What is our assessment?

Based on our analysis, blue hydrogen is ready to deploy and feasible, but there is mixed consensus and limited data on its effectiveness in reducing emissions. Its climate impact has the potential to be high, but only if adopted effectively and at a large scale, both of which are currently unproven. If deployed correctly, this technology could serve as an interim solution to reduce gray hydrogen emissions while progress is made on scaling and reducing the costs of green hydrogen. Based on our assessment, we will “Keep Watching” this potential solution.

What is it?

Hydrogen is a fuel that can be used in place of fossil fuels in industrial, transportation, and energy systems. To deploy hydrogen as an energy source or feedstock, it first needs to be extracted from other compounds. Each “color” is an informal term specifying hydrogen produced through a unique hydrogen production path, each with different associated supply chains, processes, and energy GHG emissions. Gray hydrogen, which uses natural gas as the source of hydrogen atoms and electricity, is the most produced and has high production emissions, estimated at 10–12 t CO₂-eq/t hydrogen on a 100-yr basis. One way to reduce emissions is by switching to blue hydrogen, which still uses fossil fuels but also uses CCS technologies to prevent the release of some of the CO₂ generated during production. Blue hydrogen has the potential to be a lower-emission source of energy relative to gray hydrogen or direct fossil fuel combustion.

Does it work?

Blue hydrogen is a plausible way to reduce emissions from gray hydrogen production. However, expert opinions are mixed on the magnitude of emissions that can be abated by producing blue hydrogen in place of gray hydrogen. The effectiveness of emissions reduction hinges on two main factors: the rate at which upstream methane leaks and carbon capture rates, both of which are challenging to predict on a global scale. There is uncertainty around these performance metrics and the ability to effectively store and transport captured CO₂ at scale. Due to low current adoption, there is little real-world data to answer these questions. As of 2023, blue hydrogen comprised <1% of worldwide hydrogen production. While adding carbon capture to gray hydrogen production should help prevent emissions, there is limited evidence for both effectiveness and the ability to scale of this technology.

Why are we excited?

Compared to other types of low-carbon hydrogen, including green hydrogen produced from electrolysis powered by renewable energy, blue hydrogen is a technologically developed and lower-cost option. Without a currently viable and cost-effective alternative to gray hydrogen that does not use fossil fuels, blue hydrogen can be a near-term option to facilitate the transition to a global hydrogen economy. Expert estimates of cost per emissions avoided range widely, but the International Energy Agency (IEA) estimates US$60–85/t CO₂ for lower carbon capture rates (55–70%) and US$85–110/t CO₂ for higher carbon capture rates (>90%). However, these costs are uncertain: with lower estimates of effectiveness, the cost could increase to ~US$260/t CO₂, including the cost to transport and store CO₂. If implemented with low GHG fugitive emissions and high CCS efficiencies, blue hydrogen can reduce emissions by more than 60% relative to current gray hydrogen production on a 100-yr CO₂‑eq basis. In this case, the climate impact of scaling blue hydrogen could be high. Estimates and targets for blue hydrogen production by 2050 range from ~30–85 Mt hydrogen. At that scale, even modest emissions savings relative to gray hydrogen (3 t CO₂‑eq/t hydrogen, 20-yr basis) would have a climate impact above 0.09 Gt CO₂-eq/yr by 2050. However, achieving this depends on the quality of the infrastructure and rate of technology scaling, both of which are unproven.

Why are we concerned?

While it has some advantages, blue hydrogen is still a less effective solution than green hydrogen, while costing more than gray hydrogen. Though it could be useful for near-term energy decarbonization, this risks taking resources away from renewable energy and green hydrogen development while perpetuating and increasing fossil fuel use. The infrastructure required to scale hydrogen-based energy is expensive and will require technical advances and policy incentives to be competitive with fossil fuels. There are mixed expert opinions about the realistic level of avoided emissions that blue hydrogen may reach. The theoretical worst-performing blue hydrogen plants (low capture rates, high methane leaks, high-emission electricity sources) have been predicted to lead to more emissions on a near-term basis than direct natural gas combustion. Additionally, there is uncertainty around whether CCS can meet its technical potential at a reasonable cost. While experts predict >95% carbon capture rates are possible, facilities currently in operation capture less than this target, some less than 60% of all emitted carbon. For blue hydrogen to be feasible and scalable, CO₂ transport and storage need to be low-emitting, stable, and available. Only ~8% of CO₂ currently captured from blue hydrogen production is injected in dedicated storage, with the rest used in industry, enhanced oil recovery, and other applications. Finally, an understudied risk is hydrogen leaks. Hydrogen transport and storage require larger volumes than fossil fuels, increasing the risk of leaks. Hydrogen has an indirect planet-warming effect by increasing the levels of other atmospheric GHGs. At scale, the IEA estimates that high hydrogen leak rates could contribute 0.1 Gt CO₂-eq/yr in emissions, potentially canceling out any positive climate impacts.