Green hydrogen technology is quickly becoming a key part of the global move to a low-carbon, sustainable future. Green hydrogen is made by splitting water through electrolysis, using only renewable electricity from wind, solar, or hydropower. This clean method is very different from traditional hydrogen production, which mostly uses fossil fuels and produces large amounts of CO2. Because it relies on clean power, green hydrogen is a zero-emission fuel: when it burns, it creates only water vapor. This makes it a strong tool against climate change and an important way to cut emissions in hard-to-decarbonize sectors such as heavy industry and long-distance transport.
Green hydrogen offers more than just clean fuel. It is a flexible energy carrier that can store extra renewable electricity, help stabilize power grids, and act as an important raw material for many industrial processes. As more countries commit to net-zero emissions by 2050, the need for large-scale, affordable green hydrogen has grown sharply. There are still challenges, especially around production costs and infrastructure, but steady progress in technology and rising global investment are turning green hydrogen from a future idea into a practical solution.
What is green hydrogen technology?
Green hydrogen technology covers methods of making hydrogen gas with very low, or ideally zero, greenhouse gas emissions. What makes hydrogen “green” is that it is produced through water electrolysis powered by renewable energy. This process splits water (H2O) into hydrogen (H2) and oxygen (O2) without releasing CO2. Because of this, green hydrogen is a genuinely sustainable and environmentally friendly energy carrier, giving a realistic way to cut emissions in areas where direct electrification is difficult.
Green hydrogen is attracting strong interest because it addresses two major global problems at once: the need to lower carbon emissions quickly and the need for a cleaner, more reliable energy system. Many experts see green hydrogen as a key fuel of the future that can replace fossil fuels in many uses and help the world meet its decarbonization goals by 2050. Its energy efficiency and low climate impact are driving intense research and investment around the world.
How is green hydrogen different from blue and gray hydrogen?
Hydrogen is often grouped by “color,” which refers to how it is produced and how much CO2 it causes. Green hydrogen is the cleanest type. It is made by water electrolysis using electricity from renewable sources like solar, wind, or hydro, so its production leads to almost no greenhouse gas emissions and fits well with global decarbonization plans.
“Grey” hydrogen, currently the most common, is usually made from fossil fuels, mainly natural gas, using steam methane reforming (SMR). This process releases large amounts of CO2 and adds to global warming.
CH₄ + 2H₂O → 4H₂ + CO₂“Blue” hydrogen uses the same fossil fuel-based process but adds carbon capture and storage (CCS) to trap much of the CO2 that would otherwise be emitted. While blue hydrogen aims to capture around 90% of emissions, it is still not fully carbon-free, and capture performance is still under review and improvement. For this reason, green hydrogen is still seen as the best option for truly low-carbon hydrogen.
How does green hydrogen reduce carbon emissions?
Green hydrogen cuts emissions mainly through its clean production pathway. Unlike standard methods that burn fossil fuels, green hydrogen is produced by electrolysis powered by renewable electricity, so no CO2 is released during its creation.
Its climate benefits continue when it is used. Burning green hydrogen, or using it in fuel cells, creates only water vapor and no CO2 or other polluting gases. This makes it a good substitute for fossil fuels in sectors that are difficult to electrify, such as steelmaking, chemical production, and heavy transport. By replacing carbon-heavy fuels and processes in these areas, green hydrogen can substantially reduce their overall emissions. The International Energy Agency (IEA) estimates that switching all current grey hydrogen to green hydrogen could cut global CO2 emissions by about 830 million tonnes per year, showing how large its impact could be.
How is green hydrogen produced?
Most green hydrogen is produced through electrolysis, a process in which electricity is used to split water (H2O) into hydrogen (H2) and oxygen (O2). For hydrogen to count as “green,” all of the electricity used must come from renewable sources like solar, wind, or hydropower. This keeps the entire production chain free of CO2 emissions.
