To Get more Insights,  Request A Free Sample 

Market Dynamics 

Segmental Analysis 

Driver: Emerging Pervasive Industrial Decarbonization Initiatives Driving Demand for Grey Hydrogen in Energy-Intensive Manufacturing Processes

Industrial decarbonization mandates are propelling the uptake of grey hydrogen market in heavy manufacturing clusters. In 2024, Germany’s refining sector alone estimates 1.8 million metric tons of grey hydrogen consumption to power hydrocrackers and desulfurization units. Meanwhile, Japan’s Nippon Steel is undertaking pilot demonstrations that plan to use 65,000 metric tons of grey hydrogen for partial carbon reduction in blast furnaces. In the United States, a petrochemical hub in Louisiana is slated to incorporate 40,000 metric tons to lower emissions in ethylene plants. The Middle East is also advancing four new large-scale grey hydrogen projects this year to address rising demands from refineries. Manufacturers favor grey hydrogen’s immediate availability and lower capital expenditure as a transitional route for cutting CO2 footprints without interrupting operations.

These initiatives illustrate the growing commitment to near-term emission cuts, even if grey hydrogen’s carbon profile remains imperfect. ArcelorMittal, operating in Spain, expects to consume 35,000 metric tons in 2024 to pilot low-carbon steel production. In India, a cluster of chemical manufacturers in Gujarat grey hydrogen market require 25,000 metric tons to drive partial plant decarbonization. This momentum underscores grey hydrogen’s appeal as a stepping stone while the industry readies cleaner alternatives. Oil majors in the United Kingdom, such as BP, plan to use 45,000 metric tons for near-term refining upgrades. A major pipeline company in Texas is retrofitting 120 kilometers of steel conduit to support expanded grey hydrogen flows. Meanwhile, a large-scale storage terminal in South Korea, with capacity for 20,000 metric tons, is being upgraded to accommodate higher throughput. Ports in Italy are overhauling facilities for expanded grey hydrogen shipments. With these real-world expansions, grey hydrogen is helping companies address immediate CO2 abatement targets. Industry observers anticipate that rising demand from steel, refining, and chemicals will reinforce its market position until large-scale green or blue hydrogen solutions prevail.

Trend: Growth of On-Site Grey Hydrogen Facilities to Ensure Steady Supplies for Modern Critical Industries

Large refineries, chemical complexes, and power plants worldwide grey hydrogen market are installing localized grey hydrogen units to guarantee dependable supply for high-demand operations. In 2024, a leading refinery in Alberta, Canada, plans to commission an on-site steam methane reformer capable of producing 80,000 metric tons of hydrogen for desulfurization processes. In Spain, a fertilizer manufacturer in the Basque region has invested in a compact grey hydrogen plant generating 15,000 metric tons annually to bypass external disruptions. Across the United States, a major ammonia production facility in Iowa recently integrated a 25,000-metric-ton reactor to reduce reliance on trucked hydrogen. In the industrial corridor of Jubail, Saudi Arabia, engineers are constructing a 50,000-metric-ton module next to a petrochemical hub for stable feedstock availability. Such on-site expansions lower transit costs while minimizing the risk of pipeline shortages or port delays.

In Europe, several manufacturers are adding localized grey hydrogen generation to gain greater autonomy. A chemicals producer in Antwerp, Belgium, expects to bring online a 30,000-metric-ton plant in early 2024, supplying raw hydrogen for polymer synthesis. Meanwhile, a major glassmaker in Germany’s Ruhr region aims to incorporate a 20,000-metric-ton unit, replacing conventional gas-fired furnaces. In South Korea grey hydrogen market, a consortium at Ulsan operates a 10,000-metric-ton facility within an existing power station to sustain uninterrupted output during peak demand. These decentralized projects help industrial operators sidestep logistical bottlenecks, especially when external deliveries face capacity constraints. Recent expansions by multinational gas companies also reveal a shift toward smaller-scale hubs that can rapidly ramp up or down. Logistics terminal in Marseille is exploring a 12,000-metric-ton platform for refueling. In Singapore, a floating grey hydrogen barge concept is under development, designed to produce 5,000 metric tons for marine customers. This focus on self-generated hydrogen underscores the practical advantages of constant availability and cost predictability, driving widespread adoption in critical industries.

