As the world accelerates toward a low-carbon future, hydrogen has taken centre stage as a clean, versatile energy source capable of transforming power, transportation, and industry. From powering zero-emission buses to fuelling heavy industries and even homes, the hydrogen economy is on track to become a global reality.
Major economies such as Japan, South Korea, Germany, and Australia are already making multi-billion-dollar bets on hydrogen technologies. In Southeast Asia, Sarawak stands out for its early moves and natural advantages. With abundant hydropower resources, strategic geographic location, and a clear political will to lead in green innovation, Sarawak is emerging as Malaysia’s trailblazer in the hydrogen race.
But beyond government-led initiatives and industrial-scale exports, what does the hydrogen economy mean for Sarawak’s people and industries?
The Global Hydrogen Economy Landscape
Hydrogen is fast gaining global attention as the cornerstone of a clean energy revolution. With the urgency of climate change, the global energy sector is shifting toward decarbonisation — and hydrogen is poised to fill the gap in sectors that are hard to electrify, such as steelmaking, chemicals, aviation, and maritime transport.
A report by Deloitte projects that to fully decarbonise these “hard-to-abate” sectors, global hydrogen use may need to rise to nearly 600 million tonnes by 2050. Hydrogen’s potential to reduce emissions is equally significant. According to Deloitte’s Hydrogen Pathway Explorer (HyPE) model, hydrogen adoption could cut up to 85 gigatons of carbon emissions by mid-century — more than double the total global emissions recorded in 2021.
Beyond climate targets, hydrogen also offers strategic energy advantages. It can be produced domestically from renewable sources, reducing dependence on fossil fuel imports and buffering countries against global market volatility. As energy security becomes a rising concern, hydrogen opens the door to localised, clean, and scalable production.
The economic promise is just as compelling. Deloitte’s estimates place the hydrogen market’s potential value between USD 1.4 trillion and USD 2.5 trillion per year by 2050, with the capacity to generate up to 30 million jobs worldwide, especially across developing nations. With continuing technological breakthroughs — including cheaper electrolysis, better storage systems, and fuel cell advancements — and strong government backing, hydrogen is steadily transitioning from pilot projects to industrial-scale applications.
Yet, it is worth noting that the global hydrogen economy is still in its infancy. Although numerous projects were announced between 2021 and 2023, many are only now entering research and development or early execution stages. Nonetheless, a growing number of countries are leading the way with national strategies, massive investments, and infrastructure plans.
Global Leaders in the Hydrogen Economy
Saudi Arabia has set its sights on becoming the world’s largest green hydrogen exporter. With investments surpassing USD 10 billion, the kingdom aims to produce 1.2 million tonnes of green hydrogen by 2030, supported by flagship initiatives like the Helios Green Hydrogen Project, projected to deliver 650 tonnes of green hydrogen daily by 2026. With low production costs, vast solar and wind resources, and partnerships with Germany and Japan, Saudi Arabia is well-positioned as a global hydrogen heavyweight.
Japan, one of the earliest adopters, is investing approximately 15 trillion yen (USD 110 billion) over 15 years to build a robust hydrogen supply chain. It plans to deliver 3 million tonnes of hydrogen annually by 2030, scaling up to 20 million tonnes by 2050. Japan also holds nearly 25% of global hydrogen patents, and its strategy is widely regarded as a blueprint for hydrogen adoption worldwide.
China dominates global electrolyser production and deployment. With 780 MW of electrolyser capacity added in 2023 and over 9 GW in development, China leads in scaling hydrogen infrastructure. Projects like the 737 km Zhangjiakou-Caofeidian hydrogen pipeline, due by 2027, signal serious commitment to a hydrogen-powered future.
Other emerging players include the United States, India, South Korea, and a growing cluster of African nations like Mauritania, South Africa, Namibia, and ECOWAS states, each carving out roles in production, export, or technology.
Asia’s Rising Role in the Hydrogen Economy
The Asia-Pacific region is already the largest regional market for hydrogen, accounting for over 45% of global market share in 2024. China’s leadership in electrolyser manufacturing is unmatched, contributing 60% of global capacity — with plans to scale to an estimate of 50 GW by 2030. Meanwhile, Japan and South Korea are leading importers and technology innovators, investing heavily in international hydrogen corridors linking them to supply hubs in Australia, the Middle East, and even Southeast Asia.
ASEAN is increasingly stepping into the hydrogen space. Countries like Malaysia (especially Sarawak), Indonesia, and Singapore are developing national hydrogen strategies that capitalise on renewable energy resources and logistical positioning. These initiatives aim to support both domestic decarbonisation and participation in cross-border hydrogen trade.
Forecasts show the hydrogen market could grow from USD 230 billion in 2024 to nearly USD 1.66 trillion by 2050, with clean hydrogen (green and blue) expected to meet up to 95% of global hydrogen demand in accelerated adoption scenarios. Notably, hydrogen may surpass the value of liquefied natural gas (LNG) as early as 2030, cementing its status as the next major global energy commodity.