Although electrolysis is the main approach today, scientists are also working on other ways to produce green hydrogen that may be even more efficient or cheaper, or that use different resources. These new methods show how fast the sector is changing and how much effort is going into improving hydrogen production for a cleaner energy future.
Electrolysis: using renewable electricity to split water
Electrolysis is the basic technology behind green hydrogen. It uses an electric current to break water molecules into hydrogen and oxygen. The water often needs dissolved salts or minerals so it can conduct electricity. Two electrodes are placed in the water and connected to a power source. A direct current causes a chemical reaction, drawing positive and negative ions to opposite electrodes and separating hydrogen and oxygen.
2H₂O(l) + electricity → 2H₂(g) + O₂(g)How efficient and affordable electrolysis is will strongly affect how widely green hydrogen is adopted. While the basic process is simple, ongoing work on electrolyzer design is needed to reduce energy losses and lower costs. The theoretical maximum efficiency is about 80%, which means about 20% of the input energy is lost. Research into new materials, better catalysts, and smarter system layouts is focused on pushing that figure higher.
PEM (Proton Exchange Membrane) electrolyzers
Proton Exchange Membrane (PEM) electrolyzers are an advanced type of electrolyzer known for their small size and quick response, which suits them well for use with variable renewable energy such as wind and solar. They operate at 50-80 °C and produce very pure hydrogen.
Anode (oxidation): 2H₂O → O₂ + 4H⁺ + 4e⁻
Cathode (reduction): 4H⁺ + 4e⁻ → 2H₂PEM electrolyzers can quickly ramp power up or down when electricity supply changes, which is very helpful when linked to wind or solar farms. They use a solid polymer membrane to conduct protons and can run at high pressures, which reduces the need for external compressors. However, they typically need costly platinum and iridium catalysts, which raises their upfront cost. Current research is looking for cheaper catalyst materials and better recycling methods to reduce these expenses.
Alkaline electrolyzers
Alkaline electrolyzers (AE) are an older, well-proven and typically cheaper technology for producing hydrogen. They are mainly used for large, steady hydrogen output. Operating at 70-90 °C, they use a liquid potassium hydroxide solution as the electrolyte. A key benefit is that they use non-precious metal catalysts, lowering manufacturing costs compared with PEM systems.
Anode (oxidation): 4OH⁻ → O₂ + 2H₂O + 4e⁻
Cathode (reduction): 4H₂O + 4e⁻ → 2H₂ + 4OH⁻These systems are sturdy and reliable under constant operation, but they are generally less able to handle rapid changes in power input, which are common with solar and wind. Their response time to changing power levels is slower than PEM systems. Even so, their long track record and lower capital cost make them an important option for green hydrogen, especially where renewable power supply is relatively stable.
Solid oxide electrolyzers
Solid Oxide Electrolyzers (SOEC) form another promising group of technologies, working at high temperatures of about 500-1000 °C. At these temperatures, they can convert both heat and electricity into hydrogen with very high efficiency. They use ceramic materials to move ions, in contrast to the liquid electrolytes in alkaline systems and polymer membranes in PEM systems.
Because they run hot, SOECs can be combined with industrial processes that already produce waste heat, lowering the amount of extra electricity needed. This improves overall efficiency. SOECs can also perform co-electrolysis, splitting both steam and CO2 at the same time to make syngas (a mix of hydrogen and carbon monoxide), which has many industrial uses.
H₂O + CO₂ → H₂ + CO + O₂However, the high operating temperature puts strong stress on materials and leads to durability issues, and these systems react more slowly to changes in power, which can be a drawback when connected to highly variable renewable generation.
Alternative green hydrogen production pathways
While electrolysis of water is now the main route for green hydrogen, scientists are actively exploring other paths. These new methods aim to solve current challenges such as high energy use, costly materials, and the demand for fresh water, or to use different renewable resources. Many of these technologies are still in the lab or early pilot stages, but they may widen the range of choices and improve overall performance in the future.
