Hydrogen economy

The hydrogen economy is an umbrella term for the roles hydrogen can play alongside low-carbon electricity to reduce emissions of greenhouse gases. The aim is to reduce emissions where cheaper and more energy-efficient clean solutions are not available.^[2] In this context, hydrogen economy encompasses the production of hydrogen and the use of hydrogen in ways that contribute to phasing-out fossil fuels and limiting climate change.

Hydrogen can be produced by several means. Most hydrogen produced today is gray hydrogen, made from natural gas through steam methane reforming (SMR). This process accounted for 1.8% of global greenhouse gas emissions in 2021.^[3] Low-carbon hydrogen, which is made using SMR with carbon capture and storage (blue hydrogen), or through electrolysis of water using renewable power (green hydrogen), accounted for less than 1% of production.^[4] Virtually all of the 100 million tonnes^[5] of hydrogen produced each year is used in oil refining (43% in 2021) and industry (57%), principally in the manufacture of ammonia for fertilizers, and methanol.^{[6]: 18, 22, 29}

To limit global warming, it is generally envisaged that the future hydrogen economy replaces gray hydrogen with low-carbon hydrogen. As of 2024 it is unclear when enough low-carbon hydrogen could be produced to phase-out all the gray hydrogen.^[7] The future end-uses are likely in heavy industry (e.g. high-temperature processes alongside electricity, feedstock for production of green ammonia and organic chemicals, as alternative to coal-derived coke for steelmaking), long-haul transport (e.g. shipping, and to a lesser extent hydrogen-powered aircraft and heavy goods vehicles), and long-term energy storage.^[8][9] Other applications, such as light duty vehicles and heating in buildings, are no longer part of the future hydrogen economy, primarily for economic and environmental reasons.^[10][11] Hydrogen is challenging to store, to transport in pipelines, and to use. It presents safety concerns since it is highly explosive, and it is inefficient compared to direct use of electricity. Since relatively small amounts of low-carbon hydrogen are available, climate benefits can be maximized by using it in harder-to-decarbonize applications.^[11]

As of 2023^[update] there are no real alternatives to hydrogen for several chemical processes in which it is currently used, such as ammonia production for fertilizer.^[12] The cost of low- and zero-carbon hydrogen is likely to influence the degree to which it will be used in chemical feedstocks, long haul aviation and shipping, and long-term energy storage. Production costs of low- and zero-carbon hydrogen are evolving. Future costs may be influenced by carbon taxes, the geography and geopolitics of energy, energy prices, technology choices, and their raw material requirements. It is likely that green hydrogen will see the greatest reductions in production cost over time.^[13] The U.S. Department of Energy's Hydrogen Hotshot Initiative seeks to reduce the cost of green hydrogen drop to $1 a kilogram during the 2030s. ^[14]