Challenge: Evolving Infrastructure Limitations Impede Efficient Transport and Scaling of Grey Hydrogen Within Global Markets

Grey hydrogen market’s expansion is often hindered by outdated pipelines, terminals, and storage systems unsuited for large-scale distribution. Approximately 4,500 kilometers of hydrogen pipelines exist across Western Europe, many relying on decades-old steel tubes prone to embrittlement. In 2024, a retrofit initiative in the Netherlands plans to upgrade 300 kilometers of pipeline to handle higher operating pressures. Japan maintains only two dedicated import terminals that collectively manage around 100,000 metric tons from overseas suppliers, forcing industries to rely on spot shipments. In the United States, the Gulf Coast region harbors multiple hydrogen salt caverns, each capable of storing roughly 1 million kilograms, but connectivity to major industrial hubs remains patchy. Meanwhile, India’s largest hydrogen storage site in Rajasthan holds just 40,000 kilograms, challenging the country’s efforts to meet rising demand. These constraints inflate costs and discourage investments in less-developed markets.

Transport by road or sea adds further complexity, as most tanker fleets lack suitable cryogenic systems for large-volume hydrogen movement. A shipping port in Australia grey hydrogen market handles shipments of only 2,000 metric tons monthly due to limited tanker availability. In neighboring New Zealand, a proposed hydrogen export hub estimates a shortfall of 6,000 metric tons because existing maritime carriers cannot meet specialized handling protocols. Across China’s industrial zones, lorry-based distribution struggles with route restrictions, leading to delays and supply gaps. A newly built liquefaction plant in Texas can process 150,000 kilograms daily, yet the region faces bottlenecks in shipping containers rated for extremely low temperatures. In Norway, an engineering firm is retrofitting three maritime vessels to accommodate hydrogen cargo up to 4,500 kilograms each, but expansions remain slow. A rail pilot in Germany can move 3,000 kilograms daily. Without systematic upgrades to pipelines, terminals, and transport fleets, global grey hydrogen markets will remain unevenly supplied, stalling efforts to scale production and usage.

Segmental Analysis 

By Method 

Steam methane reforming (SMR) with more than 68% market share stands out as the mainstay of grey hydrogen production due to its cost-effectiveness, technological maturity, and the global abundance of natural gas as a feedstock. Despite operating conditions at 800 to 1000°C, SMR has benefited from decades of process optimization that reduce capital costs and improve hydrogen yields. The method harnesses methane-rich natural gas and steam in a catalytic reaction, producing high-purity hydrogen alongside carbon monoxide. In the United States, over 95% of the nation’s hydrogen supply is generated through SMR, reflecting a stronghold in established energy markets. Widespread gas pipeline infrastructure and substantial reserves keep feedstock and transport costs lower, reinforcing SMR’s appeal for large-scale industrial adoption. Because natural gas is available at relatively low cost in many regions, SMR remains an economical choice, surpassing coal gasification or conventional electrolysis in cost-competitiveness. Furthermore, SMR’s reliability and capacity for rapid, large-volume hydrogen output suit sectors that operate on tight production schedules.

Demand for SMR-based grey hydrogen market largely stems from industries requiring substantial hydrogen throughput at manageable costs. Refiners use grey hydrogen to eliminate sulfur and other impurities from fuels, while the chemical sector depends on hydrogen for the production of ammonia, methanol, and other key intermediates.The steel industry also employs hydrogen in certain direct reduction processes, though it currently relies more heavily on coking coal. Companies prefer SMR technology thanks to its well-developed supply chain, ease of scaling, and flexible integration with existing site infrastructure. Moreover, ongoing research into carbon capture and storage (CCS) solutions could transform grey hydrogen into a lower-carbon alternative, sustaining SMR’s relevance in evolving regulatory environments. The method’s balance of cost-efficiency, technical maturity, and adaptability satisfies the rigorous demands of high-volume hydrogen consumers, ensuring SMR remains the dominant pathway in today’s grey hydrogen market.

