Petroleum Refining Hydrogen Generation Market

The global Petroleum Refining Hydrogen Generation market is forecasted to grow at a noteworthy CAGR of 4.32% between 2024 and 2032. By 2032, market size is expected to surge to USD 5.32 Billion, a substantial rise from the USD 3.64 Billion recorded in 2023.

Petroleum Refining Hydrogen Generation Market Size and Forecast 2024 to 2032

The petroleum refining hydrogen generation market plays a pivotal role in meeting the growing demand for cleaner fuels and reduced carbon emissions. Hydrogen is extensively used in refining processes such as hydrocracking and hydrotreating, where it removes impurities like sulfur, nitrogen, and heavy metals from crude oil, enabling the production of higher-quality fuels that comply with stringent environmental regulations.

Globally, the demand for hydrogen in the petroleum refining sector has surged due to the transition toward ultra-low-sulfur diesel (ULSD) and other cleaner fuel mandates. According to the International Energy Agency, hydrogen demand in refineries constitutes over 33% of global hydrogen usage, driven primarily by policies such as the European Union's Renewable Energy Directive and China’s National Clean Diesel Action Plan. The Energy Information Administration highlights that the U.S. alone produced approximately 9 million metric tons of hydrogen in 2023, with refineries accounting for the majority of this consumption.

The market is characterized by technological advancements in on-site hydrogen production methods, including steam methane reforming (SMR) and partial oxidation. While SMR remains the dominant method due to its cost-efficiency, there is a growing inclination toward greener alternatives like blue and green hydrogen to address climate concerns. Companies such as Air Products and Linde are at the forefront, investing in scalable hydrogen production infrastructure.

Market Dynamics

Petroleum Refining Hydrogen Generation Market Drivers

• Stringent Environmental Regulations: Governments worldwide are enforcing stringent emission standards, compelling refineries to reduce sulfur content in fuels. The International Maritime Organization’s (IMO) 2020 regulation mandates sulfur content in marine fuels to be reduced to 0.5%, down from 3.5%. Similarly, the European Union’s Euro VI standard requires diesel fuels to have sulfur levels of no more than 10 ppm. These regulations have increased the need for hydrotreating processes, significantly driving demand for hydrogen in petroleum refining. The Environmental Protection Agency reports that refineries in the U.S. alone consumed over 1.4 trillion cubic feet of hydrogen in 2022 for compliance purposes.
• Rising Demand for Clean Fuels: The shift toward cleaner energy solutions has accelerated hydrogen adoption in refining processes. The Energy Information Administration highlights that global diesel consumption, requiring ultra-low-sulfur standards, is projected to grow at a CAGR of 1.6% during the forecast period. This trend is particularly strong in developing economies like India and China, where rapid industrialization is driving demand for transportation fuels. Hydrogen is essential in producing clean fuels such as ULSD, aligning with global decarbonization goals.
• Advancements in Hydrogen Production Technology: Innovations in hydrogen production, including the adoption of blue and green hydrogen, are reshaping the market landscape. The U.S. Department of Energy states that investments in green hydrogen projects grew by over 40% in 2023. These advancements lower carbon footprints and enhance the economic viability of hydrogen generation, creating opportunities for refineries to adopt sustainable practices while meeting fuel quality standards.
• Expanding Refinery Capacities in Emerging Markets: Emerging economies are rapidly expanding their refinery capacities to meet growing energy demands. The International Energy Agency reports that Asia-Pacific accounted for 40% of global refinery expansions in 2023, with nations like India increasing their refinery output by 12% year-over-year. As these refineries aim to produce cleaner fuels, the demand for hydrogen generation infrastructure is expected to soar, further driving the market's growth.
• Integration of Renewable Energy Sources: The integration of renewable energy in hydrogen production is gaining traction as refineries transition to sustainable practices. According to the International Renewable Energy Agency, the share of renewable energy in hydrogen production is projected to reach 20% by 2030, compared to just 5% in 2022. This integration supports refineries in reducing operational emissions, fostering a more sustainable and cost-effective approach to hydrogen generation.