Sarawak’s Hydrogen Ambitions: From Regional Aspirant to Clean Energy Powerhouse
As global energy markets shift towards cleaner fuels, Sarawak is fast emerging as a serious contender in the green hydrogen race. Backed by vast hydropower capacity, strategic partnerships, and a forward-looking policy environment, the state is scaling up efforts to become a regional hydrogen leader and export hub.
Strategic Roadmap: The Blueprint for a Clean Hydrogen Economy
The launch of the Sarawak Hydrogen Economy Roadmap (SHER) in May 2025 marked a major milestone. Framed around four pillars—renewable energy, natural gas, carbon capture and storage (CCS), and hydrogen—the roadmap provides a strategic pathway to develop a clean hydrogen economy aligned with Malaysia’s National Energy Transition Roadmap (NETR) and Sarawak’s Post-COVID-19 Development Strategy (PCDS) 2030.
Key roadmap priorities include:
- Scaling up low-carbon hydrogen production
- Encouraging technological innovation such as cost-effective electrolysers
- Promoting policy certainty to attract long-term investment
- Cultivating international partnerships for technology and talent exchange
Flagship Projects: Green Hydrogen at Industrial Scale
Sarawak’s hydrogen economy is anchored by several large-scale, export-oriented production facilities:
- Southeast Asia’s first electrolyser assembly-distribution facility (SEA-DF) (Malaysian Partners: Lestari H2GaaS, subsidiary of Petroliam Nasional Berhad (PETRONAS)):
Targets 500 megawatts of electrolyses over the next five years (first launched in 2024), thus boosting the production of hydrogen. - H2biscus Project (Korean partners: Samsung Engineering, POSCO, Lotte Chemical):
Targets 7,000 tonnes/year of green hydrogen, along with 630,000 tonnes of ammonia and 460,000 tonnes of methanol for export.
Expected operation: 2027 - H2ornbill Project (Japanese partners: Sumitomo Corporation, Eneos):
- Designed for 90,000 tonnes/year of hydrogen, mostly for export to Japan, with 2,000 tonnes reserved for local use.
- Expected operation: 2028–2029
- H2X–Thales–SEDC facility in Samalaju:
- Forecast to produce 970,000 tonnes of green ammonia and 170,000 tonnes of hydrogen annually, underscoring Sarawak’s export potential.
These projects are crucial to Sarawak’s ambition of becoming a clean hydrogen export hub for the Asia-Pacific region, particularly Japan, South Korea, and Singapore.
Infrastructure and Domestic Innovation
Sarawak’s hydrogen strategy goes beyond exports. On the domestic front, it is developing an integrated hydrogen ecosystem featuring:
- Production and refuelling stations since 2019
- Hydrogen-powered buses and pilot fleets
- The RM6 billion Kuching Urban Transportation System (KUTS), a hydrogen-powered autonomous rapid transit (ART) system expected to launch in 2027
This makes Sarawak one of the earliest adopters of hydrogen-powered mobility in Southeast Asia.
Competitive Advantages: Natural Resources and Cost Leadership
Sarawak’s hydrogen edge lies in its low-cost renewable electricity, especially from hydropower—estimated as low as 3 sen per kWh—and its vast land availability for industrial-scale plants.
Other key advantages include:
- Early infrastructure readiness (pilot plants, buses, refuelling stations)
- A coordinated policy and investment framework through SHER
- Public-private partnerships and access to global expertise
Talent, Research, and Local Ecosystem
Recognising the need to develop local expertise, Sarawak has partnered with higher education institutions such as Curtin University Malaysia and UNIMAS, launching hydrogen-focused engineering programs and research centres such as the Centre for New and Sustainable Energy Research and Enterprise (Conserv).
At the same time, local firms are entering ESG-oriented supply chains. The first Sarawak SME ESG Report (by Alliance Bank, 2025) showed promising adaptation to sustainability practices in support of the green transition.
International Partnerships and Momentum
Sarawak’s hosting of the Hydrogen Economy Forum (H2EF) 2025 attracted over 400 delegates from countries such as Japan, Germany, South Korea, Australia, and the Netherlands. Notable agreements signed include:
- SEDC Energy + NGLTech: Technology and waste-to-hydrogen collaboration
- UNIMAS + Bureau Veritas: Hydrogen safety and training programs
- Sarawak Petchem + HighChem: Green chemicals and export logistics
Sarawak also confirmed that Kuching will host the Asia Pacific Green Hydrogen (APGH) Conference 2026, reinforcing its role in global hydrogen dialogue and investment.
Hydrogen as Sarawak’s Next Export Powerhouse: Promise and Pressures
Sarawak’s hydrogen ambition is not just domestic—it is export-driven. As highlighted by delegates at the Hydrogen Economy Forum (H2EF) 2025, Sarawak holds immense potential to become a major exporter of green hydrogen, leveraging three core strengths: abundant hydropower, strategic location, and large-scale industrial land.
