Key takeaways
- Agriculture remains underfunded, attracting just 1% of sustainable technology investment despite accounting for around 12% of global greenhouse gas emissions.
- Limited green hydrogen supply is slowing the development of low-carbon fertilisers, creating a bottleneck for agricultural decarbonisation and broader net-zero ambitions.
- Cheaper renewable power and advances in electrolyzer technology could improve green hydrogen economics, but investor confidence remains constrained by years of underperformance and policy uncertainty.
According to a Bain & Company report, the limited supply of green hydrogen has constrained the production of low-cost green steel, hindering the development of green fertiliser and some zero-emission fuels. This, in turn, has stalled transitions in sectors such as agriculture, transport and energy.
But a breakthrough in electrolyzer technology, such as capillary-fed electrolysis, combined with access to cheap renewable electricity, could make green hydrogen production economically viable again. The question remains whether funding will support this development, given the technology’s underperformance over the past decade.
Agriculture is particularly hamstrung by underfunding, having attracted about 1% of the $2.4tn invested in sustainable technologies since 2016. While global funding has continued to increase, rising by 15% annually between 2020 and 2022 before slowing to 7% a year between 2023 and 2025, investment has become concentrated in sectors with proven economics, such as green energy, buildings and mobility.
Agriculture struggles to attract climate investment
“The biggest issue [with agriculture] we identified is underinvestment,” said Jean-Charles van den Branden, Head of Bain’s Global Sustainability practice. “Agriculture attracted only about 1% of sustainable investment over the past decade despite accounting for roughly 12% of global greenhouse gas emissions.
“Investment tends to flow to areas with proven economics. Underperforming technologies such as green fertilisers and methane inhibitors are not yet commercially attractive enough to draw more capital.”
For dairy farmers, the implications are felt primarily through fertiliser. Green hydrogen is a critical feedstock for low-carbon ammonia production, but limited availability and high costs have delayed scale-up. This makes it harder for dairy producers and processors to cut Scope 3 emissions linked to feed and forage production.
But for green fertilisers to take off, a key feedstock in green hydrogen must become widely and economically available.
“Two conditions play the largest role in green hydrogen competitiveness: access to cheap renewable electricity and advances in electrolyzer technology,” said Van den Branden.
Investor confidence is stronger in areas where sustainability supports resilience, supply chain security and economics. “We have seen companies invest upstream in regenerative practices, water efficiency, soil health and climate-resilient crops to strengthen their supply chains,” he said.
“We have seen companies invest upstream in regenerative practices, water efficiency, soil health and climate-resilient crops to strengthen their supply chains.”
“In energy, renewable power has scaled rapidly, and we expect solar and wind to keep growing. Electrolyzer technology is the bigger uncertainty.”
Green hydrogen remains the missing link
What would unlock green hydrogen, and the transitions it is currently blocking, would be technological advances, Van den Branden said.
“Technological breakthroughs will make green hydrogen more competitive,” he explained. “We cannot predict how quickly this will happen, but past developments show that when technology, behaviour and policy align, technologies can scale much faster than expected. CEOs should therefore monitor the technology and economics closely and be ready to move as confidence strengthens.”
An electrolyzer works by splitting water into hydrogen and oxygen using electricity. However, current technologies face limitations, including efficiency and reliability challenges, as well as constraints related to storage, water availability and access to renewable energy.
At the same time, those willing to invest in the technology are seeking systems that are efficient and inexpensive to run in order to produce low-cost green hydrogen.
Government support programmes are also lacking, despite many countries increasingly incorporating green hydrogen into their decarbonisation strategies.
Source:
Arash Emdadi, Bin Bian, Bruce E. Logan; The Problems and Needs of Green Hydrogen and Electrolyzer Customers. ACS Sustainable Resource Management 2026; https://doi.org/10.1021/acssusresmgt.6c00371