Photoelectrochemical water splitting
Photoelectrochemical (PEC) water splitting tries to copy natural photosynthesis to create hydrogen directly from sunlight. In this method, solar energy is turned straight into chemical energy in the form of hydrogen, without needing an external power grid. PEC devices combine light capture and electrolysis in semiconductor-based cells, where special photoelectrodes absorb light and trigger the reactions that split water into hydrogen and oxygen.
PEC is attractive because it could provide a very compact and efficient way to make hydrogen, especially in sunny areas, and it may allow small-scale, local production. However, there are still serious hurdles, including the need for photoelectrodes that are both efficient and stable in water over long periods, as well as device designs that can be manufactured at low cost and large scale. Current research is focused on improving material durability, light absorption, and overall system design.
Biological and thermochemical processes
Researchers are also exploring biological and thermochemical approaches to producing green hydrogen, each with its own strengths and problems. Biological methods use microorganisms such as algae and bacteria that can produce hydrogen through biophotolysis (using light) or dark fermentation (without light). These processes are attractive from an environmental point of view, but they currently suffer from low hydrogen output. Ongoing work is trying to raise yields and make these systems scalable.
Thermochemical water splitting uses high temperatures, often from concentrated solar power or nuclear heat, to drive chemical cycles that split water. These cycles involve several steps and intermediate substances that react with water at high temperatures to produce hydrogen. Thermochemical methods can work well in regions with strong sunlight or in industrial sites with waste heat. The main issues are the very high operating temperatures, which can damage materials, and the complexity of running these cycles efficiently. There are also hybrid concepts such as Biochar-assisted water electrolysis (BAWE), which replace the oxygen evolution reaction with biochar oxidation to lower energy use. This can be powered by small solar or wind systems and has shown promising energy savings in lab tests, although biochar production itself still has its own carbon impacts.
Technological advances driving green hydrogen
Progress toward a large-scale green hydrogen economy depends strongly on ongoing technology advances. While the basic science of hydrogen production is well-known, meeting global demand at lower cost and higher efficiency calls for major improvements. Fortunately, strong research and engineering activity is pushing green hydrogen to become a more attractive and workable part of the energy mix.
Work ranges from new catalysts and membranes inside electrolyzers to improved integration with renewables and smarter operation through digital tools. Every part of the value chain, from production to use, is being upgraded to remove bottlenecks and raise performance, helping green hydrogen become a stronger pillar of future energy systems.
Materials innovations: catalysts and membranes
Electrolyzer performance and cost depend heavily on materials, especially catalysts and membranes. In PEM electrolyzers, platinum and iridium are widely used as catalysts for the hydrogen and oxygen reactions. These materials work very well but are rare and expensive, which increases capital costs. Researchers are working on cheaper alternatives such as cobalt- and nickel-based catalysts and carbon-supported transition metal compounds that can offer similar performance at lower cost.
Membranes are just as important. In PEM systems, the membrane must move protons efficiently while keeping hydrogen and oxygen gases apart. New membrane materials aim to improve conductivity, durability, and lifetime, while reducing manufacturing cost. For Anion Exchange Membrane (AEM) electrolyzers, which try to combine the low cost of alkaline systems with some of the benefits of PEM, better anion exchange polymers for membranes and ionomers are a key research target. These material advances can raise efficiency, extend operating life, and cut costs, making green hydrogen production more affordable and reliable.
Integration with solar and wind power
The “green” in green hydrogen depends on renewable electricity, so linking electrolysis with solar and wind power is a major focus. Solar and wind output varies with weather and time of day, making it hard to match supply and demand. Green hydrogen helps solve this by acting both as a controllable electrical load and as a storage medium. When renewables generate more power than the grid needs, the extra electricity can run electrolyzers to produce hydrogen, storing energy for later use.
