Blue hydrogen faces growing challenges from policy shifts and gas price volatility

Blue hydrogen, produced from natural gas with carbon capture, is facing increasing headwinds. A recent Hydrogen Insight webinar highlighted how changing policies and volatile gas prices are putting pressure on the sector's economics. According to Wood Mackenzie, around four million tonnes of blue hydrogen capacity has reached final investment decision, with over one million tonnes already operational, but the path forward remains uncertain. The sector's reliance on fossil gas makes it vulnerable to price swings, while carbon capture and storage infrastructure adds cost and complexity. Policy uncertainty in key markets like Europe and Asia is also slowing investment. As green hydrogen costs continue to fall, blue hydrogen may struggle to compete without strong regulatory support or a high carbon price.