By Application 

Ammonia production stands as one of the largest single consumers of grey hydrogen, commanding over 30% of global grey hydrogen demand due to the extensive use of ammonia in agriculture, chemicals, and other vital industries. Worldwide ammonia output exceeds 180 million metric tons annually, driven largely by fertilizer production, which underpins food security across both developed and developing regions. Grey hydrogen, produced primarily via steam methane reforming (SMR), is integral to the Haber-Bosch process, which synthesizes ammonia from nitrogen and hydrogen at high pressure and temperature. The availability of abundant, cost-effective grey hydrogen ensures that ammonia producers can sustain massive production volumes at stable price points. In nations with well-established natural gas infrastructure, ammonia plants can seamlessly integrate SMR units, reducing logistical complexity. As a result, ammonia manufacturing companies rely heavily on grey hydrogen to maintain operational throughput, balancing product demand with feedstock affordability.

China is a major producer and consumer of ammonia in the grey hydrogen market, underpinned by its vast agricultural sector and extensive fertilizer demand. India and the United States also rank among top producers, fueling domestic consumption while engaging in global ammonia trade. Grey hydrogen remains the dominant choice for these players as it leverages well-entrenched SMR networks with comparatively low capital expenditures. Although new low-carbon alternatives such as green hydrogen are emerging, the price sensitivity of ammonia markets typically favors less expensive feedstocks. This dynamic enables traditional grey hydrogen to remain competitive, particularly where natural gas resources are plentiful and subject to stable pricing structures. Furthermore, ammonia’s critical role in food production places a premium on production reliability, making established grey hydrogen–based processes a risk-averse strategy. 

By End Use Industry

Over 50% of the global grey hydrogen supply is allocated to various chemical processes, reflecting the industry’s continual demand for affordable and high-purity hydrogen in the grey hydrogen market. Many key compounds, including methanol, synthetic hydrocarbons, and certain high-volume specialty chemicals, rely on hydrogen at critical steps in their synthesis. Steam methane reforming (SMR) offers a consistent and economical means of meeting these sizable requirements, since chemical facilities can integrate SMR units directly into their production lines, thereby streamlining feedstock logistics. Moreover, grey hydrogen provides the robust hydrogen flow rates these plants need to operate continuously under high-volume conditions. This synergy allows chemical manufacturers to maintain stable output and cost structures, as natural gas prices tend to remain more predictable compared to other commoditized raw materials. Consequently, SMR-based grey hydrogen has become an integral input, supporting global supply chains that rely on chemical derivatives for plastics, pharmaceuticals, textiles, and beyond.

This dominance in the grey hydrogen market is driven not only by the scale of consumption but also by the versatility of hydrogen in diverse chemical transformations. Grey hydrogen facilitates hydrogenation reactions, breaking down unsaturated chemical bonds to craft new products or refine existing compounds. Large multinational chemical corporations, such as BASF and Dow, adopt grey hydrogen to optimize processes and enhance yield consistency. In regions where natural gas is abundant, on-site SMR plants operate around the clock, ensuring minimal disruption to chemical production. Additionally, many facilities are designed with integrated heat and power systems that harness byproduct steam from SMR, improving overall energy efficiency. While environmental concerns prompt growing interest in cleaner hydrogen alternatives, cost pressures and entrenched technology keep grey hydrogen firmly anchored in the chemical sector. As a result, it maintains a central role in enabling high-volume, cost-effective synthesis of the chemical building blocks essential to modern industrial life.

By Source: Natural Gas as the Primary Feedstock for Grey Hydrogen 

Natural gas remains the primary feedstock for grey hydrogen market, accounting for over 75% of worldwide output due to its abundant reserves and cost advantage over other hydrocarbons. Global natural gas production has risen above 4 trillion cubic meters annually, propelled by robust extraction in North America, Russia, and the Middle East. This expansive supply, coupled with established pipeline networks, reduces transportation overheads and simplifies feedstock procurement for hydrogen producers Steam methane reforming (SMR) capitalizes on this availability, converting natural gas into hydrogen with high efficiency and relatively lower purification expenses. In 2019, global hydrogen output reached around 75 million metric tons, with 95% derived from fossil fuels, a substantial portion of which relied on natural gas By integrating well-tested SMR systems into existing infrastructure, operators can reliably produce large hydrogen volumes critical for chemicals, refining, and other industries. Furthermore, natural gas’s comparatively lower carbon content than coal means fewer byproducts, lowering capital expenses related to carbon handling.

