The UK hydrogen industry stands ready to invest, create jobs and scale deployment – but weak demand signals and delays to policy delivery are holding back progress, according to a major new industry report launched in Parliament today.
The State of the Hydrogen Nation, published by the Hydrogen Energy Association (HEA), provides the most comprehensive picture yet of business confidence across the UK hydrogen economy, drawing on responses from 142 organisations spanning production, infrastructure, manufacturing, transport, end-use and finance.
The report finds that while confidence has softened year-on-year, this is not due to doubts about hydrogen’s long-term role, but growing frustration at the pace and predictability of policy delivery. The UK’s regulatory framework for hydrogen is perceived as strong and investable; however, policy and funding delays are affecting confidence.
More than 84% of organisations expect their UK hydrogen investment to increase or remain stable over the next 12 months, demonstrating that appetite to invest remains strong.
However, nearly half of respondents believe government commitment to hydrogen has weakened compared to a year ago, citing policy delays, stop-start funding rounds and unclear timelines as key concerns.
Demand, not supply, is now the critical blocker
The report identifies demand creation as the single biggest constraint on the growth of the UK hydrogen market.
While production capability and supply chains are developing, businesses report that projects are struggling to reach final investment decision without clear, bankable signals on where hydrogen will be used.
- 81% of organisations seeking offtakers say securing hydrogen offtake agreements is difficult
- 60% of potential end-users say integrating hydrogen into operations is challenging
- Key barriers include lack of infrastructure, high or uncertain costs, length of Hydrogen Allocation Round’s contracts, and insufficient long-term demand-side policy support.
Without action to unlock demand, the report warns that the UK risks slowing deployment even where production support mechanisms are in place.
A clear jobs prize – if policy conditions improve
The report sets out a stark contrast between current and improved policy trajectories.
Under existing conditions, survey respondents expect the sector to support around 3,800 UK hydrogen jobs by 2030. Under an improved policy environment – with faster decision-making, clearer demand signals and better-aligned delivery – that figure rises to around 17,000 jobs over the same period.
This represents a four-fold increase in employment potential, spanning engineering, construction, manufacturing, infrastructure and operations.
UK still attractive – but competitors are moving faster
Internationally, the UK remains one of the world’s most attractive destinations for hydrogen investment, ranking second only to Germany in respondents’ perceptions.
However, businesses increasingly view peer nations – particularly Germany – as moving more quickly from ambition to execution, creating concern that capital, projects and skills could be drawn elsewhere if UK delivery does not accelerate.
A call for coordination and pace
The report concludes that hydrogen policy is now at a pivotal moment.
Responsibility spans multiple departments, regulators and delivery bodies, and progress will depend on joined-up action to align production support, demand mechanisms, infrastructure planning and carbon pricing.
Launching the report at a Parliamentary event in Portcullis House with an audience of MPs, officials, businesses and industry leaders from across the hydrogen value chain, Dr Emma Guthrie, Chief Executive of the Hydrogen Energy Association, said, “This report shows a sector that is committed, capable and ready to deliver – but increasingly constrained by uncertainty over demand, policy design and delivery timelines.
“The question is no longer whether hydrogen has a role in the UK’s energy system, but how quickly we move from ambition to deployment. With clearer signals and faster delivery, the UK can unlock thousands of skilled jobs, attract investment and secure a leading global position.
“In short, collaboration and coordinated action at pace are essential to creating the right conditions to enable investment, create high-skilled jobs and to support the UK’s net zero and energy security objectives.
“The Hydrogen Energy Association, alongside its members and partners, stand ready to work with Ministers, officials, Parliamentarians and the wider UK hydrogen industry to make that happen.”
Michael Shanks MP, Minister for Energy, delivered a keynote address at the launch of the report and chaired a Q&A.
Industry backing
The Parliamentary launch of the report is supported by industry sponsors Luxfer Gas Cylinders and Chesterfield Special Cylinders, both long-standing contributors to the UK hydrogen supply chain and members of the HEA.
Keith Croysdale, Business Development Manager at Luxfer Gas Cylinders, added, “The UK has the skills, manufacturing base and innovation to lead in hydrogen. What’s needed now is coordinated delivery to turn that potential into scale.”
Rachel Grundy, Commercial Director at Chesterfield Special Cylinders, said: “This report reflects what we are seeing across the supply chain – strong technical capability and willingness to invest, but a real need for clearer market signals to justify long-term commitments.”
A nationwide view
The 142 survey respondents spanned the length and breadth of the United Kingdom, representing all home nations and organisations ranging from SMEs and start-ups to large global corporates with an interest in the UK hydrogen sector.
The survey rollout was supported by fellow trade associations across the hydrogen, clean energy, and end-user markets. Particular recognition is given to Hydrogen Scotland and Hydrogen Ireland, whose contributions highlight the importance of regional clusters in driving the sector’s growth.
The full report is available here – The State of the Hydrogen Nation Report – Hydrogen Energy Association
