Grey Hydrogen Market Trends Drive Global Industry Toward US$ 222.2 Bn by 2035 Amid Rising Industrial Hydrogen Demand

The global grey hydrogen market was valued at US$ 147.4 billion in 2024 and is projected to reach US$ 222.2 billion by 2035, expanding at a CAGR of 3.8% from 2025 to 2035. The market growth is driven by rising demand for hydrogen in refining and chemical manufacturing, expanding industrial applications, increasing energy consumption, and the continued availability of cost-effective natural gas-based hydrogen production technologies.

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Market Overview

The grey hydrogen market implies the production and sales of hydrogen made by using steam methane reforming (SMR) or coal gasification, with the carbon dioxide emissions produced from those processes not captured. Grey hydrogen represents the largest share of the hydrogen supply globally, as it is produced at low cost and delivered with the existing infrastructure to use it conveniently.

The natural availability and scalability of grey hydrogen makes it a preferable choice for industries where supply of hydrogen tonnage is constant and reliable. However, as the process of hydrogen production occurs with CO2 emissions and therefore is carbon-intensive, grey hydrogen is under looming scrutiny with respect to CO2 emissions and environmental impact.

Analysts' Viewpoint

Grey hydrogen will remain a major part of the hydrogen economy today as it is the least expensive way to obtain hydrogen in large volumes. The primary drivers of any growth in this market are the ongoing demand from existing industries (refining, the manufacture of ammonia and methanol, steel making), the availability of existing gas- and coal-based feedstock, and existing SMR/coal-gasification infrastructure that provides attractive unit economics. The production process, steam methane reforming or coal gasification produces hydrogen and CO2. It is grey as it carries carbon intensity but is immediately deployable and can scale to volume.

From an analyst's assessment, market momentum today is less about new plant built economics (green) and more about transitional dynamics: incumbents are "harvesting" existing assets and selectively investing in decarbonization. Key activities everywhere are retrofits (CCS pilot deployments and modular capture), commercial partnerships to blend blue-grey hydrogen, or establishing long-term offtake contracts to derisk investment.

At the same time, some firms are applying similar hedges by investing in electrolysis capacity, securing renewable power purchase agreements (PPAs), and pursuing only operational efficiency gains in their SMR units. Underlying the momentum for the grey hydrogen market, policy signals (carbon pricing, hydrogen strategies) and the natural gas price trajectories will influence whether grey hydrogen conceptually remains a cost anchor or is sufficiently out-competed by blue/green alternatives.

Analysis of Key Players

The competitive landscape is characterized by production capacity expansion, technological upgrades, strategic partnerships, and investments in hydrogen infrastructure.

Leading companies operating in the global grey hydrogen market include:

• Air Liquide
• Air Products and Chemicals, Inc.
• Chevron Corporation
• Linde plc
• Messer Group
• Reliance Industries Ltd.
• Orsted A/S
• Bharat Petroleum Corporation Ltd
• Indian Oil Corporation Ltd
• JSW Energy Ltd.
• GAIL (India) Ltd.
• Sinopec Corp
• Equinor
• Exxon Mobil Corporation

Strategic investments in hydrogen production facilities, steam methane reforming technologies, carbon capture integration, and industrial hydrogen distribution networks remain key competitive strategies among market participants.

Recent Developments (2024-2025)

• Air Products announced a significant project in November 2023 for blue-hydrogen in Europe in collaboration with ExxonMobil that retrofits hydrogen production with carbon capture for low-carbon hydrogen supply at scale for its industrial customers. This development represents a shift from pure grey production to supply that is capture-enabled blue, while leveraging existing SMR CO2 footprints and integrating CCS infrastructure. For the grey-hydrogen market, this is a conversion of legacy assets to blue supply by incumbents, by maintaining near-term hydrogen volumes in the market considerably below lifecycle emissions levels.

• Linde committed about $1.8 billion to supply hydrogen to OCI's U.S. world-scale ammonia project in Germany in 2023, with sequestration of over 1.7 million tons of CO2 per year. While tailored for the ammonia purpose, this transaction puts a tangible stake in the ground for how SMR delivery systems for hydrogen are now being redeployed to both - long-term offtake and downstream sequestration economics. For the grey hydrogen market, Linde has demonstrated how large gas suppliers can lock-in demand, monetize existing SMR in hours via long-term contracts with customers, and reduce net emissions by deploying capture technologies and CCS.

• Each of these players has been profiled in the grey hydrogen market research report based on parameters such as company overview, financial overview, business strategies, product portfolio, business

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Key Developments & Trends

• Industrial Hydrogen Demand: Continued growth in refining, ammonia, and methanol production.

• Carbon Capture Integration: Existing grey hydrogen plants are increasingly being retrofitted with CCUS technologies.

• Process Efficiency Improvements: Advanced steam methane reforming technologies improve productivity and reduce operational costs.

• Hydrogen Infrastructure Expansion: Increasing investments in storage, transportation, and distribution networks.

• Transition to Low-Carbon Hydrogen: Grey hydrogen producers are preparing for gradual conversion to blue hydrogen production.

Challenges

• High Carbon Emissions: Conventional grey hydrogen production generates significant CO2 emissions.

• Natural Gas Price Volatility: Fluctuating feedstock prices impact production economics.

• Environmental Regulations: Tightening emissions standards increase compliance requirements.

• Competition from Green and Blue Hydrogen: Cleaner hydrogen alternatives are gaining momentum globally.

Opportunities

• Growing Industrial Applications: Expanding demand across chemicals, refining, and steel manufacturing.

• CCUS Deployment: Carbon capture technologies offer opportunities to reduce emissions from existing facilities.

• Emerging Hydrogen Economy: Increasing investments in hydrogen infrastructure support long-term market growth.

• Developing Economies: Industrial expansion in emerging markets continues to drive hydrogen demand.

Market Segmentation

Source

• Natural Gas
• Coal

Production Process

• Steam Methane Reformation (SMR)
• Coal Gasification

End-use

• Energy & Utilities
• Transportation
• Petroleum Refinery
• Chemical Production
o Ammonia
o Methanol
o Methane
o Hydrochloric Acid
o Hydrogen Peroxide
o Others
• Mining
• Glass Manufacturing
• Steel & Metalworking
• Food Processing
• Others

Conclusion

The global grey hydrogen market is expected to witness steady growth through 2035, driven by sustained industrial demand, established production infrastructure, and the cost-effectiveness of conventional hydrogen production technologies. While the global energy sector increasingly shifts toward low-carbon alternatives, grey hydrogen will continue to play a critical role in refining, fertilizer production, and chemical manufacturing. Advancements in production efficiency, digital process optimization, and carbon capture integration will further support market development during the transition toward a cleaner hydrogen economy.

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Frequently Asked Questions

• How big was the grey hydrogen market in 2024?

The grey hydrogen market was valued at US$ 147.4 Bn in 2024

• How is the grey hydrogen industry expected to grow by 2035?

The grey hydrogen industry is expected to grow at a CAGR of 3.8% from 2025 to 2035

• What are the key drivers of the grey hydrogen market?
Cost competitiveness, established infrastructure, industrial dependence and growing hydrogen demand

• Which was the largest segment of the grey hydrogen market in 2024?

Natural gas held the largest share within the source segment and was anticipated to grow at an estimated CAGR of 3.2% during the forecast period

• Which region was the most lucrative in the grey hydrogen market in 2024?

Asia Pacific was the most lucrative region in 2024

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