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The hydrogen economy is a term for the role hydrogen as an energy carrier to complement electricity as part a long-term option to reduce emissions of . The aim is to reduce emissions where cheaper and more energy-efficient clean solutions are not available. 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 reforming (SMR). This process accounted for 1.8% of global greenhouse gas emissions in 2021.Greenhouse gas emissions totalled 49.3 Gigatonnes CO2e in 2021. 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. Of the 100 million tonnes of hydrogen produced in 2021, 43% was used in oil refining and 57% in industry, principally in the manufacture of ammonia for fertilizers, and methanol.
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. The future end-uses are likely in heavy industry (e.g. high-temperature processes alongside electricity, feedstock for production of 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.
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. Hydrogen is challenging to store, to transport in pipelines, and to use. It presents Hydrogen safety concerns since it is highly explosive, and it is inefficient compared to direct Electrification. Since relatively small amounts of low-carbon hydrogen are available, climate benefits can be maximized by using it in harder-to-decarbonize applications.
there are no real alternatives to hydrogen for several chemical processes in which it is currently used, such as ammonia production for [[fertilizer]]. 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. 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, though the cost of electrolyzers rose 50% between 2021 and 2024.Bettenhausen, Craig. [https://cen.acs.org/energy/hydrogen-power/Green-hydrogen-still-making-gains/103/web/2025/05 "Green hydrogen is still making gains"], ''Chemical and Engineering News'', May 8, 2025
A hydrogen economy was proposed by the University of Michigan to solve some of the negative effects of using hydrocarbon fuels where the carbon is released to the atmosphere (as carbon dioxide, carbon monoxide, unburnt hydrocarbons, etc.). Modern interest in the hydrogen economy can generally be traced to a 1970 technical report by Lawrence W. Jones of the University of Michigan, in which he echoed Bockris' dual rationale of addressing energy security and environmental challenges. Unlike Haldane and Bockris, Jones only focused on nuclear power as the energy source for electrolysis, and principally on the use of hydrogen in transport, where he regarded aviation and heavy goods transport as the top priorities.
In 1974 International Energy Agency (IEA) and the International Association for Hydrogen Energy (IAHE) were established. These organizations had several initiatives including advocating for national strategies to increase interest and visibility of the hydrogen economy.
Early 2020s takes on the hydrogen economy share earlier perspectives' emphasis on the complementarity of electricity and hydrogen, and the use of electrolysis as the mainstay of hydrogen production. They focus on the need to limit Climate change to 1.5 °C and prioritize the production, transportation and use of green hydrogen for 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, aviation and to a lesser extent heavy goods vehicles), and long-term energy storage.
In 2017 Japan published their strategy with a proposal to become the world's first "hydrogen society".Nagashima, M. (2018). Japan's hydrogen strategy and its economic and geopolitical implications, Études de l’Ifri, Paris, France: Ifri. ISBN 978-2-36567-918-3 Many provinces and cities in China have established hydrogen strategies. The European Union strategy, adopted in 2021, outlines a plan to develop large scale infrastructure for hydrogen including electrolysers in collaboration with multiple trade organizations. The US hydrogen strategy "presents a strategic framework for achieving large-scale production and use of hydrogen" over a 30 year period. Analysis suggests that even nations reliant on exports of natural gas like Qatar could benefit from hydrogen strategies that leverage existing infrastructure, expertise, and markets. As of 2021, 28 governments had published hydrogen strategies. However the actual strategies proposed are not necessarily based on climate friendly green hydrogen. The majority of the strategies have been characterized by scale first and clean later, meaning they add regulations to enhance the viability of green hydrogen but do not mandate it use. Economic analysis shows few national strategies can make their 2030 goals.
In 2021, 94 million tonnes (Mt) of molecular hydrogen () was produced. Of this total, approximately one sixth was as a by-product of petrochemical industry processes. Most hydrogen comes from dedicated production facilities, over 99% of which is from fossil fuels, mainly via steam reforming of natural gas (70%) and coal gasification (30%, almost all of which in China). Less than 1% of dedicated hydrogen production is low carbon: steam fossil fuel reforming with carbon capture and storage, green hydrogen produced using electrolysis, and hydrogen produced from biomass. CO2 emissions from 2021 production, at 915 MtCO2, amounted to 2.5% of energy-related CO2 emissionsEnergy-related emissions totalled 36.3 Gigatonnes CO2 in 2021. and 1.8% of global greenhouse gas emissions.
Virtually all hydrogen produced for the current market is used in oil refining (40 Mt in 2021) and industry (54 MtH2). In oil refining, hydrogen is used, in a process known as hydrocracking, to convert heavy petroleum sources into lighter fractions suitable for use as fuels. Industrial uses mainly comprise ammonia production to make fertilizers (34 Mt in 2021), methanol production (15 Mt) and the manufacture of direct reduced iron (5 Mt).
