Green hydrogen is hydrogen produced by electrolysis using renewable electricity. It is expensive today but potentially transformative for hard to abate sectors. This guide covers the technology, economics, and where green hydrogen actually makes sense.
The colours of hydrogen
| Colour | Source | Emissions |
|---|---|---|
| Green | Electrolysis with renewable electricity | Near zero |
| Blue | Natural gas reforming with CCS | Low if CCS captures well |
| Grey | Natural gas reforming | High (10 kg CO2 per kg H2) |
| Pink | Electrolysis with nuclear electricity | Low |
| Turquoise | Methane pyrolysis producing solid carbon | Low |
How electrolysis works
Electricity splits water (H2O) into hydrogen (H2) and oxygen (O2). Two dominant electrolyser types: alkaline (mature, lower cost) and PEM (proton exchange membrane, higher efficiency, more flexible). Emerging: solid oxide (high efficiency, high temperature).
Current scale
Where green hydrogen makes sense
| Application | Green H2 case |
|---|---|
| Fertiliser (ammonia) | Strong. Replaces grey H2 in existing use. |
| Steel making | Strong. Direct reduction of iron. |
| Refining | Existing hydrogen use in refineries. |
| Long duration storage | Only viable long duration option in some scenarios. |
| Aviation and shipping fuels | Via synthetic fuels or ammonia. |
| Passenger cars | Weak. Batteries win. |
| Home heating | Weak. Heat pumps win. |
Cost trajectory
Green hydrogen currently USD 4 to 8 per kg. Grey hydrogen USD 1 to 2 per kg. Green must fall to USD 2 to 3 per kg to be broadly competitive. Cost falls with renewable electricity price and electrolyser cost. See IEA Global Hydrogen Review 2024.
Cost breakdown
| Component | Share |
|---|---|
| Renewable electricity | 60 to 70% |
| Electrolyser CAPEX | 20 to 30% |
| Water treatment | Small |
| Compression and storage | 5 to 10% |
| OPEX (excluding electricity) | Small |
Hydrogen storage
Hydrogen storage is hard because of low density. Options include compressed (700 bar), liquid (very cold), salt caverns, pipelines, and chemical carriers (ammonia, LOHC). See our companion article on hydrogen storage challenges.
Policy support
US IRA production tax credit up to USD 3 per kg. EU Hydrogen Bank. UK, Germany, Japan, Korea national strategies. Aggressive policy driving investment.
Contemporary challenges
Leading regions
| Region | Focus |
|---|---|
| Middle East | Solar based export |
| Chile | Wind based export |
| Australia | Export projects |
| Europe | Industrial decarbonisation |
| US | IRA driven hub development |
| China | Domestic industrial applications |
Where green hydrogen is going
- Continued electrolyser cost reduction.
- Industrial project deployment.
- Ammonia based hydrogen trade emerging.
- Steel decarbonisation pilots scaling.
- Airline sustainable aviation fuel from hydrogen.
- Reduced expectations for consumer applications.
Frequently asked questions
Is green hydrogen renewable?
Yes when made with renewable electricity.
How expensive is it?
USD 4 to 8 per kg currently. Grey is USD 1 to 2 per kg.
What is best use?
Existing hydrogen users (fertiliser, refining, steel). Not consumer cars or heating.
Can it replace natural gas?
Limited applications. Direct electrification usually better where possible.
Is it clean to burn?
Yes. Only water as byproduct.
How is it stored?
Compressed, liquid, salt cavern, or chemical carrier.
Are cars a good use?
Generally no. Batteries better for most use cases.
What about aviation?
Possibly for long haul via synthetic fuels.
Are hydrogen trains viable?
For some rural routes. Battery trains often better on major lines.
Where can I read more?
IEA Global Hydrogen Review, IRENA, national strategies.
Summary
Green hydrogen is real technology growing rapidly on policy support. Cost is still high but falling. Best use cases are hard to abate sectors like fertiliser, steel, and refining, not consumer cars or heating. Storage remains challenging. Deployment is running behind announced pipeline but scaling. The next decade will show whether green hydrogen fulfils its industrial promise.
Next reading
- Hydrogen storage
- Hydrogen refueling
- Renewable energy complete guide
- Browse the UtilityRadar directory
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