Technology efforts are now looking at direct coupling, where electrolyzers connect directly to solar or wind plants, avoiding losses from extra grid conversions. Hybrid systems that mix wind and solar can give a more even power supply to electrolyzers. These setups increase the use of renewable energy and also help balance the grid. Electrolyzers can quickly change their power use to absorb surplus renewable electricity or back off when power is scarce, supporting other tools like batteries and demand response. This close link between green hydrogen and renewables is central to building a strong and flexible clean power system.
Digitalization: role of AI and IoT in optimization
Future green hydrogen systems will be large and complex, and managing them well will require advanced digital tools. Combining Artificial Intelligence (AI) and the Internet of Things (IoT), often called AIoT, can greatly improve how green hydrogen projects are planned, built, and operated.
Digital twins, or virtual models of plants and systems, let engineers test designs and operating plans under different conditions such as weather, demand, and available infrastructure. These simulations can help cut capital spending by around 10-15% and lower project risk by 30-50%, with only small changes to operating costs. AIoT also supports real-time monitoring through sensors and smart alarms. Quick detection of problems and remote supervision can reduce running costs by 10-20% by lowering energy use and making staffing more efficient. Advanced analytics can turn data from plants, storage tanks, pipelines, and weather forecasts into clear guidance for operators, helping to avoid failures, raise hydrogen output, and keep electrolyzers running longer. AIoT also helps automate data reporting for “Guarantee of Origin” labels, giving clear proof that hydrogen is truly green.
Modular systems for scale-up and flexibility
Scaling up green hydrogen has often meant building very large, custom plants that take years to complete and cost a lot upfront. New modular electrolyzer systems are changing this pattern by offering standardized, factory-built units that can be shipped, installed, and linked together as needed.
Modular systems bring several benefits:
- Faster deployment, as standardized units shorten construction times.
- Step-by-step growth, allowing projects to start small and add capacity later as demand or renewable supply increases.
- Lower manufacturing cost over time, as making many similar units leads to economies of scale.
This plug-and-play approach also makes installation, maintenance, and upgrades easier. It lowers financial risk for early projects and supports many different use cases, from industrial clusters to remote sites. Modular electrolyzers are a key bridge between small demonstration projects and the very large capacities needed for industry-wide decarbonization.
What are the benefits and challenges of green hydrogen technology?
Green hydrogen technology stands at a point where it offers huge promise yet faces serious obstacles. It can provide a truly low-carbon option across many sectors, meeting the urgent need to cut emissions. At the same time, there are major economic, infrastructure, and regulatory issues that must be solved before green hydrogen can be widely used.
Seeing both sides-the strong environmental benefits and the real-world challenges-helps explain why green hydrogen is central to discussions about the energy transition, but still far from fully deployed worldwide.
Environmental benefits and role in net zero transitions
The environmental advantages of green hydrogen are its strongest selling point. It has a zero-emission profile when produced from renewables and used as a fuel. During production, no greenhouse gases are emitted if all electricity comes from clean sources, and when it is burned or used in fuel cells, it only produces water vapor. This is very different from fossil fuels or even other types of hydrogen that come from fossil sources. According to the IEA, replacing today’s grey hydrogen alone could avoid 830 million tonnes of CO2 per year.
Green hydrogen is also important for sectors where electrification is technically hard or very expensive, such as steel, chemicals, cement, long-distance trucking, shipping, and aviation. By providing a clean fuel or feedstock in these “hard-to-abate” sectors, it can cut their emissions sharply. In addition, green hydrogen helps handle the ups and downs of renewable power by acting as long-duration energy storage, supporting a more stable grid. With 131 countries, responsible for 88% of global emissions, setting net-zero targets by 2050, green hydrogen is becoming a key part of their plans.
Current barriers: production costs and infrastructure
Despite its strong potential, green hydrogen still faces high costs and weak infrastructure. As of 2024, green hydrogen production can cost between 1.5 and six times more than hydrogen made from fossil fuels without carbon capture. The main drivers are the cost of renewable electricity (though it is falling) and the high capital cost of electrolyzers, which can make up about 70% of total production cost.
