Unlocking the Potential of Green Hydrogen
As momentum builds towards net-zero targets, green hydrogen is emerging as a critical solution for decarbonising sectors where direct electrification is either impractical or insufficient. Produced through electrolysis powered exclusively by renewable energy, green hydrogen offers a zero-emission alternative to fossil fuels. Its potential spans industries such as steel, shipping, aviation and fertiliser production—sectors traditionally seen as hard to abate. Backed by rising investment and growing policy support, green hydrogen is transitioning from the margins of innovation to the centre of industrial strategy, with far-reaching implications for global energy systems and geopolitics (Aggarwal et al., 2024; IEA, 2023).
At its core, green hydrogen is produced by splitting water molecules (H₂O) into hydrogen and oxygen using renewable electricity, typically from wind or solar. This process, known as electrolysis, differs fundamentally from traditional hydrogen production. Grey hydrogen, derived from natural gas, and blue hydrogen, which uses fossil fuels with carbon capture, both emit or embed CO₂. Green hydrogen, by contrast, produces no emissions during generation. As of early 2024, it accounts for less than 1% of global hydrogen output, but projections indicate exponential growth as technology advances and costs fall (IEA, 2023).
Technologies Driving the Hydrogen Economy
Central to the expansion of green hydrogen is the evolution of electrolyser technologies. There are three main types in use today: Alkaline Electrolysers (AEL), Proton Exchange Membrane (PEM), and Solid Oxide Electrolysers (SOE). Among these, PEM electrolysers are particularly promising due to their high current density and rapid responsiveness—traits that make them well-suited for coupling with intermittent renewable sources. Companies like Siemens Energy are investing in large-scale PEM systems, aiming to enhance durability and reduce costs through industrial-scale deployment (Siemens Energy, 2023).
This synergy between green hydrogen and renewable energy is one of its most compelling features. Electrolysers can absorb excess power generated during peak solar or wind hours, converting it into storable hydrogen. This not only reduces the curtailment of renewable energy but also enhances grid flexibility. In regions such as Sweden and Germany, hybrid systems combining renewables with hydrogen storage are being trialled to provide consistent, round-the-clock power while stabilising the grid (Rosell & Lomgren, 2024). This dual benefit of storage and flexibility positions green hydrogen as a valuable enabler of renewable integration.
Industrial Applications and Strategic Sectors
The strategic importance of green hydrogen becomes clearer in sectors where direct electrification is limited by technical or economic constraints. In steelmaking, hydrogen is used to produce direct reduced iron (DRI), offering a pathway to fossil-free steel. The shipping and aviation industries are investing in hydrogen-derived fuels such as ammonia and e-kerosene to replace marine oil and jet fuel. Agriculture also stands to benefit, as green hydrogen enables low-carbon ammonia synthesis—a major source of emissions in fertiliser production (Aggarwal et al., 2024). Industry leaders like ArcelorMittal and Maersk are piloting projects that shift away from fossil-derived hydrogen and fuels in favour of green alternatives (IRENA, 2023).
Policy, Geopolitics, and the Road Ahead
This momentum is reinforced by national policy frameworks. India’s National Green Hydrogen Mission (NGHM) targets 5 million metric tonnes of annual green hydrogen production by 2030, supported by $2.3 billion in funding through the SIGHT programme (Aggarwal et al., 2024). The European Union aims to install 40 GW of electrolyser capacity as part of its hydrogen strategy. Meanwhile, the United States is using the Inflation Reduction Act (IRA) to offer tax credits of up to $3/kg for green hydrogen production (IRENA, 2023). These policy instruments are sending strong market signals, enabling capital-intensive demonstration projects to move forward with greater certainty.
The growth of green hydrogen also carries implications for global energy markets. As a cross-sectoral commodity, it could help smooth energy price volatility and reduce dependence on fossil fuels. Analysts such as Shee Weng (2025) argue that hydrogen may serve as a hedge against inflation and geopolitical supply shocks by diversifying national energy portfolios. BloombergNEF projects that green hydrogen could compete with natural gas in key markets by 2030, provided electrolyser capital costs drop below $300/kW and renewable power prices continue to decline (IEA, 2023).
