Decarbonization with a capital H: The promise of green hydrogen


We must move beyond fossil fuels and into more renewable energy sources—that much we know. But how? Learn more about the role of hydrogen, or more specifically, green hydrogen, which many believe will be key to decarbonizing tough-to-abate sectors, such as chemicals, cement, and steel.

Setting the stage

As we prepare for COP27, all eyes remain on the climate crisis. And while research on the severity of the challenge is unfortunately no longer new news, every so often we learn something new that brings potential solutions into sharper relief.

The latest proof points appear in the United Nations Environment Programme’s 2022 Emissions Gap report. According to UNEP, the world needs to cut emissions by 45 percent by 2030 to get on track to limit global warming to 1.5 degrees Celsius, the level climate science tells us is critical to avoid the most catastrophic consequences of climate change. 

A 45 percent cut is a massive undertaking, to be sure. Only an urgent, system-wide transformation—indeed, a rethink of electricity supply, industry, transport and buildings sectors, and the food and financial systems—can deliver the enormous cuts needed to limit greenhouse gas emissions to this level. 

Hydrogen, or more specifically, green hydrogen, can play a pivotal role across many of these needed interventions, especially in hard-to-abate sectors. 

The basics:

  • Hydrogen offers a cleaner substitute to fossil fuels for power generation and heating. When produced through renewable sources such as wind and solar power, hydrogen is a clean energy source that only emits water vapor and leaves no residue in the air, unlike fossil fuels.
  • Green hydrogen is a particularly attractive source for hard-to-decarbonize sectors, where cost-effective alternatives to fossil fuels are few and far between—consider those that rely on extreme heat, such as cement or steel production, or those that are difficult to electrify, such as aviation or long-haul transportation.  
  • Hydrogen is already in wide use but scaling up green hydrogen will require technological advances and lower cost, including greater clean energy capacity as well as higher efficiency in converting water into hydrogen fuel.

Through our work with companies that are exploring how to deploy lower carbon technologies to support new business models while also reducing emissions, we’ve learned that the role of green hydrogen remains, at least when compared to the opportunities from wind or solar, for example, somewhat uncertain.

We hope this primer helps.

What is (green) hydrogen, and what role might it play in a low-carbon future?

It’s everywhere. It’s clean. But when it comes to hydrogen, it isn’t necessarily easy being green. 

Hydrogen is the lightest and most abundant element on earth. It already serves as an energy source across industries—from fueling cars and spacecraft to creating fertilizer. But its most important role in the climate change debate is as a potential carrier of clean, renewable energy, especially in hard-to-abate sectors such as steel, cement, and chemicals. 

Consider just a few potential uses:

  • Energy storage. Compressed hydrogen tanks can store energy for long periods of time and are also easier to handle than lithium-ion batteries given reduced weight.
  • Industrial heat. Accounting for roughly 10 percent of GHG emissions today, industrial heat includes applications like cement kilns, chemical reactors, blast furnaces, and glass making. Hydrogen’s high energy density means it has huge potential to displace coal in high-heat processes without the carbon footprint.
  • Transport and mobility. Hydrogen could play a role in the more difficult to electrify sectors of transport, including heavy-duty trucking, shipping and aviation. Several companies already focus on hydrogen-based solutions, such as H2 Clipper or Hyzon. While a few automotive companies such as Toyota are betting on hydrogen fuel cell vehicles (HFCVs) for passenger cars, adoption has been slow, and many experts believe that electric cars are likely to carry the day, both from a market and low-carbon transition perspective.

Hydrogen’s promise lies in part in its ubiquity. It’s—quite literally—everywhere. Take water—two parts hydrogen and one part oxygen—and an electric current, and we can produce hydrogen gas. This process, called electrolysis, splits hydrogen from other molecules, which can then be used for commercial, industrial or transportation purposes. 

Looks easy on paper.

But hydrogen becomes a tool to combat climate change only when the process to produce it is also clean—or in sustainability parlance—green. That’s because, although hydrogen is the most abundant molecule in the universe, it usually exists in compounds which require energy to separate it from other molecules. 

