April 21, 2022

The big hydrogen debate: super fuel or decoy solution?

There are lots of controversial topics in climate tech, but there’s few as divisive as hydrogen. 

Freya Pratty

7 min read

There are lots of controversial topics in climate tech, but few are as divisive as hydrogen. Its backers say it’ll play a key role in decarbonising heavy industry and transport, paving the way to net zero.

Figures suggest a significant number of investors take this view too — they ploughed $437m into Europe’s hydrogen startups in 2021, a 592% increase on the year before.

Meanwhile, critics slam it as a decoy peddled by the fossil fuel industry to detract attention from better options. So how did the most abundant element in the universe become so controversial? 


Molecules and electrons

First, back to basics. “There are different ways to deliver energy, there are molecules and there are electrons,” explains Magnolia Tovar, a chemical engineer from the Clean Air Taskforce, a not-for-profit focused on climate tech.  

Oil, natural gas and coal are molecular sources; whereas renewable energy sources like wind and solar are electrons — ie, electricity. 

“Today, 80% of energy is delivered through molecules because it’s easier to store,” says Tovar. “In the energy transition, Europe is anticipating that about 50% of our energy will come through electrification.

“But there are sectors where the energy demand is too high and electrification won’t work. For those industries, we’ll need molecules in the form of zero-carbon fuels, which is what hydrogen is.” When hydrogen is burnt, its only byproduct is water.

Some sectors have been using hydrogen for a long time. It’s commonly used in oil refineries and to make ammonia for fertilisers. According to Tovar, current usage is between 8-9m tonnes per year, but, under Europe’s net zero strategy, it’s estimated that the continent will need 70m tonnes by 2050. 

An oil refinery, which produces the molecular energy that hydrogen hopes to replace
An oil refinery, which produces the molecular energy that hydrogen hopes to replace

The hydrogen rainbow

That’s a big task. Although hydrogen is abundant in nature, it doesn’t appear on its own. To get it to the form we need, we have to split it apart from other molecules. It’s a process that requires a lot of energy so, although hydrogen is a "clean fuel" when it’s burnt, producing the fuel can be far from green.  

The industry has colour-coded the different production methods. Grey hydrogen accounts for about 90% of current production. It relies on fossil fuels, natural gas and methane to separate out the hydrogen molecules.

Green hydrogen, on the other hand, uses renewable energy to separate out the oxygen and hydrogen from water, a process known as electrolysis. But it’s only 0.1% of hydrogen produced today.

The fossil fuel lobby

The most controversy is around a third category: blue hydrogen, which falls somewhere in the middle of grey and green. The production process is similar to grey, so relies on natural gas, but includes carbon capture and storage (CCS) to collect emissions. 

“It’s a great way for fossil fuel companies to continue to sell a lot of gas,” says Jules Besnainou, director of Cleantech for Europe, an initiative aimed at bringing cleantech companies, venture capital and policymakers together.


He argues that fossil fuel companies promote carbon capture at the end of the process as a way to create low-carbon hydrogen, when in reality carbon capture doesn’t work every time and “you need to have a really strong network to put the carbon to work afterwards”.

A report by Corporate Europe, a non-profit research centre focused on corporate lobbying in EU policy, claimed in 2020 that fossil gas companies made up the bulk of the hydrogen lobby and that they “declared a combined annual expenditure of €58.6m trying to influence Brussels policymaking.”

One prominent lobby group is Hydrogen Europe. It represents 260 companies, including a lot of Europe’s hydrogen startups, but also a lot of the big gas players: Shell, Equinor, BP, Air Liquide and EON.

It’s not just the gas companies which have an interest in pushing the blue agenda: there are whole countries, particularly parts of the Middle East, where the economy is based on natural gas and for whom blue hydrogen represents a natural opportunity. 

Over the last year, EU regulators have tried to make the categories of hydrogen production clearer.

