The conflict in the Middle East has disrupted global production and trade in hydrogen-based products, exposing vulnerabilities in supply chains that underpin fertiliser production, refining and chemicals manufacturing, according to a new IEA report.
The latest edition of the IEA's Global Hydrogen Review finds that the crisis is renewing interest in hydrogen and hydrogen-based fuels as options to strengthen energy security in the long term, although low-emissions hydrogen remains far from the scale required to provide an immediate response.
The report shows that demand for hydrogen worldwide surpassed 100 million tonnes in 2025, while production of low-emissions hydrogen grew by 20% to almost 1 million tonnes. However, persistent barriers including high costs, uncertain demand, complex regulations and a lack of infrastructure continue to slow the development of low-emissions hydrogen, putting 2030 targets announced by governments increasingly out of reach.
"The current crisis has highlighted how deeply economies around the world depend on trade in hydrogen-based products - from fertilisers to fuels and industrial feedstocks - and the significant role of the Middle East in those supply chains," said IEA Executive Director Fatih Birol. "Countries are looking for ways to make their energy systems more resilient and diversified. Low-emissions hydrogen can play an important role in those efforts over time, but stronger policy support and much faster deployment will be needed before it can make a meaningful contribution at scale."
Fertiliser markets have been particularly affected by the conflict in the Middle East. The region accounts for around one-sixth of global hydrogen production and plays a major role in global trade in ammonia, urea, methanol and refined products. Disruptions to production, exports and shipping routes have contributed to shortages and price volatility across global markets. The report notes that urea prices doubled between January and May 2026 as supply disruptions, higher natural gas prices and export restrictions tightened global markets. The resulting increase in fertiliser costs poses risks for food supply chains, especially in import-dependent agricultural economies.
Low-emissions hydrogen production is set to reach a new record in 2026 and exceed 1% of global hydrogen production for the first time. But despite continued progress, investment momentum weakened in 2025, with delays to final investment decisions and a shrinking pipeline of projects highlighting the challenges facing the sector.
Despite continued policy support in some markets, low-emissions hydrogen and hydrogen-based products remain significantly more expensive than conventional alternatives in most markets. While diversification can strengthen energy security, it may also come with additional costs. As such, the pipeline of announced projects for producing low-emissions hydrogen by 2030 has shrunk by around a quarter since last year to 27 million tonnes due to delays and cancellations. Projects that have reached final investment decision or have a strong likelihood of becoming operational by 2030, have fallen from 10 million tonnes in last year's assessment to just above 6 million tonnes.
Demand remains the key missing piece. The volume of low-emissions hydrogen covered by new offtake agreements remained low in 2025, broadly unchanged from the previous year. Only around 20% of newly signed volumes were backed by firm contractual commitments. This lack of demand certainty continues to be cited by developers as one of the largest barriers to investment.
China remains the leader in the deployment of electrolysers, accounting for around 75% of new installations in 2025 as global installed capacity doubled to 4 gigawatts. However, the report finds signs of slowing momentum, with investment decisions for new projects to produce hydrogen via electrolysis declining for the first time. New policy support introduced in late 2025 is expected to help revive growth in the coming years.
In Europe, support programmes and regulatory requirements are helping move projects forward, particularly in refining. Yet slow implementation of key regulations continues to delay investment and scaling up. Elsewhere, progress is emerging in North America, India and Japan, though uncertainty over regulations, incentives and future demand remains a challenge.
The report also highlights the opportunities and challenges facing Africa. The continent has abundant renewable energy resources and significant long-term potential for low-emissions hydrogen production, but deployment remains at an early stage. Only around 6 000 tonnes of low-emissions hydrogen are produced in Africa today, and none of the 34 announced projects targeting operation by 2030 have reached a final investment decision yet.
According to the report, hydrogen could support industrial development, improve food security through domestic fertiliser production and help countries in Africa move up the value chain in sectors such as steelmaking. However, success will depend on reducing financing costs and ensuring that hydrogen strategies are integrated with broader economic development priorities.