Infrastructure is also at an early stage. There are only about 4,500 km of hydrogen pipelines worldwide, compared with huge global gas networks. Building a full green hydrogen value chain-including production plants, pipelines, liquefaction units, storage, and refueling stations-demands heavy investment and long-term planning. Hydrogen’s low energy density per volume and its flammability mean storage and transport are technically more complex and costly, often needing high-pressure tanks or liquefaction. Without strong infrastructure, low-cost delivery and broad market use are difficult, leading to a “chicken-and-egg” situation: companies hesitate to build supply without demand, while users are slow to commit without supply and infrastructure.
Policy, regulation, and safety standards
Policies, rules, and safety standards shape how fast green hydrogen can grow. Today, differences in regulation between countries and regions make it harder to build a global market. Clear, supportive rules are needed to attract investment, build markets, and guarantee safe use of hydrogen.
Many governments are starting to act. The European Union’s Hydrogen Strategy and the US Inflation Reduction Act, for example, include funding, subsidies, and tax credits to support green hydrogen. The US offers up to $3.00/kg as a production subsidy. However, aligning rules-especially for certification schemes that define what “green” hydrogen is-remains a challenge. Safety is another top concern. Hydrogen is highly flammable, so strong safety codes are needed for production plants, storage, pipelines, and end-use equipment. Building public confidence will depend on strict safety practices and clear regulations.
Public perception and market readiness
Public attitudes and market maturity also play a large role in green hydrogen’s future. Many people are still unfamiliar with hydrogen or may remember historic accidents like the Hindenburg, even though modern technology and safety practices are much better. Clear communication about safety systems, standards, and environmental benefits is needed to increase acceptance.
On the market side, many companies want to cut emissions but hesitate to use green hydrogen because it remains more expensive than fossil alternatives, especially without strong policy support. The lack of a well-developed trading market and price benchmarks makes deals harder and can keep prices high. There is also a shortage of specialized workers with the skills to design, build, and run hydrogen facilities. Moving from pilot plants to large commercial projects will require stronger supply chains, more skilled labor, and a clearer value story for end users.
What are the main uses of green hydrogen?
Green hydrogen is a clean and flexible energy carrier with uses across many sectors, especially in areas that are hard to decarbonize. It can work as a fuel, as an industrial feedstock, and as an energy storage medium, which gives it a special place in plans for net-zero emissions.
Its potential ranges from cleaner manufacturing and heavy transport to making renewable power systems more reliable. Because it can reach places where direct electrification falls short, green hydrogen opens new routes to deep emission cuts.
Hydrogen as clean energy for industry
Green hydrogen is becoming a key tool for making heavy industry cleaner. Many industrial processes-such as oil refining, steel, cement, and chemicals-need high heat and specific chemical inputs that have traditionally come from fossil fuels. Green hydrogen can replace fossil-based hydrogen and, in some cases, other fuels in these processes, sharply reducing their emissions.
In refineries, hydrogen is already widely used; swapping grey hydrogen for green hydrogen can lower emissions right away. For ammonia (used in fertilizers) and many organic chemicals, green hydrogen can act as a clean feedstock, making the full chain of production less carbon-intensive. It can also supply the high temperatures needed for glass and cement production. By using green hydrogen at scale, these energy-intensive sectors can reduce their dependence on coal, oil, and gas.
Decarbonizing heavy transport and shipping
Green hydrogen is especially attractive for heavy transport and shipping, where battery electric solutions face limits in weight, range, and charging time. Hydrogen fuel cells offer high energy per kilogram (about 39.6 kWh/kg), far above lithium-ion batteries (0.15-0.25 kWh/kg), which is crucial for long-distance and heavy-duty applications.