Petroleum Refining Hydrogen Generation Market Opportunities

• Transition to Green Hydrogen Production: The push toward decarbonization offers significant opportunities for integrating green hydrogen into refining operations. The International Renewable Energy Agency highlights that green hydrogen production is expected to grow at a CAGR of 45% through 2030, driven by declining costs of electrolysis technologies and renewable electricity. Refineries adopting green hydrogen can align with global sustainability goals, attract investment, and benefit from subsidies like the European Union's Hydrogen Strategy, which aims to produce 10 million tons of green hydrogen by 2030.
• Emerging Markets Driving Refining Expansion: Rapid industrialization and urbanization in regions like Asia-Pacific and Africa are spurring the construction of new refining facilities. The International Energy Agency states that over 5 million barrels per day of new refining capacity will be added globally by 2025, with 60% of this growth concentrated in Asia. These expansions provide an immense opportunity for hydrogen generation systems, especially as these refineries strive to meet stricter fuel quality standards.
• Government Incentives for Hydrogen Projects: Governments worldwide are introducing incentives to promote hydrogen adoption in industrial processes, including refining. The U.S. Department of Energy allocated $8 billion under the Hydrogen Hubs program to accelerate hydrogen production and infrastructure development. Such initiatives provide refineries with financial support to integrate advanced hydrogen generation technologies, enhancing market growth potential.
• Technological Advancements in Carbon Capture: The integration of carbon capture, utilization, and storage (CCUS) technologies into hydrogen generation offers refineries the opportunity to produce blue hydrogen with minimal environmental impact. According to the International Energy Agency, CCUS capacity needs to increase tenfold by 2030 to meet global climate targets, creating a lucrative market for refineries investing in low-carbon hydrogen solutions.
• Growing Investment in Hydrogen Infrastructure: Investments in hydrogen storage, transport, and distribution networks are creating new opportunities for refineries to scale operations. The Hydrogen Council reports that global investment in hydrogen infrastructure reached $70 billion in 2023 and is projected to exceed $300 billion by 2030. This infrastructure development supports seamless hydrogen utilization in refining processes, ensuring operational efficiency and compliance with emerging regulations.

Petroleum Refining Hydrogen Generation Market Restrain & Challenges

• High Production Costs of Green Hydrogen: Despite its environmental benefits, green hydrogen production remains costly due to expensive electrolyzer technology and reliance on renewable energy sources. The International Energy Agency reports that producing green hydrogen is two to three times more expensive than conventional hydrogen, with costs ranging from $3 to $6 per kilogram in 2023. This cost disparity poses a significant challenge for refineries aiming to transition to sustainable practices, especially in price-sensitive markets.
• Dependence on Fossil Fuels for Hydrogen Production: The majority of hydrogen used in refineries is produced through steam methane reforming (SMR), which relies heavily on natural gas. According to the U.S. Department of Energy, over 95% of hydrogen is derived from fossil fuels, contributing to carbon emissions and counteracting sustainability goals. Transitioning to alternative methods like blue or green hydrogen requires significant investment, which can strain refineries' budgets.
• Infrastructure Limitations for Hydrogen Distribution: The lack of robust hydrogen storage and transportation infrastructure remains a critical bottleneck for market growth. The Hydrogen Council highlights that only 1% of global pipeline networks are equipped to handle pure hydrogen, creating logistical challenges for refineries. Developing infrastructure to support efficient hydrogen delivery requires massive capital expenditure, delaying widespread adoption.
• Regulatory and Policy Uncertainty: Inconsistent policies and varying regulatory frameworks across regions hinder the uniform growth of the hydrogen generation market. For instance, while the European Union has clear hydrogen strategies, countries in Africa and Southeast Asia lack cohesive policies, according to the International Energy Agency. This inconsistency creates uncertainty for refineries and investors, slowing the pace of market expansion.
• Environmental Concerns of Blue Hydrogen: Blue hydrogen, produced via carbon capture in traditional SMR processes, faces scrutiny for its indirect emissions. The International Renewable Energy Agency reports that even with carbon capture, blue hydrogen can emit up to 25% of the carbon dioxide compared to conventional methods, raising doubts about its long-term viability. This challenge emphasizes the need for more sustainable and scalable solutions like green hydrogen.

