Global cumulative committed investment in clean hydrogen has grown roughly 2.8-fold in three years, surpassing $130 billion (approximately 177 trillion won). Japan has embarked on market development with a long-term investment package of ¥15 trillion (approximately 129.5 trillion won) over 15 years, while China is rapidly expanding its supply chain by scaling up hydrogen production. South Korea, by contrast—where energy import dependence stands at 93%—is moving in the opposite direction from major economies by sharply cutting subsidies for hydrogen fuel-cell vehicles and support budgets for refueling infrastructure, according to industry observers.
According to the “Global Hydrogen Compass 2026” report released on the 28th by the Hydrogen Council, a global coalition of hydrogen and energy companies, cumulative committed investment in clean hydrogen projects worldwide rose from $47 billion in 2023 to $110 billion last year and $130 billion this year. More than 570 projects have completed final investment decisions (FID) or entered construction or operational phases, with roughly 90% of these already under construction or in operation.
Actual operational clean hydrogen production capacity has also increased 70% year-over-year to approximately 1.7 million tonnes per annum. Once facilities currently under construction come online, capacity is expected to reach approximately 3.8 million tonnes next year. Investment that advanced past the FID stage over the past year alone reached $30 billion (approximately 40.8 trillion won), with China and Europe accounting for more than 80% of the total net increase.
The way hydrogen is viewed is also shifting. While carbon neutrality and greenhouse gas reduction were the primary rationales in the past, recent energy supply shocks have elevated hydrogen’s importance as a tool for energy security and supply chain diversification. Unlike oil and natural gas, hydrogen can be produced domestically using renewable energy or nuclear power, and even when imported, procurement sources can be diversified across multiple countries.
The International Energy Agency (IEA), in its “Global Hydrogen Review 2026” published in June, devoted separate attention to hydrogen’s energy security role in the wake of the Middle East conflict. The assessment is that renewable-based hydrogen production can help reduce dependence on fossil fuel imports and diversify supply chains concentrated in specific regions. However, the IEA emphasized that current production volumes cannot immediately substitute for energy supply shocks, and that sustained policy support and long-term investment are needed to realize hydrogen’s long-term potential.
In a Hydrogen Council survey of approximately 70 global hydrogen industry executives, 64% said recent energy market shocks had accelerated interest in clean hydrogen. Hydrogen is emerging as a long-term supply chain diversification tool, particularly in Europe, India, and East Asia—regions with high energy import dependence.
Japan and China’s Strategies
Japan, whose energy self-sufficiency rate stands at just 13–15%, has continuously cultivated hydrogen technology since the 1970s oil shocks. It has recently moved beyond the research and demonstration phase into building an actual market through long-term price support and policy financing. Japan revised its Basic Hydrogen Strategy in 2023 and is pursuing a combined public-private investment package of ¥15 trillion over the next 15 years. In 2024, it enacted the Hydrogen Society Promotion Act and launched a mechanism using approximately ¥3 trillion (approximately 25.9 trillion won) in funding to cover the price gap between low-carbon hydrogen and ammonia and existing fossil fuels for up to 15 years.
China’s expansion is also rapid. According to China’s National Energy Administration, hydrogen production last year exceeded 39 million tonnes, up 7.3% from the previous year. Hydrogen fuel-cell vehicles grew more than 30% year-over-year to approximately 32,000 units, and hydrogen refueling stations surpassed 590 locations. As of June this year, the number of refueling stations had grown to approximately 620. Renewable-based hydrogen production capacity is also expanding quickly, with operational and under-construction facilities combined exceeding 1.4 million tonnes per annum.
However, China’s scale expansion does not immediately translate into clean hydrogen expansion. Of last year’s hydrogen production, coal-based output accounted for 23 million tonnes and natural gas-based output for 7.9 million tonnes, meaning fossil fuel-based hydrogen represented approximately 79% of the total. Renewable-based hydrogen production capacity more than doubled year-over-year to over 250,000 tonnes per annum, but the overall production structure remains fossil fuel-centric.