Strong Export Fundamentals
Several factors position Sarawak favourably in the emerging hydrogen export market:
- Competitive Production Costs
Hydropower electricity as low as 3 sen per kWh allows Sarawak to produce green hydrogen at globally competitive prices—critical as buyers increasingly favour cost-effective and low-emission options.
- Large-Scale Industrial Output
Flagship projects like H2biscus and H2ornbill are expected to produce up to 240,000 tonnes of green hydrogen annually by 2028, alongside green ammonia and methanol for export.
- Targeted High-Demand Markets
Sarawak is strategically aligned with hydrogen-importing nations—Japan, South Korea, and Singapore—that have committed to net-zero goals and developed clear hydrogen import strategies.
- Regional Hydrogen Hub Potential
Sarawak aims to become the ASEAN green hydrogen hub, capitalising on its Bintulu Port, Malaysia’s primary LNG gateway, and future integration with the ASEAN Power Grid.
- Broader Economic Impact
Hydrogen exports are expected to diversify revenue, expand GDP, and support Sarawak’s ambition to become a high-income state by 2030. Revenue from hydrogen-related industries could also fund public services and future green initiatives.
- Complementary Infrastructure and Ecosystem Development
Export ambitions are strengthened by the growth of a domestic hydrogen ecosystem—urban hydrogen transport systems, refuelling infrastructure, and research-driven local talent pipelines.
Economic and Social Benefits
The rise of hydrogen as a major economic pillar offers transformative potential:
- Economic Diversification: Sarawak aims to double its GDP by 2030 (from RM136 billion in 2019 to RM280 billion), and the hydrogen economy is a key contributor. Export markets for hydrogen, ammonia, and methanol offer new growth engines beyond oil, gas, and timber. The hydrogen market’s global growth also opens new revenue streams from hydrogen, green ammonia, and methanol exports, as well as carbon trading and related green solutions.
- Job Creation: While workforce projections are still developing, the broader hydrogen economy could help generate up to 200,000 new job opportunities. New university programs and partnerships (e.g., Curtin’s Bachelor of Energy Engineering) are equipping locals for high-skilled roles in the sector.
- Environmental Gains: Over 70% of Sarawak’s energy already comes from renewable sources, positioning it well to supply zero-emission green hydrogen for heavy industries, shipping, and aviation—both locally and internationally.
- Energy Security: Producing clean hydrogen from hydropower reduces reliance on fossil fuels, stabilises long-term energy costs, and enhances national energy resilience.
Challenges to Address
However, transitioning from potential to reality will not be without obstacles. Experts such as Prof. Brian Wong (Swinburne Sarawak) and Madam Tham Siew Yean (ISEAS-Yusof Ishak Institute) caution that significant economic, technological, regulatory, and social challenges must be overcome.
1. Economic Viability and Financing
- Despite low electricity costs, high capital expenditure—particularly for electrolysers and infrastructure—raises overall production costs.
- The nascent global green hydrogen market means limited demand certainty, which complicates financing and bankability for large-scale projects.
- Developers may struggle to secure funding without long-term offtake agreements from overseas buyers.
2. Technology and Infrastructure Gaps
- Storage and transport of hydrogen remain expensive and technically complex.
- Hydrogen must be converted into carriers like ammonia for export, increasing energy use and cost.
- Fuel cell refuelling networks, essential for transport applications, are not yet widespread.
- Retrofitting existing industries to adopt hydrogen adds further cost and complexity.
3. Environmental and Community Considerations
- Hydrogen projects, while clean in output, require large land areas and water resources. Managing environmental impacts and securing community support will be vital.
- Proactive environmental and social governance (ESG) frameworks will be critical for long-term viability and international acceptance.
4. Policy and Market Uncertainty
- Clear, stable policies and incentives are required to attract sustained investment.
- Sarawak must harmonise local hydrogen strategies with national and international standards, including certification, safety, and carbon accounting.
- The current lack of mature market mechanisms for hydrogen (e.g., carbon pricing or guarantees of origin) may deter potential buyers.
5. Scaling and Operational Risks
- Transitioning from pilot to commercial scale involves significant risk. Similar projects globally have faced setbacks or cost overruns.
- Public trust is another factor—concerns about the safety of hydrogen-powered vehicles and stations could hinder adoption.
Conclusion: From Pioneer to Export Leader
Sarawak’s hydrogen journey is just beginning, but its ambitions are clear. The state is laying the groundwork not only to power its own clean economy but also to supply the world with sustainable hydrogen fuels.
Balancing bold export ambitions with realistic planning, social responsibility, and resilient infrastructure will determine whether Sarawak can move from a green energy pioneer to a clean hydrogen powerhouse by 2035.
References:
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- Initial phase of KUTS to be operational by 2027
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- Hydrogen economy in Sarawak: A realistic direction to shape the future of sustainable energy systems?