Current Trends in the Petroleum Refining Hydrogen Generation Market

• Adoption of Carbon Capture and Storage (CCS) Technologies: Refineries are increasingly integrating CCS into hydrogen production to reduce carbon emissions. According to the International Energy Agency, CCS-equipped hydrogen plants captured over 40 million metric tons of CO₂ globally in 2023, a figure expected to grow exponentially by 2030. This trend enables the production of low-carbon blue hydrogen, aligning with global climate targets and boosting sustainability efforts in refineries.
• Shift Towards Modular Hydrogen Plants: Modular hydrogen production units are gaining popularity due to their scalability and cost efficiency. The U.S. Department of Energy reports that modular systems can reduce hydrogen production costs by 20% compared to traditional large-scale plants. These compact systems also provide flexibility for refineries to adapt to fluctuating production demands, enhancing operational efficiency.
• Advancements in Electrolysis Technology: Innovations in electrolysis are making green hydrogen production more feasible for refineries. The International Renewable Energy Agency highlights that the cost of electrolyzers dropped by 60% between 2015 and 2023, driven by improved efficiency and economies of scale. These advancements support the adoption of green hydrogen, allowing refineries to transition to cleaner energy solutions.
• Increased Use of AI and Automation: Artificial intelligence and automation are revolutionizing hydrogen production processes in refineries. AI-driven systems optimize resource allocation, monitor plant performance, and predict maintenance needs, reducing operational costs. According to the U.S. Department of Energy, AI integration in hydrogen production could enhance efficiency by up to 15%, driving significant cost savings and operational improvements.
• Hybrid Renewable Energy Integration: Refineries are leveraging hybrid renewable energy systems, such as combining solar and wind, to power hydrogen production processes. The International Renewable Energy Agency states that hybrid systems could lower renewable hydrogen production costs by up to 30% by 2030. This integration reduces dependence on fossil fuels, helping refineries achieve sustainability goals while ensuring cost competitiveness.

Segmentation Insights

Petroleum Refining Hydrogen Generation Market Analysis, By Product Technology

By Product Technology, the market is divided into Steam Reforming, Partial Oxidation, Autothermal Reforming, Electrolysis, and Other technologies.

• Steam reforming is the largest segment in the petroleum refining hydrogen generation market, primarily due to its cost efficiency and widespread adoption in refineries. This technology is favored for its ability to produce large quantities of hydrogen using readily available natural gas. According to the U.S. Department of Energy, over 95% of hydrogen produced globally in 2023 came from steam methane reforming. Its importance lies in its role in desulfurization processes and meeting the demand for cleaner fuels, making it indispensable for modern refining operations despite its carbon-intensive nature.
• Electrolysis is the fastest-growing segment due to the global push for green hydrogen production and decarbonization in the refining industry. Electrolysis enables hydrogen generation by splitting water into hydrogen and oxygen using renewable electricity, significantly reducing greenhouse gas emissions. The International Renewable Energy Agency states that the cost of renewable electricity, a critical input for electrolysis, fell by 70% between 2010 and 2023, making this technology increasingly viable. Governments are investing heavily in electrolysis projects; for instance, the European Union allocated €9 billion to scale up green hydrogen infrastructure by 2030. This growth is driven by its potential to produce zero-emission hydrogen, aligning with global sustainability goals and energy transition initiatives.

Petroleum Refining Hydrogen Generation Market Analysis, By Feedstock

By Feedstock, the market is categorized into Natural Gas, Naphtha, Butane, Petroleum Coke, and Other.

• Natural gas is the largest segment in the petroleum refining hydrogen generation market due to its cost-effectiveness, availability, and high hydrogen yield. According to the U.S. Energy Information Administration, over 70% of global hydrogen production in 2023 relied on natural gas as a feedstock, primarily through steam methane reforming. Its dominance is attributed to its lower carbon intensity compared to other fossil-based feedstocks, making it a preferred choice for refineries aiming to balance efficiency with environmental compliance. Additionally, natural gas infrastructure is well-established, further facilitating its use in hydrogen production.
• Naphtha is the fastest-growing feedstock segment, driven by its increasing utilization in regions with abundant petroleum refining operations, such as Asia-Pacific. Naphtha's versatility as a byproduct of crude oil refining makes it an attractive option for hydrogen generation, especially in integrated refinery setups. The International Energy Agency highlights that Asia accounted for nearly 50% of global naphtha consumption in 2023, fueled by rapid industrialization and the rising demand for cleaner fuels. Its growth is further supported by advancements in naphtha reforming technologies, which improve efficiency and reduce emissions, aligning with sustainability goals in emerging markets.