The European Union (EU) is also providing subsidies to renewable hydrogen producers for up to 10 years through the European Hydrogen Bank. In July this year, it announced a draft for the fourth auction, signaling a tender of €500 million (approximately 780 billion won).
South Korea’s Support Cuts
South Korea, by contrast, is seeing institutional support move backward despite holding strong competitiveness in key areas such as fuel cells and water electrolysis. According to the 2027 budget restructuring details released earlier this month by South Korea’s Ministry of Climate, Energy and Environment, hydrogen fuel-cell vehicle subsidies were cut 23% from 576.2 billion won to 445.7 billion won, while hydrogen refueling station subsidies fell 37% from 189.7 billion won to 119.7 billion won.
Demand contraction for hydrogen fuel-cell vehicles is also a concern. The individual consumption tax reduction for passenger hydrogen fuel-cell vehicles will be phased out starting next year and end in late 2028, while the acquisition tax reduction is set to sunset at the end of next year. The value-added tax exemption for hydrogen fuel-cell buses—which applied to city, village, and rural buses—will also be terminated two years earlier than originally planned, at the end of this year.
The hydrogen power generation auction market has shrunk in scale and become less predictable. General hydrogen power generation capacity offered fell from 1,300 GWh to 930 GWh, while clean hydrogen power generation was limited to 500 GWh. Moreover, unlike in the past when multi-year auction volumes were announced in advance, this year only the 2026 volume was confirmed, with the 2027 volume to be decided next year—leaving companies unable to gauge even the market size one year ahead.
The Hydrogen Economy Committee, the government’s control tower for hydrogen policy, has not convened for nearly two years since its seventh meeting in November 2024.
Predictable Markets Are Key
Global investment is growing, but the hydrogen industry has not yet entered a full-scale commercialization phase. According to the IEA, global hydrogen demand exceeded 100 million tonnes last year, but low-emission hydrogen production—which significantly reduces carbon emissions—fell short of 1 million tonnes. That is less than 1% of the total. Only this year is the low-emission hydrogen share expected to exceed 1% for the first time.
Conversely, the fact that the global hydrogen market is just now moving beyond research and demonstration into full-scale commercialization means South Korea still has opportunities to capture market share. With South Korea’s energy import dependence reaching 92.9% last year, hydrogen is important not only for industrial competitiveness but also for energy security.
Kim Hee-sung, a senior researcher at POSCO Research Institute, noted that even though South Korea possesses world-class technology in fuel cells, water electrolysis, and liquefied hydrogen carriers, it will be difficult to translate these into industrial competitiveness without linking them to supply chains, demand, and financing. He suggested creating an initial market centered on large-scale demand sources and attracting private investment through policy financing and government front-loaded investment.
Hydrogen is not an industry where a market emerges simply by building production facilities. Storage and transportation networks, as well as power generation and industrial demand sources, must be built simultaneously, and recovering investment takes a long time. The liquefied natural gas (LNG) market similarly required enormous capital for production and transportation infrastructure in its early days, but grew by sharing investment risk through 20–25 year long-term purchase contracts and financial support.
For this reason, there are concerns that even if the government reorganizes its support system to enhance cleanliness and economic viability, private investment could be dampened if the market size shrinks significantly in the short term or if demand becomes difficult to gauge a few years out. Sudden changes in government support or power market scale could shake not only national-level hydrogen supply chain development plans but also the business plans of companies that made preemptive investments based on those commitments.
The Hydrogen Council emphasized that clear and predictable policies are essential for creating commercially viable demand, driving FIDs, and expanding the hydrogen ecosystem. An industry source said that while major economies are racing to capture the hydrogen market with government backing, South Korea cannot avoid falling behind in the competition if it alone reduces support—and that if companies that invested based on the government roadmap lose direction, the hard-won foundation of South Korea’s hydrogen industry could be shaken as well.
