According to a new report published by Allied Market Research, titled, “Grey Hydrogen Market,” The grey hydrogen market size was valued at $131.8 billion in 2022, and is estimated to reach $174.9 billion by 2032, growing at a CAGR of 2.9% from 2023 to 2032.
Grey hydrogen is produced primarily through the reforming of natural gas or the combustion of coal, without the use of carbon capture and storage (CCS) technologies. In 2022, key trends driving the grey hydrogen market included growing commercial viability, rising global energy demand, expanding industrial applications, and increasing interest in hydrogen as an alternative fuel—particularly within the transportation sector.
However, the market faces significant headwinds. Global efforts to combat climate change and achieve net-zero emissions are accelerating the transition away from fossil fuels toward cleaner alternatives such as renewables, synthetic fuels, nuclear fusion, and green hydrogen. This shift presents a major challenge to the growth of the grey hydrogen market.
In addition, the absence of robust policy frameworks and the complexity of the grey hydrogen value chain further hinder market expansion. The growing adoption of renewable energy sources, along with increasing investment in blue and green hydrogen production, is expected to significantly suppress demand for grey hydrogen in the coming years.
Nevertheless, evolving government policies and strategic corporate initiatives may create niche opportunities within the grey hydrogen market, even as the broader energy landscape continues to shift toward low-carbon solutions.
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Key growth drivers for the grey hydrogen market:
- Abundance and Availability of Feedstock
The widespread availability and relatively low cost of natural gas and coal, the primary feedstocks for grey hydrogen production, drive market growth by ensuring a steady supply. - Established Production Technology
Grey hydrogen production primarily uses steam methane reforming (SMR), a mature and widely implemented technology, which facilitates large-scale production with existing infrastructure. - Rising Industrial Demand
Growth in industries such as refining, ammonia production, and methanol manufacturing fuels demand for grey hydrogen as a critical feedstock and energy source. - Cost Competitiveness
Compared to green or blue hydrogen, grey hydrogen is currently cheaper to produce, making it attractive for industries focused on cost efficiency. - Growing Energy Transition Awareness
While grey hydrogen emits CO₂, it remains an important transitional fuel in the shift towards cleaner energy systems, especially in regions where alternative hydrogen types are less accessible or cost-prohibitive. - Expanding Applications
Emerging uses of hydrogen in transportation, power generation, and chemical sectors increase the demand for grey hydrogen as an immediate source.
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The grey hydrogen market is analyzed based on source, production method, application, and region. By source, it is segmented into natural gas, coal, and others. In 2022, the natural gas segment held the largest share of the grey hydrogen market and is projected to maintain its lead throughout the forecast period in terms of revenue. This segment is also expected to register the highest CAGR, driven by its relatively lower carbon emissions compared to coal. Steam methane reforming (SMR), the primary method for producing grey hydrogen, predominantly uses natural gas as a feedstock. However, despite its lower emissions relative to coal, the SMR process still results in substantial carbon dioxide emissions, contributing to climate change.
The grey hydrogen market is analyzed across key regions including North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. Among these, Asia Pacific dominated the market in 2022, driven by the region’s extensive industrial base and high demand for hydrogen in refining and chemical sectors. Countries like China, India, and Japan are significant contributors to the region’s market growth, supported by abundant natural gas reserves and ongoing investments in hydrogen infrastructure.
North America and Europe also hold substantial shares of the grey hydrogen market due to their advanced industrial frameworks and efforts to optimize hydrogen production methods. However, stringent environmental regulations in these regions are encouraging a gradual shift towards cleaner hydrogen variants, which may impact grey hydrogen demand in the long term.
The Middle East & Africa region is witnessing steady growth, attributed to its rich natural gas resources and expanding petrochemical industries. Meanwhile, Latin America is an emerging market for grey hydrogen, with increasing exploration of natural gas and coal resources supporting production capacity.
Overall, regional dynamics such as resource availability, industrial demand, and regulatory policies significantly influence the growth trajectory of the grey hydrogen market across the globe.
The major players operating in the grey hydrogen industry are Linde plc, Air Liquide, Orsted A/S, Iberdrola SA, Air Products & Chemicals, Inc., Indian Oil Corporation Ltd., Reliance Industries, China National Petroleum Corporation, Exxon Mobil Corporation, and Messer Group GmbH.
Key findings of the study
- By source, natural gas is projected to grow at the highest CAGR of approximately 3.1%, in terms of during the market forecast period.
- By the production method, the steam reformation segment dominated the grey hydrogen market share by over 50% in 2021.
- By application, the ammonia production segment is projected to grow at the highest CAGR of approximately 3.2%, in terms of during the grey hydrogen market forecast period.
- By region, Asia-Pacific dominated the grey hydrogen market and is expected to grow at a CAGR of 3.1% during the forecast period.