Petroleum Refining Hydrogen Generation Market Analysis, By Application

By Application, the market is categorized into Hydrocracking, Hydrotreating, Fluid Catalytic Cracking, Catalytic Reforming, and Other.

• Hydrotreating is the largest segment in the petroleum refining hydrogen generation market, driven by its critical role in removing impurities like sulfur, nitrogen, and metals from crude oil to produce cleaner fuels. According to the International Energy Agency, hydrotreating accounts for nearly 60% of hydrogen consumption in refineries, as regulatory mandates for ultra-low-sulfur diesel (ULSD) continue to grow. The process is essential for meeting emission standards, such as the U.S. Environmental Protection Agency's requirement of sulfur content below 15 ppm in diesel fuels. Its importance lies in enhancing fuel quality and compliance with global environmental policies.
• Hydrocracking is the fastest-growing application segment, fueled by increasing demand for high-value products like jet fuel, kerosene, and diesel. The Energy Information Administration reports that hydrocracking processes consume approximately 25% more hydrogen than hydrotreating, making hydrogen generation critical for its operation. This growth is particularly prominent in regions like Asia-Pacific, where refinery upgrades and expansions are underway to meet rising fuel demands. Additionally, the technology's ability to process heavy crude oil into lighter, cleaner products aligns with global trends toward energy efficiency and resource optimization, accelerating its adoption in advanced refining processes.

Petroleum Refining Hydrogen Generation Market Analysis, By End-Use Industry

By End-Use Industry, the market is categorized into Petroleum Refining, Petrochemicals, Power Generation, Steel Manufacturing, and Other.

• Petroleum refining is the largest segment due to its extensive demand for hydrogen in processes like hydrotreating, hydrocracking, and catalytic reforming. According to the U.S. Energy Information Administration, over 70% of hydrogen produced globally is utilized in petroleum refineries. Hydrogen is critical for producing cleaner fuels, such as ultra-low-sulfur diesel and jet fuel, to comply with stringent environmental regulations like the International Maritime Organization’s sulfur cap. The segment's dominance is attributed to its role in meeting global energy demands while addressing emission standards and improving fuel quality.
• The petrochemical industry is the fastest-growing segment due to the rising demand for hydrogen in producing ammonia, methanol, and other key chemicals. The International Energy Agency notes that global petrochemical production is expected to grow by nearly 40% by 2030, with hydrogen playing a vital role in reducing carbon emissions and enhancing process efficiency. Regions like Asia-Pacific, which account for a significant share of global petrochemical output, are investing heavily in hydrogen technologies to align with sustainability goals. Additionally, advancements in green hydrogen integration further boost the segment's growth potential, meeting both industrial and environmental objectives.

Petroleum Refining Hydrogen Generation Market Analysis, By Capacity

By Capacity, the market is categorized into Small-Scale (100,000 Nm³/hr), Medium-Scale (100,000-250,000 Nm³/hr), and Large-Scale (>250,000 Nm³/hr).

• Large-scale hydrogen generation is the largest segment due to its suitability for high-demand applications in large refineries. According to the International Energy Agency, major refinery operations in regions like North America and the Middle East rely on large-scale hydrogen production to meet their processing needs. These facilities ensure efficient hydrogen supply for processes like hydrocracking and hydrotreating, which require significant volumes of hydrogen. The segment's dominance is further supported by advancements in hydrogen production technologies that improve cost efficiency and reduce emissions, meeting both operational and environmental goals.
• Medium-scale hydrogen generation is the fastest-growing segment, driven by the rising number of mid-sized refineries and petrochemical plants, particularly in emerging economies. The U.S. Department of Energy highlights that medium-scale facilities are increasingly popular due to their flexibility and cost-effectiveness, allowing refineries to cater to regional fuel demands efficiently. Asia-Pacific, with its rapid industrialization and expanding refining capacity, is a key region propelling this growth. Additionally, the segment benefits from the integration of modular systems and renewable energy sources, which enhance scalability and sustainability, aligning with global decarbonization efforts.