The demand for grey hydrogen market derived from natural gas originates in sectors requiring large and steady hydrogen flows, such as petrochemical refining, fertilizer manufacturing, and methanol production. Giants in the oil and gas industry, including Shell, BP, and TotalEnergies, have positioned themselves as leading producers by leveraging integrated upstream and downstream operations. Meanwhile, specialized industrial gas companies such as Air Liquide, Linde, and Air Products have built dedicated SMR plants to supply hydrogen to refineries and chemical complexes globally. These market participants benefit from both their extensive natural gas portfolios and expansive commercial networks, concurrently expanding usage in emerging economies. This convergence of technical know-how and resource access has allowed them to capture a lion’s share of the grey hydrogen market. As hydrogen consumption continues to surge, natural gas-based SMR remains the dominant production pathway, with strong demand signals reinforcing its role in today’s energy and industrial value chain.

 To Understand More About this Research:  Request A Free Sample 

Regional Analysis: Asia Pacific to Continue Dominating Grey Hydrogen Market

Asia Pacific accounts for more than 45% of global grey hydrogen production and consumption, owing to the region’s rapid industrialization, population growth, and energy-intensive manufacturing sectors Countries such as China, India, South Korea, and Japan lead the pack, leveraging steam methane reforming (SMR) to secure economical hydrogen supplies for their sprawling chemical, refining, and fertilizer industries. China, in particular, exhibits immense demand, fueled by large-scale ammonia production, massive refining capacity, and rising investments in petrochemicals. This surge in demand aligns with the country’s drive to sustain economic growth and elevate living standards, which, in turn, boosts downstream industries reliant on hydrogen. India follows a similar path, emphasizing ammonia-based fertilizers for its extensive agricultural needs, while South Korea and Japan maintain advanced petrochemical and refining bases that require steady hydrogen inflows. The extensive natural gas infrastructure in these economies encourages production of grey hydrogen, reinforcing the Asia Pacific region’s dominance. Furthermore, relatively lower labor costs in parts of Southeast Asia also create favorable conditions for building and operating SMR plants, expanding hydrogen’s regional footprint.

China’s preeminence within the Asia Pacific grey hydrogen market rests on a confluence of resource availability, widespread industrial facilities, and robust policy incentives for chemical expansion. The nation’s abundant domestic coal and emerging shale gas resources, though more carbon-intensive than conventional natural gas, can still be reformed into hydrogen for a variety of applications. At present, SMR remains significantly cheaper than green alternatives, enabling Chinese producers to scale up quickly and keep costs low for end-users. India, trailing closely behind, couples local natural gas with imported supplies to power ammonia plants and refineries, while also eyeing hydrogen’s potential as a cleaner energy vector in the future. Japan and South Korea, though less resourced in natural gas, leverage advanced technology and strategic import arrangements to ensure a steady grey hydrogen flow. Together, these four nations comprise the epicenter of the Asia Pacific’s grey hydrogen activity, with China’s formidable industrial base bolstering the region’s lead in global consumption. From refineries serving domestic transportation needs to major export-oriented chemical complexes, Asia Pacific’s grey hydrogen ecosystem remains unrivaled in scale and dynamism. 

Top Companies in the Grey Hydrogen Market:

• Air Products and Chemicals, Inc.
• Linde plc
• Air Liquide
• Shell plc
• ExxonMobil Corporation
• BP plc
• TotalEnergies SE
• Saudi Aramco
• Mitsubishi Heavy Industries Ltd.
• Chevron Corporation
• Others

Market Segmentation Overview:

By Production Method

• Steam Methane Reforming (SMR)
• Partial Oxidation of Hydrocarbons

By Source

• Natural Gas
• Coal

By Application

• Ammonia Production
• Methanol Production
• Refining Processes
• Power Generation
• Others

By End-Use Industry

• Chemical Industry
• Oil & Gas Industry
• Power Generation
• Others

By Region

• North America
  • The U.S.
  • Canada
  • Mexico
• Europe
  • Western Europe
    • The UK
    • Germany
    • France
    • Italy
    • Spain
    • Rest of Western Europe
  • Eastern Europe
    • Poland
    • Russia
    • Rest of Eastern Europe
• Asia Pacific
  • China
  • India
  • Japan
  • Australia & New Zealand
  • South Korea
  • ASEAN
  • Rest of Asia Pacific
• Middle East & Africa (MEA)
  • Saudi Arabia
  • South Africa
  • UAE
  • Rest of MEA
• South America
  • Argentina
  • Brazil
  • Rest of South America