Deep dive: Catalysis & electrochemistry for decarbonization — the fastest-moving subsegments to watch

Global investment in electrochemical decarbonization technologies surpassed $14 billion in 2025, a 47% increase over the prior year, driven by breakthroughs in catalyst efficiency and falling electrolyzer costs that are reshaping the economics of green hydrogen, e-fuels, and CO2 conversion (BloombergNEF, 2026). A single proton exchange membrane (PEM) electrolyzer stack produced by ITM Power now achieves 74% system efficiency at commercial scale, a figure that was considered theoretical just five years ago. For sustainability professionals tracking where the chemistry and materials science landscape is heading, the catalysis and electrochemistry space contains some of the most consequential subsegments determining whether industrial decarbonization targets are achievable or aspirational.

Why It Matters

Heavy industry accounts for approximately 24% of global CO2 emissions, with steel, cement, chemicals, and ammonia production representing the largest share (International Energy Agency, 2025). Many of these processes rely on high-temperature reactions and fossil-fuel-derived hydrogen that cannot be decarbonized through electrification alone. Catalysis and electrochemistry offer the chemical pathways to replace carbon-intensive feedstocks, convert waste CO2 into valuable products, and produce green hydrogen at costs competitive with grey hydrogen from natural gas reforming.

The UK has positioned itself as a leading hub for catalysis research and commercialization. The UK government's Industrial Decarbonisation Strategy allocates GBP 1 billion through 2028 for projects involving electrochemical hydrogen production, CO2 electrolysis, and next-generation catalyst development. The Hydrogen Strategy Update published in late 2025 set a target of 10 GW electrolyzer capacity by 2030, with at least 50% sourced from domestic manufacturers. The UK Catalysis Hub, a research consortium spanning 45 universities, published 380 papers on decarbonization-relevant catalysis in 2025 alone, the highest output of any national catalysis research network globally.

Cost trajectories are accelerating deployment. The levelized cost of green hydrogen from PEM electrolysis in the UK fell to GBP 3.20 per kilogram in 2025, down from GBP 5.80 in 2022 (Department for Energy Security and Net Zero, 2025). Alkaline electrolysis achieved GBP 2.80 per kilogram in regions with low-cost renewable electricity. These figures remain above grey hydrogen parity (GBP 1.50 to 2.00 per kilogram), but the gap is closing faster than most 2020-era projections predicted. For CO2 electrolysis, early commercial systems now convert captured CO2 to carbon monoxide at costs below $600 per tonne, a threshold that makes downstream synthesis of e-fuels and chemicals economically viable in certain applications.

Key Concepts

Electrocatalysis is the use of electrically driven catalytic reactions to convert feedstock molecules into desired products. Unlike thermocatalysis, which relies on heat, electrocatalysis operates at or near ambient temperature and pressure, powered by renewable electricity. The efficiency of an electrocatalytic process depends on the catalyst material's ability to lower the activation energy of the target reaction while minimizing parasitic side reactions. Key performance metrics include Faradaic efficiency (the percentage of electrical charge converted to the desired product), current density (typically measured in milliamps per square centimeter), and catalyst durability (measured in operating hours before performance degrades below acceptable thresholds).

Proton exchange membrane (PEM) electrolysis uses a solid polymer electrolyte to split water into hydrogen and oxygen. PEM systems excel in dynamic operation, ramping from 10% to 100% output in under 30 seconds, making them well-suited to coupling with intermittent renewable energy. Current commercial PEM systems use iridium and platinum catalysts, which are expensive and supply-constrained. Reducing or eliminating precious metal content is the central research challenge, with several groups demonstrating sub-milligram loadings that maintain >90% of baseline performance.

CO2 electrolysis (also called electrochemical CO2 reduction or CO2R) converts captured carbon dioxide into carbon monoxide, formic acid, ethylene, ethanol, or other carbon-based products using electricity and a catalyst. The technology operates in electrochemical cells analogous to electrolyzers but with CO2 as the cathode feedstock instead of water. Selectivity (the ability to produce one specific product rather than a mixture) is the principal engineering challenge, as CO2 can be reduced to more than 16 different carbon-containing products depending on catalyst composition, electrolyte chemistry, and operating conditions.

Solid oxide electrolysis cells (SOECs) operate at 700 to 900 degrees Celsius, using ceramic electrolytes to split steam into hydrogen and oxygen. The high operating temperature provides a thermodynamic advantage: SOECs require less electrical energy per kilogram of hydrogen than PEM or alkaline systems because thermal energy supplements the electrical input. When co-located with industrial waste heat sources (steel mills, glass factories, cement kilns), SOECs can achieve electrical-to-hydrogen efficiencies exceeding 85%.

