03.10.2025

GREEN HYDROGEN AND THE ELECTROLYZER MARKET

Context

With the global push toward decarbonization, Green Hydrogen has emerged as a clean alternative fuel. Its production depends on electrolyzer technology, raising strategic concerns about market dominance, supply chains, and energy security. Recent debates question whether China can replicate its solar panel dominance in the electrolyzer market, or whether global diversification will prevent such dependency.

Understanding Hydrogen Types

Hydrogen acts as an energy carrier and, when used, emits only water vapor — making it a non-polluting fuel. Its environmental impact depends on the method of production:

• Grey Hydrogen:
   
  • Derived from fossil fuels (coal or natural gas steam reforming).
     
  • Highly polluting.
     
  • Accounts for 95% of current global hydrogen production.
     
• Blue Hydrogen:
   
  • Produced through fossil fuel-based methods with carbon capture and storage (CCS) to manage emissions.
     
• Green Hydrogen:
   
  • Generated via electrolysis of water using renewable electricity (solar/wind).
     
  • Zero carbon emissions, sustainable, and future-ready fuel.
     

The Role of Electrolyzers

Electrolyzers are the key technology for splitting water (H₂O) into hydrogen and oxygen using electricity.

Main Types of Electrolyzers:

1. Alkaline Electrolyzers (ALK):
    
   • Established and relatively low-cost technology.
      
   • Uses nickel and steel (China has abundant reserves).
      
   • Limitations: Lower efficiency, less effective in handling fluctuating renewable power supply.
      
2. Proton Exchange Membrane (PEM) Electrolyzers:
    
   • Advanced and efficient technology.
      
   • Capable of managing fluctuating renewable energy and producing high-purity hydrogen.
      
   • Constraint: Requires rare and costly metals such as iridium, platinum, and titanium.
      

China’s Market Position

• Current Status: Largest hydrogen producer globally (36.5 million tonnes in 2024).
   
• Green Hydrogen Output: Still limited (~1.2 lakh tonnes).
   
• Strengths:
   
  • Strong production capacity in ALK electrolyzers, supported by nickel and steel reserves.
     
  • Low-cost manufacturing ecosystem.
     
• Weaknesses:
   
  • Heavy dependence on imports of rare metals needed for PEM electrolyzers.
     
  • Limits its ability to dominate advanced electrolyzer markets.
     

Global Strategy and Competition

• India: National Green Hydrogen Mission targeting 5 MMT (million metric tonnes) of green hydrogen production by 2030.
   
• United States, EU, Japan, Australia: Investing in hydrogen technology, electrolyzer R&D, and domestic supply chains to prevent over-reliance on China.
   
• Collaborative Efforts: Focus on diversifying sources of rare metals and encouraging technology innovation for PEM and other next-generation electrolyzers.
   

Significance of the Market

• Energy Transition: Green hydrogen is vital for decarbonizing industries like steel, cement, shipping, and aviation.
   
• Strategic Autonomy: Control over electrolyzer technology influences national energy security.
   
• Global Competition: Unlike solar panels, electrolyzer dominance may be more balanced due to rare metal dependencies and wider R&D competition.

Conclusion

Green Hydrogen represents the future of clean energy, with electrolyzers at its core. While China may dominate low-cost ALK electrolyzers, its reliance on imported rare metals limits full control over the PEM electrolyzer market. This creates space for countries like India, the US, EU, and Japan to carve leadership roles in the global hydrogen economy, ensuring a more multipolar, competitive, and resilient clean