For large trucks, hydrogen fuel cells can deliver the needed power and range without adding the heavy battery packs that would be required otherwise, and refueling times are similar to diesel. In shipping, green hydrogen can be used directly or converted into synthetic fuels like green ammonia or green methanol, which can replace heavy fuel oil in ships. Projects such as Hycarus and Cryoplane in the EU are studying hydrogen for passenger aircraft as well. While passenger cars are increasingly served by battery electric vehicles, green hydrogen looks set to play a growing role in heavy-duty trucks, ships, and possibly planes.
Energy storage and grid balancing
Green hydrogen is a strong candidate for long-term energy storage and grid support in systems dominated by renewables. Because solar and wind output changes over time, there are periods of surplus or shortage. Using surplus electricity to run electrolyzers and make hydrogen allows that energy to be stored in chemical form.
Hydrogen stored in tanks-either compressed or liquefied-can keep energy for weeks or months, something batteries struggle to do at large scale. When needed, the hydrogen can be used in fuel cells or hydrogen-ready gas turbines to supply electricity. Electrolyzers can also be controlled to help stabilize the grid, drawing more power when supply is high and cutting back when the grid is tight. This reduces curtailment of renewables and raises overall system reliability.
Green hydrogen in steel and chemical production
The steel and chemical sectors are two of the highest-emitting industries, and green hydrogen can greatly reduce their climate impact. In traditional steelmaking, coke made from coal is used to remove oxygen from iron ore, which releases a lot of CO2. Green hydrogen can replace coke as the reducing agent in direct reduction iron (DRI) processes, cutting emissions sharply.
Traditional (Blast Furnace): 2Fe₂O₃ + 3C → 4Fe + 3CO₂
DRI with Green Hydrogen: Fe₂O₃ + 3H₂ → 2Fe + 3H₂OSweden’s H2 Green Steel (now Stegra) is building large plants based on this concept, including a 740 MW electrolyzer in Boden, making it one of Europe’s largest such facilities.
The chemical industry also depends heavily on hydrogen, especially for ammonia and methanol. Today, almost all of this hydrogen comes from fossil fuels. Switching to green hydrogen would cut emissions from these key products. Iberdrola, for instance, is developing projects for e-methanol and green ammonia in several locations to meet decarbonization needs. Green hydrogen can also be combined with captured CO2 to make green methanol, used as both a fuel and as a basic chemical, helping lower emissions both directly and along downstream supply chains.
CO₂ + 3H₂ → CH₃OH + H₂OGlobal green hydrogen market and leading projects
The global market for green hydrogen is growing fast, driven by national strategies, public-private investments, and large-scale projects. Green hydrogen still makes up less than 0.15% of total hydrogen production (as of 2023), but momentum is strong as governments and companies look to meet climate goals, create jobs, and strengthen energy security.
Large projects are emerging in sunny deserts, windy coasts, and offshore areas, many backed by subsidies and international partnerships. These efforts aim to push technology forward and cut costs, laying the groundwork for green hydrogen to become a mainstream, competitive energy option.
Key countries investing in green hydrogen
Several countries are making large bets on green hydrogen, using their natural resources and industrial strengths to position themselves as leaders.
Australia
Australia has excellent solar and wind resources and has long been seen as a possible green hydrogen export giant. In 2020, the government fast-tracked what was expected to be the world’s largest renewable export hub in the Pilbara. ARENA, the Australian Renewable Energy Agency, has funded many hydrogen projects, from early research to large electrolyzers. However, by early 2025 many headline projects in places like Port Pirie, Whyalla, Gladstone, and the Hunter region had been cancelled or paused, with around 99% of announced capacity stuck at the concept or approval stage. Some projects are shifting focus from pure hydrogen to green methanol. These setbacks show how hard it is to secure financing and move huge projects forward, but Australia’s strong renewable resources still make it an attractive location for future development.
