(Oct 28): The main renewables energy company in the United Arab Emirates (UAE) has pushed back its target for green hydrogen capacity beyond 2030, the latest sign of the challenges facing production of the clean power source.

Masdar’s hydrogen unit will instead reach one million tonnes a year capacity for the fuel over the next decade, according to its press office. It didn’t say why the target has been delayed.

Climate-friendly hydrogen was once one of the most-hyped sectors in green energy, but limited demand for the fuel amid high cost has stymied its development. Buyers need to pay a premium for hydrogen that’s produced from water and renewable power, as well as build infrastructure to receive and use it.

“Green hydrogen is currently more expensive,” Saeed Ghumran Al Remeithi, chief executive officer of Emsteel Group, said on Monday as the company and Masdar inaugurated a pilot project in Abu Dhabi to produce steel using the clean fuel. “This highlights the need for alignment with regulators, suppliers, steel producers and customers.”

The Emsteel and Masdar facility will use solar power sourced via Abu Dhabi’s electricity grid to power electrolysers that make hydrogen for the steel-making process. Representatives of both companies declined to comment on the project’s current or future capacity.

Few large-scale green hydrogen projects have progressed to the construction phase. One such facility is in Neom in northwest Saudi Arabia, which is slated to start operating in 2026. Separately, Saudi Arabia’s Public Investment Fund is said to have created a company to invest at least US$10 billion (RM43.38 billion) in green hydrogen.

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