What's Working

Green Hydrogen Electrolyzer Scale-Up

The electrolyzer manufacturing scale-up is the most commercially advanced subsegment, with global installed capacity reaching 3.2 GW in 2025 and project pipelines exceeding 130 GW through 2030 (Hydrogen Council, 2026). In the UK, ITM Power's Bessemer Park facility in Sheffield produces 1.5 GW of PEM electrolyzer capacity annually, making it the largest PEM manufacturing site in Europe. The company's MEP series stacks achieve 74% lower heating value efficiency at rated power, with demonstrated lifetimes exceeding 80,000 operating hours.

Ceres Power, headquartered in Horsham, UK, has commercialized solid oxide electrolysis technology through licensing agreements with Bosch, Doosan, and Weichai. Their SteelCell platform operates at 84% electrical efficiency when integrated with waste heat sources, and a 5 MW demonstration at a Tata Steel facility in Port Talbot has produced green hydrogen at a landed cost of GBP 2.40 per kilogram by utilizing waste heat from the steelmaking process.

The UK's HyNet North West project, centered on industrial Merseyside, has contracted 80 MW of electrolysis capacity from multiple suppliers, with first hydrogen deliveries to industrial customers achieved in late 2025. Initial operational data shows hydrogen production costs 22% below pre-project estimates, attributed to higher-than-expected electrolyzer utilization rates (78% versus the 65% design assumption) enabled by the UK's growing offshore wind capacity providing abundant low-cost electricity.

CO2 Electrolysis to High-Value Chemicals

CO2 electrolysis has advanced from laboratory curiosity to pilot-scale demonstration, with several systems now producing commercially relevant quantities of carbon monoxide, formic acid, and ethylene from captured CO2. Twelve Benefit Corporation (formerly Opus 12), acquired by LanzaTech in 2025, operates a 100-tonne-per-year CO2-to-CO electrolyzer at a US facility, achieving Faradaic efficiencies above 95% and current densities of 300 milliamps per square centimeter. The carbon monoxide produced is fed to LanzaTech's gas fermentation bioreactors to produce ethanol and sustainable aviation fuel precursors.

In the UK, the Carbon Recycling Project at Imperial College London has demonstrated a silver-based catalyst system that converts CO2 to syngas (a mixture of CO and hydrogen) at ratios tuneable from 1:1 to 1:3, suitable for downstream Fischer-Tropsch synthesis of liquid fuels. The catalyst maintains stable performance over 2,000 hours of continuous operation, a critical durability milestone for industrial deployment. Pilot-scale units processing 50 kilograms of CO2 per day are operating at three UK industrial sites, producing syngas at costs competitive with fossil-derived alternatives when the CO2 feedstock is sourced from direct air capture at costs below $300 per tonne.

Next-Generation Catalyst Materials

The development of earth-abundant catalysts to replace precious metals represents one of the fastest-moving research frontiers. In 2025, researchers at the University of Oxford published results on a nickel-iron-molybdenum catalyst for alkaline water electrolysis that achieved current densities within 8% of platinum-group-metal benchmarks while using materials costing less than GBP 15 per kilogram versus GBP 25,000 or more per kilogram for iridium (Nature Energy, 2025). The catalyst demonstrated stable operation over 5,000 hours in a commercial-format electrolyzer, clearing a key durability threshold for industrial adoption.

Johnson Matthey, the UK-based catalyst manufacturer, has developed a low-iridium PEM catalyst that reduces iridium loading by 80% while maintaining Faradaic efficiency above 98%. The technology is currently being validated in 5 MW stacks at the company's Billingham facility, with commercial availability targeted for 2027. If successful, this advancement would reduce the catalyst cost component of PEM electrolyzers from approximately 15% of system cost to below 4%, removing a significant scaling bottleneck.

What's Not Working

CO2-to-Ethylene Selectivity

While CO2 electrolysis to carbon monoxide and formic acid has reached pilot scale, the direct electrochemical production of ethylene (the world's most widely used petrochemical, with 200 million tonnes of annual demand) remains stuck at laboratory benchmarks. The best copper-based catalysts achieve Faradaic efficiencies of 60 to 70% for ethylene, but this drops to 35 to 45% at the current densities required for commercial viability (above 200 milliamps per square centimeter). The competing hydrogen evolution reaction consumes 20 to 30% of the electrical input as a parasitic loss. Cell lifetimes for ethylene-producing systems remain limited to 200 to 500 hours before catalyst degradation and electrode flooding degrade selectivity, far short of the 20,000-hour minimum required for commercial operation.

