Why Ammonia, Not Hydrogen, Is Driving the Next Energy Deals

Contract-backed ammonia offtake cuts risk, unlocks financing, and speeds scalable hydrogen demand ahead of costly network buildouts

22 Jan 2026

The US hydrogen market is moving into a more serious phase. After years of lofty forecasts, progress is now being driven by deals that work in the real world. The focus has shifted from ambition to execution.

That change was on clear display this month when ExxonMobil announced a long-term agreement to supply about 250,000 tonnes a year of low-carbon ammonia from its planned Baytown, Texas project. Marubeni will take the volume and place it with customers looking to cut emissions without reworking their operations. The message is simple. Demand is no longer theoretical. Buyers are ready to sign.

For many in the industry, the logic is straightforward. Hydrogen demand is growing, but moving pure hydrogen at scale remains expensive and limited. Pipelines are scarce. Shipping options are few. Low-carbon ammonia offers a practical alternative.

Ammonia can be stored, transported, and handled using infrastructure that already exists. That makes it an effective bridge between today’s constraints and a future hydrogen network that is still years away. For large industrial users, it brings dependable supply, clearer pricing, and less delivery risk.

ExxonMobil described the agreement as a step toward expanding commercial low-carbon energy. Analysts see something broader at work. Long-term offtake contracts are becoming essential to making projects financeable. Lenders want proof of demand, not just strong technology. Bankability has become the test that matters most.

Not every project is passing that test. Air Products recently said it would exit three US developments after a portfolio review. The move was a reminder that timelines and costs still need to line up. As the sector matures, discipline is replacing exuberance.

Taken together, these signals point to a market that is growing up fast. Winners are likely to be companies that lock in customers early and show they can deliver at scale. With more low-carbon ammonia contracts coming together, the hydrogen economy is shifting from vision to verifiable business, and the transition may move faster than many expect.