A baby born from hydrogen could potentially grow into a colossal being.
The hydrogen economy is experiencing significant growth, driven by investments in green hydrogen and related infrastructure. This expansion, however, is uneven, with delays in some regions and selective progress worldwide.
The hydrogen hubs market, a critical infrastructure concept for production, storage, and distribution of hydrogen, is projected to grow from around USD 2.1 billion in 2025 to USD 9.9 billion by 2035, at a Compound Annual Growth Rate (CAGR) of about 17%. Liquid hydrogen and electrolytic green hydrogen are central technologies in this market [1].
Green hydrogen production, which uses electrolysis powered by renewables, accounts for nearly half the hydrogen hub supply techniques (46.7% projected share in 2025) but remains expensive and infrastructure-limited in some regions, particularly in the Global South and certain industrial sectors, slowing broad rollout [1][2][4].
The European Union (EU) has ambitious plans, targeting 20 million tonnes of renewable hydrogen by 2030 (10 million tonnes domestic production + 10 million tonnes imports) to cover roughly 10% of its energy needs by 2050 and decarbonize hard-to-abate sectors like heavy industry and transport [5]. However, current hydrogen use is less than 2% of EU energy consumption, mostly from fossil-derived hydrogen [5].
Global rollout in other regions is shaped by geopolitical factors, cost of capital, and renewable resource availability. Pilot projects and state-backed clusters are prevalent rather than a fully integrated global hydrogen economy [2]. In lower-income countries, investments lag due to high capital costs and lack of guarantees.
Hydrogen ETFs, such as the VanEck Vectors Hydrogen Economy UCITS ETF, GG Wasserstoff Fund, and L&G Hydrogen Economy UCITS ETF, focus on companies involved in the entire hydrogen value chain: production, storage, distribution, fuel cells, and related technologies. Given the projected long-term market growth (CAGR ~17% in hydrogen hubs) and ongoing global push for decarbonization and hydrogen infrastructure, these ETFs potentially benefit from increasing green hydrogen investments and adoption worldwide.
However, the hydrogen sector's current investment pace, project execution risk, and selective application economics mean these ETFs may see volatility and uneven returns in the short term, reflecting delays and regional disparities in green hydrogen adoption [1][2][4]. Market attention to related emerging segments (e.g., white hydrogen from natural geological sources), and governmental policy shifts will also influence these funds' performance and attractiveness [3].
The EU, the U.S., and China have announced hydrogen initiatives to advance hydrogen with renewable energies. Notably, the VanEck Vectors Hydrogen Economy UCITS ETF was listed on the German Stock Exchange in March 2021.
Politicians see great potential in hydrogen for building a climate-neutral economy. Aanand Venkatramanan, head of ETF investment strategies at Legal & General Investment Management, believes that the short-term demand for green hydrogen will come from industries such as fertilizer production, steelmaking, and refineries. He also sees medium to long-term demand for green hydrogen in sectors like shipping, rail, aviation, heating applications, and power generation [4].
Venkatramanan predicts that the hydrogen market will grow to 1.5 trillion US dollars by 2050, according to consulting firm McKinsey. He expects the acceptance of green hydrogen to improve due to upcoming political support from governments worldwide and the continued decline in production costs. Technological progress and cheaper green energy are expected to open up more application areas for hydrogen [1][4].
Hydrogen, with the chemical formula H2, is the most abundant element in the universe. It is obtained by electrifying water and splitting it into oxygen and hydrogen. Green hydrogen can provide sustainable solutions where batteries reach their limits, such as in industry, air, sea, and heavy-duty transport.
The hydrogen sector is still in its infancy and subject to larger fluctuations due to its small market capitalization. However, its potential as a key player in the global decarbonization effort is undeniable. The L&G Hydrogen Economy UCITS ETF USD Acc (ISIN: IE00BMYDM794) is a fund investing in the hydrogen economy, offering investors an opportunity to capitalize on this promising sector's growth.
The hydrogen economy, beyond its expansion in the European Union, is also attracting interest from other industries, finance, technology, and the energy sector, as they see the potential of hydrogen in decarbonization efforts. The Liquid hydrogen and electrolytic green hydrogen technologies, central to the hydrogen hubs market, are not just confined to the hydrogen economy but have implications for numerous sectors, such as heavy industry, transport, and power generation.