Geopolitical Energy Dynamics
These shifts are already beginning to reshape the geopolitical energy landscape. Countries with abundant renewable resources—such as Australia, Chile, and those in the Middle East—are positioning themselves as future exporters of green hydrogen. On the other end of the value chain, import-reliant regions like Japan, South Korea and parts of Europe are building partnerships to secure long-term hydrogen supply (Fossa Riglos, 2024). However, this emerging trade dynamic raises concerns about equity. Some scholars warn of “green colonialism”, where land and resources in the Global South may be disproportionately exploited to meet the decarbonisation goals of wealthier nations (Fossa Riglos, 2024).
Private-sector involvement is accelerating this transition. Leading firms are making significant bets on hydrogen as a key pillar of their decarbonisation strategies. Air Liquide has partnered with Siemens to scale up gigawatt-level electrolyser manufacturing in Europe. Shell’s Refhyne project in Germany is operational, with larger-scale plans underway in the Netherlands. In the U.S., Plug Power is developing a network of green hydrogen plants with a goal of reaching 500 tonnes/day production capacity by 2025. These companies are not only investing in production but also building out the broader ecosystem—storage, distribution, and end-use applications—to enable a fully functioning hydrogen economy (IEA, 2023; Siemens Energy, 2023).
Barriers to Scale and Systematic Challenges
Still, challenges remain. Electrolysis is energy-intensive, with system losses of up to 40%. Water consumption is also a concern, especially in regions facing scarcity (Kravets, 2024). The infrastructure needed to transport, store and utilise hydrogen at scale is underdeveloped. Safety issues, particularly regarding flammability, persist. Moreover, the lack of standardised global certification systems—such as guarantees of origin—complicates international trade and consumer trust. Cost remains the most significant hurdle: green hydrogen is currently 2–3 times more expensive than grey hydrogen, though this gap is narrowing steadily (IEA, 2023).
Looking ahead, green hydrogen could become a mainstream energy vector by 2030 if supportive policy, market dynamics and innovation align. Over 200 GW of electrolyser capacity is in the pipeline globally. The IEA estimates that hydrogen could contribute up to 10% of global final energy consumption by 2050. As Shee Weng (2025) notes, its success will be pivotal in building a diversified, resilient and low-carbon energy system.
Ultimately, green hydrogen sits at the intersection of technology, policy and market transformation. Its trajectory will be shaped by continued innovation in electrolysis, deeper integration with renewables and coordinated policy frameworks that address affordability, infrastructure and equity. As governments and industry commit to long-term investment, green hydrogen is well on its way to becoming a cornerstone of the post-carbon economy—powering industry, supporting energy security, and reshaping the global energy landscape
References:
Aggarwal, V. S., & Aggarwal, M. (2024). Strategic analysis of India’s National Green Hydrogen Mission and SIGHT program. Water and Energy International.
Fossa Riglos, M. F. (2024). The geopolitics of green colonialism, global justice and ecosocial transitions. Pluto Press.
Guyot, D. (2025). Active combustion control and hydrogen-based gas turbines. TU Berlin.
International Energy Agency. (2023). The Future of Hydrogen. IEA Report
International Renewable Energy Agency (IRENA). (2023). Green Hydrogen: A Guide to Policy Making.
Kravets, S. (2024). Prospects for hydrogen energy and cost reduction through innovation. Техніка, енергетика, транспорт АПК, 4(127).
Rosell, E., & Lomgren, S. (2024). Hydrogen Hybrid Systems: Bridging the gap between grid capacity and electricity generation. Lund University.
Shee Weng, L. (2025). The Carbon-Driven Economy: Trade and Investment in the Net-Zero Transition. SSRN.
Siemens Energy. (2023). Hydrogen Technology Whitepaper.