The imperative to use low-carbon hydrogen to reduce greenhouse gas emissions has the potential to reshape the geography of industrial activities, as locations with appropriate hydrogen production potential in different regions will interact in new ways with logistics infrastructure, raw material availability, human and technological capital.
Hydrogen used to decarbonize transportation is likely to find its largest applications in shipping, aviation and to a lesser extent heavy goods vehicles, through the use of hydrogen-derived synthetic fuels such as Green ammonia and Green methanol, and fuel cell technology. Hydrogen has been used in fuel cell buses for many years. It is also used as a fuel for spacecraft propulsion.
In the International Energy Agency's 2022 Net Zero Emissions Scenario (NZE), hydrogen is forecast to account for 2% of rail energy demand in 2050, while 90% of rail travel is expected to be electrified by then (up from 45% today). Hydrogen's role in rail would likely be focused on lines that prove difficult or costly to electrify. The NZE foresees hydrogen meeting approximately 30% of heavy truck energy demand in 2050, mainly for long-distance heavy freight (with battery electric power accounting for around 60%).
Although hydrogen can be used in adapted internal combustion engines, fuel cells, being electrochemical, have an efficiency advantage over heat engines. Fuel cells are more expensive to produce than common internal combustion engines but also require higher purity hydrogen fuel than internal combustion engines.
In the light road vehicle segment including passenger cars, by the end of 2022, 70,200 fuel cell electric vehicles had been sold worldwide, compared with 26 million plug-in electric vehicles. With the rapid rise of and associated battery technology and infrastructure, hydrogen's role in cars is minuscule.
A review of 32 studies on the question of hydrogen for heating buildings, independent of commercial interests, found that the economics and climate benefits of hydrogen for heating and cooking generally compare very poorly with the deployment of district heating networks, electrification of heating (principally through ) and cooking, the use of solar thermal, waste heat and the installation of energy efficiency measures to reduce energy demand for heat. Due to inefficiencies in hydrogen production, using blue hydrogen to replace natural gas for heating could require three times as much methane, while using green hydrogen would need two to three times as much electricity as heat pumps. Hybrid heat pumps, which combine the use of an electric heat pump with a hydrogen boiler, may play a role in residential heating in areas where upgrading networks to meet peak electrical demand would otherwise be costly.
The widespread use of hydrogen for heating buildings would entail higher energy system costs, higher heating costs and higher environmental impacts than the alternatives, although a niche role may be appropriate in specific contexts and geographies. If deployed, using hydrogen in buildings would drive up the cost of hydrogen for harder-to-decarbonize applications in industry and transport.
although technically possible production of syngas from hydrogen and carbon-dioxide from bio-energy with carbon capture and storage (BECCS) via the Sabatier reaction is limited by the amount of sustainable bioenergy available:: The potential for bio-gasification with CCS to be deployed at scale is limited by the amount of sustainable bioenergy available. .... " therefore any [[bio-SNG]] made may be reserved for production of [[aviation biofuel]].: production of biofuels, even with CCS, is only one of the best uses of the finite sustainable bio-resource if the fossil fuels it displaces cannot otherwise feasibly be displaced (e.g. use of biomass to produce aviation biofuels with CCS)."
Hydrogen is flammable when mixed even in small amounts with air. Ignition can occur at a volumetric ratio of hydrogen to air as low as 4%. In approximately 70% of hydrogen ignition accidents, the ignition source cannot be found, and it is widely believed by scholars that spontaneous ignition of hydrogen occurs.
Hydrogen fire, while being extremely hot, is almost invisible, and thus can lead to accidental burns. Hydrogen, like most gases, can cause asphyxiation in the absence of adequate ventilation.
