Green Hydrogen Expansion Could Stall Without Major Energy System Reforms, New Study Warns

Green hydrogen is widely promoted as a critical solution for decarbonizing heavy industry, long-distance transport, and other sectors where electrification is difficult. However, new research suggests the technology may not deliver its expected climate benefits unless countries rapidly reform energy systems and hydrogen supply chains.

A study led by researchers at the University of Sheffield warns that without structural reforms, green hydrogen could fall short as a sustainable fuel option. The research highlights the importance of decarbonized electricity grids, coordinated supply chains, and supportive policy frameworks to ensure hydrogen production truly reduces greenhouse gas emissions.

The findings come at a time when governments around the world are investing billions in hydrogen technologies as part of net-zero strategies.

Energy Mix Determines Hydrogen's Climate Impact

Green hydrogen is produced through electrolysis, a process that splits water into hydrogen and oxygen using electricity. When powered by renewable energy such as wind or solar, the resulting hydrogen is considered a zero-carbon fuel.

However, the new research shows that the environmental benefits of hydrogen depend heavily on the carbon intensity of the electricity used in production.

Researchers evaluated 20 possible scenarios for producing and transporting green hydrogen across 14 countries from 2023 to 2050. The countries examined include the United Kingdom, Japan, China, France, Norway, Canada, Germany, South Korea, the United States, Austria, Ireland, Poland, Italy, and the Netherlands.

The analysis found that national energy mixes play a decisive role in determining the overall emissions associated with hydrogen production. If hydrogen is produced using electricity from fossil fuel-dominated grids, the fuel can carry significant embedded emissions despite being labeled “green.”

This challenge is significant because the hydrogen industry still relies heavily on fossil fuels. Around 96% of global hydrogen production today is generated using fossil energy sources rather than renewable electricity.

The study, therefore, concludes that hydrogen can only become a genuinely low-carbon energy carrier if electricity systems are rapidly decarbonized.

Supply Chains and Infrastructure Remain Critical

Beyond electricity generation, the researchers highlight structural challenges across the hydrogen value chain.

These include the manufacturing of electrolyzers, transport infrastructure, storage systems, and international supply networks. Without coordinated planning and decarbonized supply chains, hydrogen projects risk shifting emissions rather than eliminating them.

For example, producing hydrogen in regions with fossil-fuel-heavy grids and transporting it globally could undermine its climate benefits. At the same time, shortages of key materials, limited manufacturing capacity, and infrastructure constraints could slow deployment and raise costs.

Hydrogen transport and storage also present technical challenges. The gas requires high-pressure tanks or extremely low temperatures for liquefaction, and it can leak easily through existing pipeline systems. These infrastructure issues must be addressed for hydrogen markets to scale effectively.

Ambition Versus Deployment Reality

The findings align with broader trends across the hydrogen sector. Despite strong political support, deployment has lagged behind expectations.

Green hydrogen accounted for less than 1% of global hydrogen production as of 2023, highlighting the gap between policy ambitions and real-world implementation.

Many announced hydrogen projects have also faced delays, cancellations, or revisions due to high costs and uncertain demand. Analysts estimate that only a fraction of planned capacity may be operational by the end of this decade in several major markets.

Cost remains a major barrier. Green hydrogen typically costs significantly more than conventional hydrogen produced from natural gas, largely due to the price of renewable electricity and electrolyzer technology.

To compete with fossil-based hydrogen, analysts estimate renewable electricity prices must fall significantly, while electrolyzer manufacturing scales up to achieve economies of scale.

Strategic Role in the Net-Zero Transition

Despite these challenges, the study does not dismiss the long-term potential of hydrogen. Instead, it emphasizes that hydrogen must be deployed strategically within broader decarbonization strategies.

Green hydrogen is particularly valuable in sectors where direct electrification is difficult, such as steelmaking, chemicals, aviation fuels, shipping, and heavy transport. In these applications, hydrogen could enable deep emissions reductions that cannot easily be achieved through batteries or electrification alone.

However, researchers stress that hydrogen policy should be closely aligned with national decarbonization pathways.

This includes accelerating renewable energy deployment, improving grid infrastructure, and ensuring that hydrogen production relies on genuinely low-carbon electricity. Governments may also need to design policies that support early demand in industrial sectors while encouraging long-term investment in infrastructure.

Implications for Policymakers and Industry

For policymakers, the study highlights the need for integrated planning across energy systems. Hydrogen strategies cannot succeed in isolation from electricity market reforms and renewable energy expansion.

Countries with rapidly decarbonizing grids could gain strategic advantages in the emerging hydrogen economy, both in domestic supply and potential export markets.

For industry stakeholders, the research underscores the importance of lifecycle emissions assessments and transparent supply chains. Companies investing in hydrogen production may need to secure renewable electricity contracts and build partnerships across the value chain to ensure projects deliver genuine climate benefits.

Ultimately, the researchers conclude that hydrogen can still play a major role in achieving global net.zero targets. However, its success will depend on structural reforms that transform the energy systems that support it.

Without those changes, the promise of green hydrogen may remain difficult to realize at scale.

Source: sustainabilityonline.net