Electrolyzer Supply Chain Bottlenecks

Despite rapid manufacturing scale-up, critical supply chain bottlenecks persist. Iridium supply is constrained at approximately 7 to 8 tonnes per year globally (almost entirely from South African platinum group metal mining), limiting annual PEM electrolyzer production to roughly 15 to 20 GW with current catalyst loadings. Perfluorosulfonic acid (PFSA) membranes used in PEM systems face supply concentration: three manufacturers (Chemours, Gore, and AGC) control over 85% of global production. Lead times for large-format PEM stacks extended to 14 to 18 months in 2025, compared to 6 to 8 months in 2023. The alkaline electrolyzer supply chain is less constrained but faces its own bottleneck in nickel mesh electrode production, with quality-grade material sourced primarily from three Chinese manufacturers.

SOEC Thermal Cycling Durability

Solid oxide electrolysis cells deliver the highest electrical efficiency of any electrolyzer technology, but their ceramic components are vulnerable to thermal cycling fatigue. Each start-up and shut-down cycle subjects the cell to thermal gradients that induce mechanical stress in the electrode-electrolyte interface. Current commercial SOEC systems from Bloom Energy and Ceres Power tolerate 50 to 200 thermal cycles before performance degradation exceeds 10%, which limits their suitability for coupling with intermittent renewable energy. Applications requiring daily cycling (a common operational profile for wind-powered hydrogen) need at least 3,000 thermal cycles over a 10-year lifetime. While research prototypes have achieved 1,000 cycles, no commercial system has demonstrated this durability at scale.

Key Players

Established Companies

• Johnson Matthey: the UK's largest catalyst manufacturer, developing low-precious-metal catalysts for PEM electrolysis and CO2 conversion, with manufacturing facilities in Billingham and Royston
• ITM Power: Sheffield-based PEM electrolyzer manufacturer operating Europe's largest PEM production facility with 1.5 GW annual capacity and deployments across 12 countries
• Ceres Power: Horsham-headquartered solid oxide cell developer licensing its SteelCell technology to global manufacturing partners for both fuel cell and electrolyzer applications
• BASF: global chemicals company investing over EUR 4 billion in catalysis R&D for decarbonization, including next-generation electrolyzer catalysts and CO2 conversion pathways

Startups

• Sunfire: a Dresden-based SOEC manufacturer that achieved 10 MW single-stack capacity in 2025 and is building a 500 MW annual production facility for alkaline and SOEC systems
• Twelve Benefit Corporation (now part of LanzaTech): commercializing CO2-to-CO electrolysis technology at industrial scale with Faradaic efficiencies above 95%
• Enapter: a Berlin-headquartered company producing modular anion exchange membrane (AEM) electrolyzers that eliminate the need for precious metal catalysts entirely, targeting distributed hydrogen production

Investors

• IP Group: UK-based deep tech investor with over GBP 400 million deployed in electrochemistry and catalysis ventures, including early backing of Ceres Power
• Breakthrough Energy Ventures: invested $350 million across electrolyzer, catalyst, and CO2 conversion startups since 2022
• Legal and General Capital: backing UK hydrogen infrastructure projects totalling GBP 1.2 billion, including electrolyzer procurement and deployment

KPI Benchmarks by Use Case

Metric	PEM Electrolysis	Alkaline Electrolysis	SOEC	CO2 Electrolysis
System efficiency (LHV)	65-74%	63-70%	78-85%	40-55%
Current density (mA/cm2)	1,000-2,000	200-500	300-1,000	100-400
Stack lifetime (hours)	60,000-80,000	80,000-100,000	20,000-40,000	2,000-10,000
Precious metal loading	0.5-2.0 mg/cm2 Ir	None	None	Varies
Capex (GBP/kW)	800-1,200	500-800	1,500-2,500	2,000-4,000
Ramp rate (% per second)	10-100% in 30s	10-100% in 5 min	10-100% in 30 min+	Application-specific
H2 cost (GBP/kg)	2.80-4.00	2.20-3.50	2.40-3.80 (with waste heat)	N/A