Germany
Germany is at the forefront of Europe’s green hydrogen plans, driven by ambitious climate policies and a desire for greater energy independence after the Ukraine war. The government has set aside €9 billion to reach 5 GW of electrolyzer capacity by 2030. Recognizing that domestic supply may not cover demand, Germany is also building partnerships with regions like North Africa and South America to import green hydrogen and derivatives. Projects such as the Trailblazer – Siemens-Air Liquide plant in Oberhausen are due to start producing in 2024. Germany is also supporting projects abroad, like Enertrag’s e-methanol plant in Uruguay, aimed at supplying German refineries. This mix of domestic and international efforts reflects Germany’s broad strategy to build a secure green hydrogen supply chain.
United States
The United States has sharply increased its green hydrogen support through major funding and policy steps. The Infrastructure Investment and Jobs Act (2021) allocated $9.5 billion to hydrogen, and the Inflation Reduction Act (2022) added a 10-year production tax credit of up to $3.00/kg for green hydrogen. These measures are designed to make green hydrogen competitive with fossil-based hydrogen. Texas stands out due to its large existing hydrogen industry and pipeline network. The US Department of Energy is planning hydrogen network demonstrations and hydrogen hubs, such as a proposed hub linking Arkansas, Louisiana, and Oklahoma. Although some projects, including one in New York, have been cancelled, the general trend is toward rapid growth in capacity and infrastructure.
Japan
Japan has long promoted the idea of a “hydrogen society” as part of its energy and climate strategy. In 2023, it announced US$21 billion of subsidies over 15 years for delivered clean hydrogen. Japan’s roadmap calls for hydrogen and related fuels to supply about 10% of its electricity and a large share of energy for shipping and steel by 2050. The country is building a network of hydrogen fueling stations, aiming for around 1,000 by the late 2020s. Japan is also working to secure future imports of liquefied hydrogen and other hydrogen-based fuels. Its strong focus on fuel cell vehicles and detailed long-term planning show its commitment to embedding hydrogen across multiple sectors.
Notable public-private initiatives
Public-private partnerships are at the center of green hydrogen’s rapid development. By bringing together governments, multilaterals, and companies, these initiatives share risk, concentrate investment, and push innovation across the full value chain.
One key initiative is the “Green Hydrogen Catapult,” launched in 2020 by the UN, RMI, and several companies, aiming to cut green hydrogen costs to below US$2/kg by 2026. In Europe, the “European Green Hydrogen Acceleration Center” seeks to build a €100 billion per year green hydrogen sector by 2025. UNIDO’s Global Programme for Hydrogen in Industry, started in 2021 and supported by countries like Austria, China, Germany, and Italy, focuses on using green hydrogen in industrial processes.
On the corporate side, companies such as Iberdrola are actively developing large-scale projects in Europe, Australia, and Brazil, targeting refineries, fertilizer plants, chemical producers, and heavy transport. These partnerships are critical for shaping supportive policies, funding large plants, and signaling long-term demand.
Milestone production facilities and hubs
Across the globe, new green hydrogen plants and regional hubs are starting to show what large-scale deployment looks like. These projects are important for proving that the technology works in real-world settings and for lowering costs through experience.
China now hosts some of the biggest operational green hydrogen facilities. Sinopec’s Kuqa Xinjiang Green Hydrogen Plant, launched in 2023, has a capacity of 44.1 kt per year. The Ningxia Baofeng Energy Group plant, running since 2021, adds another 25.6 kt per year. These plants are often powered by big wind farms and highlight how quickly capacity can be scaled. In Europe, the Trailblazer – Siemens-Air Liquide project in Oberhausen, Germany, and Iberdrola’s Puertollano I in Spain each provide about 3.0 kt per year and have been online or are starting up around 2022-2024.
Hydrogen “hubs” that bundle production, storage, transport, and end use in one region are also gaining ground. Uruguay, for example, is developing a Green Hydrogen Roadmap and hosting major projects from HIF Global and Enertrag to produce green hydrogen and e-methanol for domestic use and export. The Kahirós Project in Fray Bentos, due to begin operations in 2026 as a pilot, will supply hydrogen fuel-cell trucks in the forestry sector. These projects help test business models and technologies while building local skills and supply chains.
