects. High profile examples include the Baytown blue hydrogen complex led by ExxonMobil in Texas and the Teesside facility proposed by BP in the United Kingdom.
IDTechEx notes that while growth across the broader hydrogen economy has been slower than anticipated, the structural drivers for blue hydrogen remain intact. Regulatory pressure to decarbonise, improving carbon capture technologies and expanding hydrogen use across industrial applications are expected to sustain long term market expansion.
Author: Bryan Groenendaal