They released a new taxonomy of hydrogen, breaking it down into two categories: renewable hydrogen and low-carbon hydrogen. The low-carbon hydrogen has to achieve a 70% reduction in greenhouse gases compared to grey hydrogen. 

“The fossil fuel industry is looking to blur the lines between blue hydrogen and green hydrogen in Brussels,” says Besnaiou. “It worked in the case of the taxonomy, where the thresholds set for hydrogen to be considered green implicitly includes blue hydrogen, so it is not limited to renewable hydrogen."

EU flags flying outside the European Parliament building
The EU has been criticised for letting oil and gas lobbyists set rules

But Besnaiou says Europe still should prioritise renewable hydrogen from the onset, because it cuts reliance on imported fossil fuels and any investment that we do now, we are locked in for the next 25 years.

There are people in the industry, however, who argue we need to move to blue hydrogen while green is still being scaled.

“You can retrofit existing hydrogen facilities to produce blue hydrogen or low-carbon hydrogen, while the green hydrogen infrastructure is being built and scaled,” says Tovar. 

They say that the logic behind blue hydrogen is sound. Tovar says existing carbon capture could reduce emissions by 90% — though some people estimate a far lower figure. 

Steel, trucking and EVs

The next point of contention is over where hydrogen should be deployed. There are a few use cases that people generally agree on — a key one being the steel industry. Steel’s produced using coal, but Swedish startup Hybrit is now making the metal using hydrogen. Steel is important to decarbonise because a lot of the energy transition relies on it — to make wind turbines, for example. 

People generally agree that long-haul trucking is another key use case for hydrogen. Drivers travel long distances and can’t stop to recharge electric batteries. 

There’s a lot less agreement over the use of hydrogen for cars, however. The amount of energy it takes to produce hydrogen is significantly lower than the amount of energy potential in the resultant fuel, so there’s an argument that says we should focus hydrogen only on the areas where electricity can’t be used directly. 

“A hydrogen fuel cell vehicle will always be much less efficient than a battery electric vehicle, because you need two power conversions: one from electricity to produce hydrogen for fuel, another from hydrogen back to electricity to power the car,” says Besnainou.  

The ‘blended network’

Then there are the more controversial use cases — of which heating homes is one the most fractious. In the UK, heating accounts for a third of carbon emissions, so partly decarbonising the system could bring critical reductions. There’s a pilot in the north of England at the moment run by Northern Gas Networks, pumping hydrogen blended with natural gas into people’s homes. 

But not everyone’s on board with the idea. “If you use 5% hydrogen in the gas grid, you’re actually only displacing 1.6% of the natural gas, because the energy density of hydrogen is lower,” says Francois Paquet, from the Renewable Hydrogen Coalition, an industry group founded by SolarPower Europe, WindEurope and Breakthrough Energy. “So you’d need more gas in there to compensate.” 

And if the hydrogen is not produced using renewable means, the decarbonisation gains are even smaller.

People have also pointed out that a blended network could move focus away from converting domestic boilers and existing gas pipelines to a decarbonised model. Most domestic boilers and pipelines can’t transport pure hydrogen. 

The next gigafactory race?

Even if we just to deploy hydrogen to the hard-to-electrify sectors like steel and trucking, it’s going to mean a serious ramping up of renewable hydrogen infrastructure. 

“It’s a Herculean task,” says Tovar — though the progress Europe’s made on ramping up renewable energy provision, particularly wind and solar, over the last few months makes her confident. 

“There's going to be a race for scale,” says Besnainou. “We need to start building electrolyser gigafactories.” (Electrolysers are used to separate hydrogen from oxygen in green hydrogen production.)

“A bit like what Tesla's doing on batteries, we need to start doing the same for renewable hydrogen,” he says. “Competition from China and the US to produce this renewable hydrogen is heating up and it’s all going to come down to economies of scale.”

Freya Pratty

Freya Pratty is a senior reporter at Sifted. She covers climate tech, writes our weekly Climate Tech newsletter and works on investigations. Follow her on X and LinkedIn