Investment decisions in hydrogen projects have accelerated over the past 12 months but the industry is facing pressures due to regulatory uncertainties, according to an analysis. 

In its latest report, the International Energy Agency said that the current rate of investments made in the sector could increase today's global production of low-emissions hydrogen fivefold by the end of this decade.

Total Production Set to Reach 50 Million Tons

According to IEA, total production could reach almost 50 million tonnes a year by the end of this decade if all the announced hydrogen projects worldwide are materialized. 

However, this would require the hydrogen sector to grow at an unprecedented compound annual growth rate of over 90 percent between now and 2030. 

"The growth in new projects suggests strong investor interest in developing low-emissions hydrogen production, which could play a critical role in reducing emissions from industrial sectors such as steel, refining and chemicals," said Fatih Birol, executive director of IEA. 

The Crucial Policy Setting Factor

Birol added that demand for low emission hydrogen should increase in the coming years to propel the growth of the industry. 

He also underscored the necessity of having better regulatory environment to ensure the development and distribution of such clean energy soiurces. 

"But for these projects to be a success, low-emissions hydrogen producers need buyers. Policymakers and developers must look carefully at the tools for supporting demand creation while also reducing costs and ensuring clear regulations are in place that will support further investment in the sector," said Birol. 

IEA further pointed out that low-emissions hydrogen still faces technology and production cost pressures, with electrolysers in particular slipping back on some of their past progress due to higher prices and tight supply chains. 

The energy agency added that development of technology could reduce the cost of generating low-emissions hydrogen in the future.