Hydrogen has a demand problem, and the contracts show it

Hydrogen has a demand problem, and the contracts show it.

Low-emissions hydrogen has no shortage of announced projects. What it lacks is enough buyers willing to commit to volumes in writing, and the International Energy Agency's Global Hydrogen Review 2026 puts numbers on that gap.

What the contracts say

According to the IEA, new offtake agreements for low-emissions hydrogen came to about 1.7 Mt in 2025, roughly flat on the year before. Only around 20% of the newly signed volumes were backed by firm contractual commitments, which means most of the year's announced demand still sits in memoranda, letters of intent and other agreements that a lender cannot rely on.

Project developers say the same thing in their own words. The IEA reports that developers widely cite demand creation as a key barrier to investment.

Why firm offtake matters

A memorandum of understanding signals interest, but it does not finance an electrolyzer. Lenders and equity investors look for contracted revenue before they commit capital to a plant, and a soft agreement that either side can walk away from does not provide it.

As a result, the gap between announced and contracted demand shows up directly in investment decisions. Projects without firm buyers struggle to reach final investment decision, and the volumes they were meant to supply do not arrive.

Where supply-chain buyers come in

The industries that already use large amounts of hydrogen, such as refining, chemicals and fertilizer, are the natural first buyers of low-emissions supply. Companies that buy from these sectors carry the related emissions in their own Scope 3 inventories.

When those buyers sign firm, verified offtake, they give developers the bankable signal that soft agreements cannot. Additionally, the switch from conventional to low-emissions hydrogen reduces emissions inside the buyer's own value chain, rather than somewhere outside it.

On Carbon3, that verified reduction can be recorded once as an inset credit and linked to the hydrogen supply, the producer and the buyer that funded it. Credits are issued to the project developer after independent verification, and Carbon3 records them in its registry, so each tonne is claimed only once.

Insetting is not offsetting. The reduction happens in the supply chain the buyer already depends on.

Claim treatment depends on the applicable reporting framework.

Source: IEA, Global Hydrogen Review 2026.