Future outlook for green hydrogen technology
The outlook for green hydrogen is hopeful but realistic. It is increasingly seen as necessary for reaching net-zero targets, especially in sectors where other solutions are weak. Over the coming decades, green hydrogen is expected to take a much larger role in the global energy system and industrial processes.
However, this future depends on collective action to lower costs, expand infrastructure, and develop new uses. The next 10-15 years will be especially important in deciding whether green hydrogen moves from a niche solution to a central part of energy systems worldwide.
Cost reduction pathways and scalability prospects
For green hydrogen to see wide use, its production cost must fall closer to that of fossil-based options. Although current costs are high, several trends point toward steady decreases and strong potential for growth.
The falling cost of renewable electricity is one of the biggest drivers. Solar and wind prices dropped sharply between 2009 and 2024 and are expected to fall further. Since electricity can account for roughly 70% of green hydrogen production cost, cheaper renewables will directly reduce overall costs. Electrolyzer costs are also expected to decline as factories scale up and experience grows. While prices for some electrolyzer components rose temporarily between 2021 and 2024, the long-term trend, supported by a 35% increase in the project pipeline (over 1,400 announced projects), points downward. Many analysts view a price of about $2/kg as a key level at which green hydrogen can compete with grey hydrogen.
Policy tools such as carbon pricing on grey hydrogen, along with production tax credits and subsidies like the US $3.00/kg credit, help narrow the gap. Modular electrolyzer systems will also help by making it easier to expand capacity and match supply to demand, reducing investment risk and supporting faster market growth.
Emerging applications and market trends
The green hydrogen market is constantly changing as new applications are tested and new trends emerge. While heavy industry, transport, and energy storage remain the main targets, hydrogen derivatives are gaining increased attention.
Converting green hydrogen into ammonia, methanol, or synthetic fuels raises its energy density and makes long-distance shipping and long-term storage easier and cheaper. This enables global trade in clean energy, where countries with rich renewable resources export hydrogen-based products to regions with higher demand. Uruguay, for example, aims to become a major exporter of green hydrogen, green fuels, and green ammonia. Green methanol, made by combining hydrogen with captured CO2, is drawing strong interest for shipping fuel and as a feedstock.
The global hydrogen market was worth about $155 billion in 2022, with green hydrogen contributing around $4.2 billion (2.7%). Projections suggest a compound annual growth rate of about 9.3% for green hydrogen between 2023 and 2030, which reflects strong investor interest. Yet the IEA’s 2025 forecast of 37 million tonnes of green hydrogen by 2030, down from earlier expectations, suggests growth is strong but may not reach the very highest early estimates. This underlines the ongoing need for policy support and technology advances. Growing use of AIoT for monitoring, control, and certification is another clear trend that can improve efficiency and trust in green hydrogen supply.
Role of green hydrogen in global energy transitions
Green hydrogen is set to play a central role in how the world moves away from fossil fuels. It fills important gaps left by other renewables, especially in industrial and transport sectors that are hard to electrify and in long-term energy storage.
Reaching net-zero emissions by 2050 will require deep cuts in the use of oil, gas, and coal. Renewables and electrification will cover much of this, but green hydrogen will be needed to clean up steel, chemicals, cement, shipping, aviation, and heavy trucking, and to store energy between seasons. It also improves energy security by reducing exposure to volatile fossil fuel markets, as shown by the energy price shocks following the war in Ukraine. Countries with strong renewable resources, such as Uruguay, are turning to green hydrogen to cut fossil fuel use in transport and industry and to open new export markets.
By enabling renewable electricity to be converted into hydrogen and easily moved or stored as ammonia or methanol, green hydrogen supports a global trade in clean energy. This broadens supply options, strengthens grid resilience, and can lower costs through access to cheaper renewable resources. Although cost and infrastructure challenges remain, the strategic importance of green hydrogen for building a low-carbon energy system is increasingly clear, and it is expected to be a key building block of future energy transitions.
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