| Production method | Note | Current cost (2020–2022) | Projected 2030 cost | Projected 2050 cost |
| Gray hydrogen (not including a carbon tax) | ||||
| International Energy Agency | 2022 costs estimated for June, when gas prices peaked in the wake of Russia's invasion of Ukraine | 2021: 1.0–2.5 | – | – |
| 2022: 4.8–7.8 | ||||
| PwC | 2021: 1.2–2.4 | |||
| Blue hydrogen | ||||
| International Energy Agency | 2022 costs estimated for June, when gas prices peaked in the wake of Russia's invasion of Ukraine | 2021: 1.5–3.0 | – | – |
| 2022: 5.3–8.6 | ||||
| UK government | Range dependent on gas price | 2020: 1.6–2.7 | 1.6–2.7 | 1.6–2.8 |
| GEP | 2022: 2.8–3.5 | - | - | |
| Energy Transitions Commission | 2020: 1.5–2.4 | 1.3–2.3 | 1.4–2.2 | |
| Green hydrogen | ||||
| International Energy Agency | 2030 and 2050 estimates are using solar power in regions with good solar conditions | 2021: 4.0–9.0 | <1.5 | <1.0 |
| 2022: 3.0-4.3 | ||||
| UK government | Using grid electricity, UK specific; range dependent on electricity price, and electrolyser technology and cost | 2020: 4.9–7.9 | 4.4–6.6 | 4.0–6.3 |
| Using otherwise curtailed renewable electricity, UK specific; range dependent on electrolyser technology and cost | 2020: 2.4–7.9 | 1.7–5.6 | 1.5–4.6 | |
| IRENAIRENA (2020), Green Hydrogen Cost Reduction: Scaling up Electrolysers to Meet the 1.5 °C Climate Goal, International Renewable Energy Agency, Abu Dhabi, p. 91. | 2020: 2.2–5.2 | 1.4–4.1 | 1.1–3.4 | |
| GEP | Source notes green H2 production cost has fallen by 60% since 2010 | 2022: 3.0–6.0 | ||
| Lazard | 2022: 2.8–5.3 | |||
| PWC | 2021: 3.5–9.5 | 1.8–4.8 | 1.2–2.4 | |
| Energy Transitions Commission | 2020: 2.6–3.6 | 1.0–1.7 | 0.7–1.2 | |
A 2022 Goldman Sachs analysis anticipates that globally green hydrogen will achieve cost parity with grey hydrogen by 2030, earlier if a global carbon tax is placed on gray hydrogen. In terms of cost per unit of energy, blue and gray hydrogen will always cost more than the fossil fuels used in its production, while green hydrogen will always cost more than the renewable electricity used to make it.
Subsidies for clean hydrogen production are much higher in the US and EU than in India. The discovered price of green hydrogen in India is US$4.67 (INR 397) per kg as of June 2025.
Also, in a few private homes, fuel cell micro-CHP plants can be found, which can operate on hydrogen, or other fuels as natural gas or LPG.
By November 2020 the Australian Renewable Energy Agency (ARENA) had invested $55 million in 28 hydrogen projects, from early stage research and development to early stage trials and deployments. The agency's stated goal is to produce hydrogen by electrolysis for $2 per kilogram, announced by Minister for Energy and Emissions Angus Taylor in a 2021 Low Emissions Technology Statement.
In October 2021, Queensland Premier Annastacia Palaszczuk and private investor Andrew Forrest announced that Queensland would be home to the world'
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In November 2024, the South Australian Government's plan to spend A$593 million on a 200MW hydrogen energy near Whyalla was granted federal approval under the EPBC Act. The project is planned to be developed by the Office of Hydrogen Power SA, ATCO, and BOC, and intended "to supply additional Electrical grid stability for homes and businesses around the state, by using excess renewable energy generated from large-scale wind and solar farms to provide a consistent output of supply"
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Iceland already converts its surplus electricity into exportable goods and hydrocarbon replacements. In 2002, it produced 2,000 tons of hydrogen gas by electrolysis, primarily for the production of ammonia (NH3) for fertilizer. Ammonia is produced, transported, and used throughout the world, and 90% of the cost of ammonia is the cost of the energy to produce it.
Neither industry directly replaces hydrocarbons. Reykjavík, Iceland, had a small pilot fleet of city buses running on compressed hydrogen, and research on powering the nation's fishing fleet with hydrogen is under way (for example by companies as Icelandic New Energy). For more practical purposes, Iceland might process imported oil with hydrogen to extend it, rather than to replace it altogether.
The Reykjavík buses are part of a larger program, HyFLEET:CUTE, operating hydrogen fueled buses in eight European cities. HyFLEET:CUTE buses were also operated in Beijing, China and Perth, Australia (see below). A pilot project demonstrating a hydrogen economy is operational on the Norway island of Utsira. The installation combines wind power and hydrogen power. In periods when there is surplus wind energy, the excess power is used for generating hydrogen by electrolysis. The hydrogen is stored, and is available for power generation in periods when there is little wind.
Currently however, hydrogen energy is just at the Research, Development and Demonstration (RD&D) stage. Overview of Indian Hydrogen Programme As a result, the number of hydrogen stations may still be low, although much more are expected to be introduced soon.
In August 2021, Chris Jackson quit as chair of the UK Hydrogen and Fuel Cell Association, a leading hydrogen industry association, claiming that UK and Norwegian oil companies had intentionally inflated their cost projections for blue hydrogen in order to maximize future transfer payment by the UK government.
In 2006, Florida’s infrastructure project was commissioned. First opened Orlando as public bus transportation, Ford Motor Company announced putting a fleet of hydrogen-fueled Ford E-450. Liquidated hydrogen mobile system was constructed at Titusville. An FPL’s pilot clean hydrogen facility operated in Okeechobee County.
NuScale Power is a power traded company that designs and market, headquartered in Tigard, Oregon. The company'
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A similar pilot project on Stuart Island uses solar power, instead of wind power, to generate electricity. When excess electricity is available after the batteries are fully charged, hydrogen is generated by electrolysis and stored for later production of electricity by fuel cell. The US also have a large natural gas pipeline system already in place.
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