Petroleum Refining Hydrogen Generation Market Regional Insights

The market has been geographically analysed across five regions, Europe, North America, Asia Pacific, Latin America, and the Middle East & Africa.

• Asia-Pacific is the largest region in the petroleum refining hydrogen generation market, driven by its extensive refining capacity and growing demand for cleaner fuels. The International Energy Agency reports that Asia-Pacific is home to over 50% of the world's refining capacity, with China, India, and Japan being the leading countries. These nations are increasingly adopting hydrogen technologies to meet stricter emission regulations and enhance fuel quality. The rise in industrial activities, urbanization, and energy demand across Asia-Pacific ensures the continued dominance of this region. Future growth is expected to remain strong, as China, for instance, has pledged to expand its hydrogen production capacity and invest in hydrogen infrastructure to meet sustainability goals. In 2023, China accounted for over 40% of global refining output, which further cements the region's critical role in global hydrogen demand for refineries.
• The Middle East and Africa (MEA) are the fastest-growing regions, primarily due to large-scale infrastructure investments and the growing adoption of hydrogen technologies in refining. The International Energy Agency projects that the region will see significant growth in hydrogen adoption, especially in countries like Saudi Arabia and the UAE, which are diversifying their economies and investing in green hydrogen as part of their long-term energy strategies. For instance, Saudi Arabia has announced plans to become a global leader in hydrogen production, investing in both blue and green hydrogen projects to meet international demand. The region’s push toward sustainability, combined with abundant natural gas resources, makes it an attractive market for hydrogen generation technologies. The demand for hydrogen is anticipated to accelerate as refineries in the region upgrade to meet global fuel specifications and reduce carbon emissions, aligning with the regional energy transition goals.

Petroleum Refining Hydrogen Generation Market Competitive Overview

The petroleum refining hydrogen generation market is highly competitive, with key players focusing on technological innovation, strategic partnerships, and capacity expansion to meet the growing demand for cleaner fuels. Leading companies such as Air Products and Chemicals, Inc., Linde, and Shell are investing in advanced hydrogen production technologies, including green hydrogen through electrolysis and carbon capture and storage (CCS) technologies for blue hydrogen. According to the U.S. Department of Energy, global hydrogen production from renewable sources is expected to increase significantly by 2030, with leading market players positioning themselves to capitalize on this shift.

The integration of renewable energy sources in hydrogen production is also becoming increasingly important as companies aim to reduce carbon footprints. In addition, several governments, including those of the U.S., European Union, and China, have introduced policies and subsidies to accelerate the adoption of hydrogen technologies, creating a favourable environment for market growth. Furthermore, emerging players in the Middle East, particularly in Saudi Arabia and the UAE, are making substantial investments in hydrogen infrastructure, aiming to become global leaders in the market. These competitive dynamics reflect the growing importance of hydrogen in the refining industry as part of broader energy transition efforts to reduce emissions and improve sustainability.

