Asia Pacific's clean hydrogen future: diverging pathways, shared challenges
By Thomas Koller
The Asia Pacific region (APAC) is home to the world’s largest hydrogen growth market, some of the most import-dependent energy economies, major industrial demand centres and leading renewable resource bases. Yet the region’s clean hydrogen transition is uneven. China is scaling rapidly, while much of the rest of APAC is still working through challenges around economics with stubbornly high capital expenditure, high inflation and weak investment appetite.
China is the exception and shows what scale can look like
China is moving faster than the rest of the region because it has the conditions other economies are still trying to create - low-cost manufacturing, domestic demand, capital availability and strategic policy alignment – all of which are coming together to form a scaling industry. This is why in DNV’s Hydrogen to 2060 outlook we expect China to account for around 35% of new global clean renewable and low-carbon hydrogen production and use over the coming decades. China’s advantage is not only lower cost. It is the way hydrogen is being embedded into a broader industrial strategy, currently holding 60% of global electrolyser manufacturing capacity. The combination of renewable deployment, electrolyser manufacturing and demand from the chemicals, steel and transport sectors is difficult to replicate quickly elsewhere. Funding for hydrogen in China far exceeds that of other economies.
APAC hydrogen production by route (Mt/yr)
India is an emerging challenger
India is quickly becoming the most important hydrogen growth story outside of China. The economy is anticipating massive future energy demand. For renewable hydrogen, there is strong and coherent government policy support. India is foreseeing renewable hydrogen for both domestic petrochemical refining, the fertilizer and steel industries, as well as exports to other importing regions, especially for ammonia. Costs are being driven down by competitive renewable resources, and several large-scale projects have reported some of the lowest projected production costs for renewable ammonia, with some claims suggesting competitiveness with fossil ammonia.
The rest of the region faces a bankability gap
Australia, Japan, Korea and Southeast Asia do not lack ambition. They lack bankable demand at a price that supports project finance. The challenge is no longer proving hydrogen can be produced. It is proving it can be delivered, certified and used at a cost that customers are willing to pay and investors are willing to finance.
Demand needs to become more certain. While APAC economies differ in the particulars, the likely demand anchors are ammonia and fertilizer production, methanol, refining, iron and steel making, shipping fuels and sustainable aviation fuels. But the economic case only begins to make sense where there is concentrated industrial use and where electrification is difficult, where carbon exposure is rising and in economies where governments see strategic value and invest. The projects that are first to move will be those in locations where renewable power, industrial demand, ports, storage, pipelines, safety regimes and credible offtake come together.
An important regional distinction is transportation. China and India have the scale and geography to connect much of their future hydrogen supply and demand through domestic pipelines, while most cross-border hydrogen trade elsewhere in APAC will ultimately be seaborne.
APAC hydrogen demand by sector (MtH2/yr)
Policy must move from ambition to obligation. Investors need policy that creates demand, reduces price risk, or closes the cost gap. In APAC, the next phase of policy needs to shift from supply-side ambition to demand-side certainty. Projects will not reach final investment decision (FID) because national strategies and targets exist. They will reach FID when customers have a reason or an obligation to buy.
Energy security is becoming an increasingly powerful driver, particularly in import-dependent economies such as Japan, Korea and Singapore. Geopolitical instability, including the Iran war, has reinforced concerns around fuel and fertilizer security and supply chain resilience. For many economies, the case for hydrogen is no longer solely about decarbonization. It is also about reducing reliance on imported fossil fuels, diversifying energy supply and strengthening resilience in a more fragmented energy landscape.
Once the above foundations are in place, the capital will return to hydrogen at scale. Investors are not avoiding hydrogen because the opportunity lacks strategic importance; they are waiting for risk profiles to improve. Capital will flow where demand is contracted, risks are clearly allocated, emissions claims are credible, and policy support is durable beyond political cycles.
What APAC needs next
APAC’s hydrogen future will not be uniform. China is already demonstrating what scale looks like, while other parts of the region are still working through the task of turning ambition into investable projects. The next phase is not about setting more targets and national strategies, but about implementing more specific mechanisms that obligate demand, reduce risk and reward low-carbon molecules. Where energy security, industrial demand, infrastructure and credible policy align, hydrogen can move from promise to execution. Where they do not, projects will continue to struggle.