Hydrogen Can you lower hydrogen’s green premium?

Our new interactive tool shows the importance of bringing down the green premium for clean hydrogen

This article is the fifth and final in a series of posts on clean hydrogen’s role in building a net-zero future. Other articles in the series can be found below:

Clean hydrogen is one of the most versatile decarbonization tools available today. To reach net-zero carbon emissions by 2050, we need new carbon-free solutions for electricity storage, fuel, chemicals, and heat—and clean hydrogen can help with all of the above.

Over the past few months, my colleague Maria Martinez and I have taken us on a bit of a journey to understand more about this molecule and why we believe it’s so crucial to meeting our climate goals. We’ve explored new investments in clean hydrogen, how we can use it, various ways to transport and store it, and what the recent hydrogen tax credit can and can’t help us do. Now, we want to put those pieces together and explore how each step—production, transportation, and storage—impacts clean hydrogen’s overall cost, and thus the ability to use it in different ways.

The economics of our clean energy transition are so important. Right now, clean hydrogen is more expensive than conventional hydrogen made with fossil fuels – it’s also more expensive than fossil fuel-based energy sources it could replace. Without clean hydrogen becoming more affordable, it’ll be difficult for governments and companies to scale the industry. And the world simply cannot reach net zero carbon emissions without scaling clean hydrogen to reduce emissions from heavy industries where electrification isn’t an efficient or viable option (like steel, chemicals, aviation, and heavy-duty transportation).

That’s why we made a tool that approximates the green premium* for using clean hydrogen in some of these highest priority use cases. Using data from the Department of Energy that projects market conditions in 2030, our calculator lets you estimate the cost of making, storing, and moving one kilogram of clean hydrogen to an end user, and how that compares with the price those users are willing to pay.**

How to use the hydrogen calculator:

  • Start by selecting your production method
  • Select your transportation method
  • Select your storage method
  • Select your end use and see how your clean hydrogen compares to what customers are willing to pay

So what’s the best production, storage, and transport method for clean hydrogen? The answer often lands in a frustrating place: it depends!

Hydrogen is a complex emerging industry, and the best choices require nuanced decisions that balance costs with decarbonization goals. As you can see, a number of variables impact clean hydrogen’s green premium, a gap that we need to acknowledge and address. But keep in mind, too, that this data is a snapshot in time and space. Willingness to pay can vary based on any number of factors, and costs are expected to decline as production and infrastructure scale up and technologies mature.

If you’ve read the other posts, I hope you have picked up on a few themes:

  • Hydrogen only becomes a climate solution when it is clean.
  • We should focus our resources on using clean hydrogen to cut emissions in sectors where other clean solutions—like electrification—are not viable or economical. 
  • We must look at the cost and emissions from clean hydrogen from a systems perspective and include production, transport, storage, and end use in that calculation. Each variable impacts costs and decarbonization potential.
  • As with any energy source, clean hydrogen has some potential downsides, including leakage if it is improperly transported and stored. This is an issue because hydrogen is an indirect greenhouse gas, and perpetuates the lifetime of methane in the atmosphere. Especially if it’s produced with methane that also leaks, escaped hydrogen can contribute to warming. Fortunately, there are many tools and solutions to mitigate this concern.
  • While recent policy measures will do a great deal to spur innovation and reduce the cost of clean hydrogen, much more support is needed to ensure there’s durable demand and enabling infrastructure to meet hydrogen’s potential.

We also shouldn’t sleep on the ability of innovative breakthroughs to change the hydrogen industry in potentially radical ways. For example, a breakthrough in electrolyzer catalyst technology could greatly increase the efficiency of using water and electricity to produce clean hydrogen. Or the exploration of natural hydrogen stores within the earth’s crust could make clean hydrogen abundant and affordable very quickly and could eliminate the green premium for some uses. This is why it’s important to continue to innovate and support research and development in tandem with deploying technologies ready to go now.

I remain hopeful and inspired by the progress and potential of clean hydrogen. As the technology gets more affordable and clean, it will become an essential ingredient in meeting our climate objectives.



*This calculation provides a useful way to compare how far we have to go to spark liftoff for each use, but isn’t technically the green premium—the difference between the cost of the status quo and a cleaner way of doing things. And while the clean hydrogen supply chain is still early in its evolution, costs and willingness to pay estimates are still subject to substantial uncertainty.

**The data that we used for this calculator comes from DOE’s Pathways to Commercial Liftoff: Clean Hydrogen report. DOE used a variety of methods to estimate what the costs and willingness to pay for hydrogen will look like in 2030 once these technologies are commercialized. Where DOE reported ranges, we used the lowest figure for willingness to pay, and the highest cost estimates for each step. Production costs do not reflect the price after applying 45V. These projections are not perfect, but they reflect the importance of bringing down the costs of the wide variety of pathways used for clean hydrogen production, storage, and transportation.

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