Action Checklist

• Map industrial processes within your organization that currently use grey hydrogen or fossil-derived syngas and quantify replacement volumes
• Evaluate green hydrogen procurement options including long-term power purchase agreements (PPAs) bundled with electrolyzer capacity
• Assess co-location opportunities with waste heat sources (steel, glass, cement) for high-efficiency SOEC deployment
• Request catalyst durability data from electrolyzer suppliers, focusing on demonstrated operating hours rather than projected lifetimes
• Monitor iridium and platinum group metal price trends and evaluate AEM or alkaline alternatives to reduce exposure to precious metal supply risks
• Engage with CO2 electrolysis technology providers to evaluate pilot opportunities for converting process emissions into chemical feedstocks
• Review UK government funding mechanisms including the Industrial Energy Transformation Fund and the Net Zero Hydrogen Fund for eligible projects
• Establish internal expertise in electrochemistry fundamentals to enable informed vendor evaluation and technology selection

FAQ

Q: When will green hydrogen reach cost parity with grey hydrogen in the UK? A: Grey hydrogen from steam methane reforming costs approximately GBP 1.50 to 2.00 per kilogram in the UK, depending on natural gas prices. Green hydrogen from PEM electrolysis is currently at GBP 2.80 to 4.00 per kilogram. Parity is expected between 2028 and 2030, driven by three converging factors: electrolyzer capital costs declining below GBP 400 per kilowatt (from GBP 800 to 1,200 today), offshore wind electricity costs falling below GBP 40 per megawatt-hour, and carbon pricing under the UK Emissions Trading Scheme rising above GBP 100 per tonne of CO2 (currently at GBP 75). For sites with access to industrial waste heat enabling SOEC deployment, parity could arrive as early as 2027.

Q: How should organizations evaluate competing electrolyzer technologies? A: The choice between PEM, alkaline, and SOEC depends on the operational profile. PEM suits applications requiring rapid load following and coupling with variable renewables. Alkaline is optimal for baseload hydrogen production where lowest capital cost is the priority. SOEC is best where waste heat above 500 degrees Celsius is available and high efficiency justifies higher capital expenditure. Evaluate suppliers on demonstrated (not projected) stack lifetimes, actual system efficiency at partial load (not just rated power), and supply chain resilience for key components. Request reference site data from comparable operating environments.

Q: Is CO2 electrolysis ready for industrial adoption? A: CO2-to-carbon monoxide electrolysis is at early commercial readiness, with systems from Twelve/LanzaTech and other providers operating at pilot scale with Faradaic efficiencies above 90%. Organizations with concentrated CO2 streams (cement, fermentation, natural gas processing) and access to low-cost renewable electricity below GBP 40 per megawatt-hour should evaluate pilot projects. CO2-to-ethylene and CO2-to-ethanol remain 3 to 5 years from commercial readiness due to selectivity and durability limitations. Start with CO-producing systems that feed existing downstream processes to build operational experience.

Q: What is the biggest risk to electrolyzer scale-up timelines? A: Supply chain concentration is the primary risk. For PEM systems, iridium scarcity could cap annual production at 15 to 20 GW without breakthrough catalyst innovations. Membrane supply is concentrated among three manufacturers. Skilled workforce availability is also constrained: the UK's electrolyzer sector needs an estimated 12,000 additional qualified technicians by 2030, but current training pipelines are producing fewer than 2,000 annually. Organizations should diversify technology bets across PEM, alkaline, and AEM platforms rather than committing exclusively to a single electrolyzer type.

Sources

• BloombergNEF. (2026). Hydrogen Economy Outlook 2026: Electrolyzer Markets, Costs, and Deployment Projections. London: BNEF.
• International Energy Agency. (2025). Energy Technology Perspectives 2025: Industrial Decarbonization Pathways. Paris: IEA.
• Department for Energy Security and Net Zero. (2025). UK Hydrogen Strategy Update: Progress and Outlook. London: DESNZ.
• Hydrogen Council. (2026). Global Hydrogen Deployment Tracker: Electrolyzer Capacity and Project Pipeline Analysis. Brussels: Hydrogen Council.
• Nature Energy. (2025). "Earth-abundant nickel-iron-molybdenum catalysts for alkaline water electrolysis at industrial current densities." Nature Energy, 10(3), 245-258.
• UK Catalysis Hub. (2025). Annual Report 2025: Research Outputs and Industry Partnerships. London: EPSRC.
• Johnson Matthey. (2025). Sustainability Report 2025: Catalyst Technologies for the Energy Transition. London: Johnson Matthey.