Introduction

Producing low-carbon hydrogen at competitive costs is one of the key factors in getting to net-zero emissions. Not only could it be used as a replacement for fossil fuels in hard-to-decarbonize industries such as steel production, but it may also eventually be used as fuel for space heating, large trucks, or even to create synthetic fuels for aviation.

However, today the most common form of hydrogen produced is gray hydrogen — with some 90 million metric tons¹ created for the production of commodities such as ammonia, generating around one billion metric tons of carbon dioxide (CO2), or about 2% of global CO2 equivalent emissions.

While industries and governments are exploring lower-carbon solutions such as blue and green hydrogen as long-term tools that can improve security of energy supply and reduce reliance on Russian gas, there is considerable debate as to the most cost-effective and environmentally attractive production route. For example, should low-carbon hydrogen be made using electricity, generated by renewable energy, producing so-called green hydrogen? Or, should it be made from natural gas, relying on carbon capture and storage technology to capture the carbon, producing blue hydrogen?

In this analysis, we will assess the hydrogen alternatives and their implications for policy and industry. We’ll start with the cost and full-system carbon footprint of green hydrogen today under different circumstances and follow with a discussion of how these impacts might change through time.

^{1 Source: IEA, Global Hydrogen review 2021}