Clean hydrogen: researchers call for targeting the most effective uses

Research published in Nature Climate Change urges governments to direct low-carbon hydrogen toward uses where it can cut emissions at lower cost. Comparing ten high-emitting sectors around 2035, researchers identify steelmaking, refining and ammonia production as priority applications. Conversely, hydrogen in road and rail vehicles appears less competitive than direct electrification under the assumptions studied.

The conclusion concerns allocating a resource likely to remain scarce and costly in the near term. Hydrogen is not a universal solution: producing it through electrolysis consumes considerable electricity, and competitiveness varies by technology, location and sector. Public policy should therefore help create targeted demand, rather than indiscriminately subsidizing production of volumes that might be used in less efficient applications.

Comparing hydrogen with alternatives

The study examines clean hydrogen’s mitigation potential and costs across ten carbon-intensive sectors. It compares uses with other available low-carbon options, considering the levelized cost of emissions abatement. The central finding is that a molecule’s climate value depends on what it replaces and the competing technology available in each sector.

In steelmaking, hydrogen can serve as a reducing agent in some iron production processes, replacing coal. In refining, it can replace natural-gas-based hydrogen, currently widely used in processing petroleum products. In ammonia, hydrogen is an essential feedstock; decarbonizing its production therefore reduces the footprint of a product vital to fertilizers and chemicals.

These sectors are described as “no-regret” in the analysis because they rank among the most cost-effective emissions-avoidance options at the scale studied. This does not mean every project will automatically be profitable or desirable. Results depend on cost assumptions, energy prices, infrastructure, industrial processes and policies applied.

Direct electrification remains more efficient in transport

For road and rail vehicles, the study finds hydrogen less economically attractive than electricity used directly in batteries, given the alternatives considered. Using electricity to produce hydrogen, compress it, transport it and then convert it in a fuel cell entails several losses. A direct electric chain can require less energy to deliver the same mobility service.

This comparison does not settle every case. Heavy-duty uses, long distances, payload constraints and infrastructure can alter the economics. But the analysis stresses that hydrogen should be reserved for situations where direct electric solutions are insufficiently competitive or practical, rather than deployed by default across all transport segments.

This prioritization principle matters because clean hydrogen still faces high costs and limited production capacity. Directing initial volumes to industrial processes that are difficult to replace can maximize climate benefits and support a market of creditworthy buyers.

Production alone does not create the right uses

The authors caution against policies that mainly subsidize supply without guiding uses. General producer support can encourage electrolyzer expansion, but does not ensure hydrogen is consumed where it most effectively replaces fossil fuels. If volumes go to applications where direct electrification performs better, support can consume public funds without maximizing emissions reductions.

Electrolytic hydrogen production is also tied to renewable electricity availability. If facilities use electricity that could have directly supplied homes, vehicles or industries, the net climate value may differ from expectations. Certification rules, power purchase agreements and electrolyzer locations therefore influence system performance.

Demand-side policies can reduce this risk. They can encourage industrial companies to replace fossil-based hydrogen in processes, support initial purchases of low-carbon products or align standards and public procurement with emissions criteria. Support design must nevertheless remain proportionate and account for consumer costs and the competitiveness of industries exposed to international trade.

A trade-off between climate, cost and industrial capacity

The research recalls that decarbonization objectives are not simply about producing more hydrogen. States must choose which uses to support, assess emissions across the entire chain and compare options with competing technologies. This approach helps avoid capacity announcements that reflect neither user needs nor expected climate gains.

For priority sectors, substantial obstacles remain: investment costs, renewable electricity availability, equipment conversion, infrastructure construction and securing contracts. Clean hydrogen can help decarbonize certain industrial chains, but the pace will depend on producers’ and buyers’ ability to share risks.

The study’s message is therefore selective use. Steelmaking, refining and ammonia emerge as priority candidates in the framework analyzed, while road and rail mobility must be compared with direct electrification. As technologies and costs evolve, governments will need to update these trade-offs and direct support toward uses offering the most credible emissions reductions.