Indeed, when talking about hydrogen, we talk about colors that reflect the source of energy used to produce it—the most common of which are brown or black, which is hydrogen produced from coal, to gray or blue, both of which are produced from natural gas (with CO2 from the latter captured and sequestered), to green, which is produced from a zero-emissions, renewable source such as wind or solar power. Beyond these three main types, there are many others, including pink hydrogen generated through electrolysis powered by nuclear energy and red hydrogen made from biomass.

Green is what we want. But when it comes to hydrogen, it isn’t easy being green, and likely won’t be for a while. 

What’s the catch?

Under the category of “no free lunch,” most hydrogen produced today is of the gray variety. And significant innovations (read: investments) are needed to make zero-emissions green hydrogen competitive with the fossil fuels now used by hard-to-abate industries. 

Current technology and infrastructure limitations make green hydrogen production roughly 10 times more expensive than natural gas production. Many experts believe we are more than a decade away from meeting the cost and technology curve required for wide-scale adoption of green hydrogen, which will require greater renewable energy capacity and higher efficiency in converting water into hydrogen gas. 

Beyond cost and capacity, scaling green hydrogen presents other technical and even broader environmental and social justice challenges, including

  • Demand for water, an already scarce resource. Estimates for the amount of water needed to produce green hydrogen vary greatly, from 9 to 10, to more than 90, liters of fresh water to create one kilogram of hydrogen. This is a major concern both financially and socially, especially in water-stressed regions.
  • Safety considerations. Hydrogen is highly volatile and flammable, but also scentless. Extensive safety measures are required to detect leaks and prevent leakage and explosions.
  • Infrastructure investment. Hydrogen hubs and other infrastructure and hydrogen projects that must be built will require significant investment. Potential social justice issues arise here, too: many such projects disproportionately affect lower income communities or are subject to “not in my backyard (NIMBY)” challenges, which can tie up projects for years.

What’s next?

Scaling renewable energy capacity and reducing cost will be critical to green hydrogen production and adoption. We’re not there yet, but several initiatives are underway to support the conditions needed to capture the potential of green hydrogen.

Globally, nearly 50 targets, mandates, and policy incentives directly support hydrogen. A few recent country-level initiatives: 

  • In November 2021, the Breakthrough Agenda was launched at COP26 with a commitment from 44 countries to work together to make clean technologies affordable and accessible globally before 2030. Hydrogen is one of the breakthroughs adopted. 
  • In May 2022, the G7 launched a Hydrogen Action Pact to accelerate the ramp-up of low-emission hydrogen, technology development, the shaping of regulatory frameworks and standards, and financial commitments.  
  • In the U.S., several recent federal policies support the scale of hydrogen, including the Inflation Reduction Act, which includes tax credits that will bring the price of American green hydrogen from $3 per kilogram to as low as USD $0.73 per kilogram, a level competitive with fossil fuels, and the Infrastructure Investment and Jobs Act which will invest USD $9.5 billion to fund regional clean hydrogen hubs, a clean hydrogen electrolysis program and clean hydrogen manufacturing and recycling programs.

In addition, investors and companies are actively investing in hydrogen, to develop projects to supply and consume clean hydrogen, and to scale technology providers. According to the Hydrogen Council, investors spent about USD 7 billion on fuel cell and electrolyzer suppliers in 2021, nearly doubling in a year.


Exciting times for the big H. And while hydrogen is likely critical to reaching climate goals, it’s important to note that it is not the only solution. 

Experts posit that hydrogen is best used absent other decarbonization opportunities. Chemicals, steel, oil refining and heavy-duty transport are all hard-to-abate sectors that are prime candidates now, which could potentially be joined by other sectors, such as aviation, in the future.

For nearly 20 years FrameworkESG has worked with companies of all sizes and at various stages of their ESG journeys to focus on the issues that matter. If you are looking to understand how your company can address climate, or any other ESG issues, contact Victor Melendez, President and Chief Growth Officer.

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Hasib Nasirullah

Hasib Nasirullah

Hasib Nasirullah is a Consultant for FrameworkESG, where he empowers clients to transform challenges into opportunities using an ESG lens.
Lydia Whitbeck

Lydia Whitbeck

Lydia Whitbeck is an Analyst for FrameworkESG, where she helps clients shape an ESG strategy that aligns with stakeholder expectations.