Key things to watch for hydrogen in 2026

Wood Mackenzie's Hydrogen: 5 things to look for in 2026 report identifies five critical developments that will reshape the sector: non-RFNBO project gains, bid prices for Indian projects, the Middle East retreat, cracker FIDs, and abandonment of RED III industry targets.

Non-RFNBO project lift-off

Wood Mackenzie predicts at least three large scale, non-RFNBO projects supplying European buyers, with combined capacity of over 50 000 tpy, will reach final investment decision (FID) in 2026.

Europe's strict RFNBO (Renewable Fuels of Non-Biological Origin) rules have been widely criticised as incompatible with a timely ramp-up of green hydrogen supply. The added costs to producers can be around US$1.0-2.0/kg, creating a significant barrier to project development. However, 2026 will mark a turning point. The publication of the Low-Carbon Fuels Delegated Act in November 2025 provided long-awaited clarity for producers of non-RFNBO hydrogen, including blue.

"We expect this shift in sentiment to accelerate policy support for low-carbon hydrogen through expanded funding eligibility or new support schemes, even if rewriting the Delegated Acts remains unlikely in the near term," said Murray Douglas, Vice President, Hydrogen and Derivatives Research for Wood Mackenzie. "This policy shift will enable faster project development, more offtake deals, and an uptick in allocated funding."

Can Indian projects hit bid prices?

Wood Mackenzie predicts 439 ktpa of India's auctioned ammonia capacity will be commissioned by ACME, Onix Renewable, Suryam International, and SCC Infrastructure, while 285 ktpa will be withdrawn before supply agreements are signed.

India's domestic ammonia supply auction, targeting 725 ktpa, revealed its winners in late 2025. At US$550 - 700/t, the bids are competitive with blue ammonia from the US and Middle East. The question is whether the projects will materialise.

"ACME remains best positioned, planning to consolidate its entire allocation into a single 800 000 tpy facility in Odisha, strategically placed near two supply locations with shipping access for the remainder," said Douglas. "Onix Renewable, Suryam International, and SCC Infrastructure are likely to pursue the brownfield route, benefiting from proximity to existing ammonia production hubs at their designated supply locations."

"The rest face steeper odds. Oriana Power, Jakson Green, NTPC RE Limited, and SCC's Madhya Bharat Agro Products deal cannot access brownfield economics, while greenfield development would force them to build 800 000 tpy plants to service sub-100 000 tpy contracts - an untenable risk without additional offtakers. Our call is that these deals will collapse."

The Middle East retreats as demand falters

The promise of the Middle East playing a leading role in hydrogen market development has faltered since NEOM took FID in May 2023. Projects in the region, being export-oriented, have felt the largest impact from policy delays in Europe and Northeast Asia.

"We anticipate at least three large scale Middle Eastern projects are cancelled or significantly scaled back in 2026," explained Douglas. "Supply could still be unlocked, but this will rest largely on successful auctions in Northeast Asia and transposing RED III criteria into national laws across Europe – or a relaxation in RFNBO criteria. The market has shown that these milestones are hard to achieve, and the potential for Middle Eastern volumes will continue to suffer in 2026."

Cracker FIDs

Industrial-scale ammonia crackers will start reaching final investment decision (FID) in 2026 as demand fundamentals align and technology readiness converges with market need. Hydrogen sourced from cracked ammonia is expected to serve steel, refineries, and high-temperature process heat applications, providing an import-based option in regions where local green hydrogen remains cost-prohibitive.

"We expect at least three industrial scale ammonia cracker projects, representing approximately US$600 million in investment, will reach FID in 2026. Two will be in Northwest Europe and one in Northeast Asia," commented Douglas.

RED III industry targets heading to the bin

Wood Mackenzie predicts Member States will abandon the 42% industrial RFNBO target for 2030. "The EU's ambitious industrial hydrogen mandate is failing to gain traction," said Douglas. "As we closed out 2025, only three Member States had set quotas, and two are disappointingly inadequate. Germany, the EU's largest industrial hydrogen consumer, has confirmed it will not impose binding industry mandates, opting instead for subsidisation."

"The European Commission will face a choice: enforce compliance through infringement procedures or accept Member States' retreat from industry targets. Precedent suggests the latter. Without binding mandates, green hydrogen developers targeting industrial use will need to reassess project economics."

These five developments will reshape the hydrogen investment landscape for years to come. 2026 will provide a clearer picture of which markets will lead and what will drive commercial scale.

As Douglas notes: "Projects advance where policy and offtake align, and stall where either remain uncertain. 2026 will separate viable hydrogen markets from those built on policy ambition alone."

Read the article online at: https://www.globalhydrogenreview.com/special-reports/09012026/key-things-to-watch-for-hydrogen-in-2026/