Back in 2021, the CEO of BlackRock – which manages $10 trillion of assets – took to a stage in Riyadh to predict that the next 1,000 billion-dollar startups would not be media companies or search engines but businesses developing “green hydrogen, green agriculture, green steel and green cement”.

Fast forward four years, and Larry Fink has changed his tune, telling an audience of oil and gas executives in Houston last week: “Everyone talks about the opportunity with hydrogen. Well, we can have green hydrogen and blue hydrogen, but is anybody willing to pay the cost?”

Other speakers at the “CERAWeek by S&P Global” conference in Texas were similarly down on the prospects for clean hydrogen, a gas that can replace fossil fuels in sectors that are hard to otherwise clean up, like shipping, aviation, chemicals, steel and cement.

The CEO of oil company Saudi Aramco, Amin Nasser, pointed to the high cost of green hydrogen compared to fossil fuels as a demonstration of “the fiction that critical transition technologies are genuinely competitive and being rapidly deployed”.

“Many were aiming for $1 per kilogram [for green hydrogen] by 2030. Yet production costs alone currently range wildly from almost $4 per kilogram to $12,” he said, comparing International Energy Agency (IEA) figures on the cost today with the Biden administration’s targeted cost for 2030.

Even sellers of clean hydrogen accepted that mood has shifted down a gear. David Burns, vice-president of global clean energy at industrial gases multinational Linde, said there’s now “more a sense of realism, a more kind of pragmatic approach to what’s going to work”. But, he added, viable projects which “meet the willingness to pay for customers in different sectors” are still moving forward.

Green hydrogen costs more

According to the IEA, producing green hydrogen – which is made with renewable energy – is between 1.5 and 6 times more expensive than the traditional, most common and polluting way of making it, with unabated fossil fuels.

But this could change, the IEA says. The price of fossil gas could rise or carbon pricing could make fossil fuel-based hydrogen more expensive. Or large-scale deployment of green hydrogen could bring the cost per kilo down from the $4-$12 Aramco’s Nasser cited to $2-$9 by 2030. It could go even lower in parts of China, the IEA says, where abundant solar meets cheaper electrolysers – the equipment that turns water into hydrogen.

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“The future cost evolution will depend on numerous factors, such as technology development, and particularly on the level and pace of deployment,” the IEA said in its latest global hydrogen review.

But as BlackRock’s Fink noted, high prices are proving a barrier to deployment. Companies like BP and Ørsted have cancelled or delayed green hydrogen production projects in recent months, citing unfavourable economics.

Governments boost hydrogen demand

Some governments have stepped in to try and increase demand. The European Union, for example, has set a mandate that synthetic fuels, including those based on green hydrogen, must make up 1.2% of all the plane fuel at its airports by 2030 and 35% by 2050.

The EU has similar measures for shipping, while a German government programme aims to cover the extra cost of buying clean hydrogen in industries like steel, cement, paper and glass, so that it is not a financial risk.

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These policies have helped, the IEA says – but “the overall scale of these efforts remains inadequate for hydrogen to contribute to meeting climate goals”. In October, the Paris-based analysts revised their forecast for 2030 hydrogen demand down by about a fifth compared to the previous year.

Green hydrogen’s supply problems

Estimates of supplies of green hydrogen also look likely to have been overstated. Experts told Climate Home recently that a planned pipeline to bring hydrogen from North Africa to Europe will struggle to deliver the quantities the European Union is hoping for.

Adrian Odenweller, a researcher at the Potsdam Institute for Climate Impact Research (PIK), warned that the EU should “certainly not count on the delivery” of green hyd