North America Water as a Fuel Market by Country, Competition, Forecast & Opportunities, 2020-2030F

The North America Water as a Fuel Market was valued at USD 2.17 Billion in 2024 and is projected to reach USD 4.02 Billion by 2030, rising at a CAGR of 10.82%. The concept of using water as a fuel centers around extracting hydrogen through electrolysis - a process that separates water into hydrogen and oxygen using renewable electricity. The hydrogen produced can be stored and used as a clean energy source in fuel cells or combustion systems, emitting only water vapor as a byproduct.

In North America, increasing environmental regulations, decarbonization goals, and the push for energy independence are accelerating investments in water-based hydrogen technologies. Governments and industries across the United States and Canada are committing significant resources toward building hydrogen infrastructure and promoting clean energy transitions. This includes funding for electrolysis projects, incentives for green hydrogen production, and the integration of hydrogen into transportation, utilities, and industrial operations.

Advancements in renewable energy technologies have improved the efficiency of electrolyzers, while the deployment of decentralized hydrogen systems in residential, commercial, and backup power applications is gaining traction. The convergence of public-private partnerships, regional policies, and innovation in water-sourced hydrogen production is expected to further propel market growth in the coming years.

Key Market Drivers

Policy-Driven Decarbonization Initiatives Fueling Hydrogen Adoption from Water

Decarbonization initiatives across North America are playing a pivotal role in driving the growth of the water as a fuel market. Both the United States and Canada have introduced ambitious net-zero emissions targets and have implemented carbon pricing frameworks to reduce reliance on fossil fuels. In this regulatory environment, water-derived hydrogen is gaining traction as a critical zero-emission energy solution, particularly for sectors that are challenging to electrify, such as steel production, heavy-duty transport, and chemical processing.

Governments are backing this transition with financial support through programs like the U.S. Infrastructure Investment and Jobs Act and Canada’s Hydrogen Strategy. These initiatives promote clean hydrogen production via water electrolysis and offer tax credits, subsidies, and long-term procurement commitments, effectively lowering investment risks and encouraging private sector participation. Local and regional authorities are also aligning with national goals, embedding hydrogen targets in their climate action plans.

As of 2024, more than 25 hydrogen production projects across North America prioritize electrolysis and have received over USD 8 billion in combined public funding, reinforcing the market’s momentum toward water as a primary fuel source.

Key Market Challenges

High Operational and Capital Costs Associated with Electrolytic Hydrogen Production

A major constraint in the North America Water as a Fuel Market is the high cost associated with electrolytic hydrogen production. Electrolyzers, which split water into hydrogen and oxygen using electricity, are expensive to manufacture and operate, especially when relying on costly materials like platinum and complex safety systems. In addition, although renewable electricity is a cleaner power source, its cost and availability can vary regionally, affecting the economic feasibility of hydrogen production.

These high capital expenditures and operational uncertainties limit adoption among small and medium enterprises and cost-sensitive sectors such as transit and manufacturing. Hydrogen from electrolysis remains more expensive on a per-kilogram basis compared to fossil-fuel-based hydrogen, making widespread deployment difficult without subsidies or high carbon pricing mechanisms.

Until technological innovations drive down equipment costs or regulatory environments introduce stronger economic incentives, the scalability of water-based hydrogen solutions will remain constrained in the North American market.

Key Market Trends

Integration of Renewable Energy with Electrolyzer Systems

A significant trend shaping the North America Water as a Fuel Market is the increasing integration of renewable energy - particularly solar and wind - with water electrolysis systems. This pairing allows for the production of green hydrogen, a completely carbon-free energy source that enhances both sustainability and grid efficiency.

Regions with high renewable capacity such as Texas, California, and Ontario are leading the way, with several pilot projects demonstrating the economic and environmental benefits of co-located energy and hydrogen facilities. This model minimizes grid transmission losses and supports energy storage, providing a practical use for surplus renewable generation.

Incentive structures linked to the carbon intensity of hydrogen are also encouraging the development of hybrid solar-hydrogen and wind-hydrogen installations. As this trend matures, it is expected to reshape production logistics, reduce costs, and enable broader deployment of water-based hydrogen systems across decentralized and industrial use cases.

Key Players Profiled in this North America Water as a Fuel Market Report

Air Liquide S.A.
Linde plc
Cummins Inc.
Plug Power Inc.
Nel ASA
ITM Power plc
Ballard Power Systems Inc.
General Motors Company

Report Scope

In this report, the North America Water as a Fuel Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

North America Water as a Fuel Market, by Fuel Type:

Oxyhydrogen
Hydrogen

North America Water as a Fuel Market, by Technology:

Natural Gas Reforming
Electrolysis

North America Water as a Fuel Market, by End use Industry:

Refineries
Manufacturing
Petrochemicals
Utilities
Automotive
Aerospace
Electronics
Others