Leading Market Players in the Petroleum Refining Hydrogen Generation Market

• Air Products and Chemicals, Inc.: Air Products is a global leader in hydrogen production, focusing on advanced hydrogen generation technologies such as steam methane reforming (SMR) and electrolysis. The company is heavily involved in large-scale hydrogen projects, with over 60 hydrogen production plants worldwide. Air Products plays a key role in supplying hydrogen to refineries for hydrotreating and hydrocracking processes. In 2023, the company announced a $12 billion investment in green hydrogen projects in the Middle East, aiming to produce up to 4,000 tons of green hydrogen per day by 2027, helping to meet growing global energy demand while reducing emissions.
• Linde: Linde is one of the leading players in the hydrogen market, known for its extensive experience in hydrogen production, storage, and distribution. The company uses cutting-edge technologies like steam reforming and electrolysis to supply hydrogen to petroleum refineries worldwide. Linde is committed to sustainability, investing heavily in renewable hydrogen projects. In 2022, Linde signed a strategic partnership with several European firms to develop large-scale green hydrogen infrastructure, aiming to produce 1,500 tons of green hydrogen annually by 2025. Linde's leadership in hydrogen infrastructure is crucial to supporting global energy transitions.
• Plug Power Inc.: Plug Power specializes in fuel cell technologies and hydrogen generation, providing integrated solutions for various industries, including petroleum refining. The company has shifted towards green hydrogen production by focusing on electrolyzer technologies powered by renewable energy sources. In 2023, Plug Power expanded its operations with a $500 million investment in green hydrogen projects in North America. The company’s growing footprint in the clean energy sector is aligned with increasing hydrogen demand in refining operations for cleaner fuels. Plug Power’s electrolyzer solutions are seen as key to driving the growth of hydrogen adoption in refineries globally.

Top Strategies Followed by Players

• Investment in Green Hydrogen Production: Many players in the petroleum refining hydrogen generation market are focusing on transitioning to green hydrogen as a long-term strategy. Companies like Air Products and Linde are heavily investing in green hydrogen projects by integrating renewable energy sources like wind and solar power for electrolysis. In 2023, Linde announced a partnership with several European countries to invest $8 billion in green hydrogen infrastructure by 2030. This strategy is increasingly seen as a way to meet carbon neutrality goals while capitalizing on the growing global demand for sustainable energy solutions, particularly in hydrogen-intensive industries like refining.
• Expansion into Emerging Markets: Companies are expanding into emerging markets, particularly in Asia-Pacific and the Middle East, to tap into the increasing demand for hydrogen as a result of refining industry modernization and sustainability efforts. Air Products, for instance, is pursuing significant investments in Saudi Arabia, with plans to establish one of the world’s largest green hydrogen plants by 2026. The expansion into these regions allows companies to support growing demand for cleaner fuel production while contributing to economic diversification initiatives in these regions, making it a strategic focus for global market expansion.
• Technological Innovation and Partnerships: Technological innovation and strategic partnerships have become a core strategy for key players to maintain market leadership. Companies like Plug Power and ITM Power are focusing on the development of advanced electrolyzers for more efficient green hydrogen production. In 2023, Plug Power entered a major partnership with Renault to co-develop hydrogen-powered vehicles, reinforcing its commitment to diversifying its hydrogen applications. These partnerships help foster innovation in hydrogen production technologies, which are crucial for meeting growing demand in the petroleum refining sector. Strategic collaborations with governments and other industry leaders further enhance technological development and adoption in the market.

List of Companies Profiled in the Report are

• GenCell Energy
• Ballard Power Systems
• Chart Industries Inc.
• Hydrogenics Corporation
• Plug Power Inc.
• Air Products and Chemicals Inc.
• Nel Hydrogen Fuel Cells A/S
• Air Liquide
• Linde
• ITM Power plc
• Bloom Energy Corporation
• Cummins Inc.
• Hyzon Motors Inc.
• Praxair
• Proton OnSite

Global Petroleum Refining Hydrogen Generation Market Report: Scope

List of Segments Covered

This section of the Petroleum Refining Hydrogen Generation Market report provides detailed data on the segments at country and regional level, thereby assisting the strategist in identifying the target demographics for the respective product or services with the upcoming opportunities.

By Product Technology

• Steam Reforming
• Partial Oxidation
• Autothermal Reforming
• Electrolysis
• Other

By Feedstock 

• Natural Gas
• Naphtha
• Butane
• Petroleum Coke
• Other

By Application 

• Hydrocracking
• Hydrotreating
• Fluid Catalytic Cracking
• Catalytic Reforming
• Other

By End-Use Industry

• Petroleum Refining
• Petrochemicals
• Power Generation
• Steel Manufacturing
• Other

By Capacity 

• Small-Scale (100,000 Nm3/hr)
• Medium-Scale (100,000-250,000 Nm3/hr)
• Large-Scale (>250,000 Nm3/hr)