What Is Green Hydrogen, and When Does It Make Sense?
What is green hydrogen? Electrolysis powered by renewables, compared with grey and blue hydrogen, and a worked cost per kilogram.
• Green hydrogen is hydrogen made by splitting water with electricity from renewables. Grey hydrogen is made from fossil fuels with the CO2 released. Blue adds carbon capture to a fossil route.
• The IEA says renewable hydrogen can cost 1.5 to 7 times as much as unabated fossil hydrogen, depending on the place.
• A kilogram of hydrogen holds about 33.3 kWh of chemical energy (lower heating value). Making it often takes about 50 kWh or more of electricity.
• It makes sense where hydrogen is already used, or where a fuel is hard to electrify. It is a poor way to store a few hours of household solar.
What is green hydrogen? It is hydrogen gas, H₂, produced by electrolysis: an electric current splits water into hydrogen and oxygen, and the electricity comes from wind, solar or other renewables. The gas is the same molecule industry has used for a century. The climate claim sits entirely in how it was made. If the electricity was fossil-fired, the hydrogen is not green, however new the electrolyser looks. The International Energy Agency's Global Hydrogen Review 2025 is the source for the cost picture below. A lot of project announcements are not in that picture yet, because they have not been built.
What is green hydrogen, next to grey and blue?
Most hydrogen today is still made from fossil fuels without capturing the carbon dioxide. The IEA's review says demand keeps growing mainly in refining, ammonia, methanol and fossil-based steel, and that nearly all of it is still met by unabated fossil supply. That unabated route is what people call grey hydrogen. Steam methane reforming is the usual process: natural gas in, hydrogen out, CO2 to the air.
"Blue" hydrogen is the same fossil route with carbon capture fitted. It is not zero-carbon. Capture is incomplete, and leaks of methane upstream still count. The IEA describes the penalty of doing it properly: on a new plant designed around capture, a unit that catches about 90% of the CO2 can mean on the order of 80% higher capital cost and about 33% higher operating cost than the plant without capture. Even then, in the Southeast Asian example in that report, fossil hydrogen with capture stayed less than half the cost of the cheapest renewable hydrogen in the region. Blue is a cost and engineering claim. It has to be checked project by project. [CHECK the capture rate and the methane leakage a developer is actually warranting.]
The IEA's own bucket, "low-emissions hydrogen", is wider than the word green. It includes renewable electrolysis and fossil routes that meet a capture standard, and it can include electrolysis fed by nuclear power. When a government says "low-emissions" and a company says "green", they may not be counting the same molecules.
| Grey | Blue | Green | |
|---|---|---|---|
| How it is made | Fossil fuel, usually natural gas, no capture | Fossil fuel with carbon capture | Electrolysis using renewable electricity |
| Direct CO2 from the plant | Released | Mostly captured, if the rate promised is real | None at the electrolyser. Construction and backup power still count in a full account. |
| Cost position, IEA 2025 | The cheap incumbent | A premium on grey, still often below green | About 1.5 to 7 times unabated fossil hydrogen, by location |
| When it is the grown-up choice | It is the incumbent, not a climate plan | Where gas, storage geology and an honest capture rate already exist | Where renewable electricity is cheap and a buyer will pay for the molecule |
Green hydrogen cost: electricity first, then the machine
The cost of green hydrogen is mostly the cost of electricity, then the cost of the electrolyser, then the hours the plant actually runs. The IEA puts the 2024 installed cost of an electrolyser at $2,000–2,600 per kW outside China, and $600–1,200 per kW for units made and installed in China. More than half of the non-Chinese figure is engineering, construction and contingency, not the stack on a truck. Chinese equipment installed abroad, once transport and tariffs are included, lands around $1,500–2,400/kW in the same report, which narrows the gap and does not erase it. The IEA also says Chinese electrolysers have faced efficiency and standards issues abroad. A low sticker is not a low cost of hydrogen if the plant runs badly.
China can make renewable hydrogen about 40–45% cheaper than Europe or the United States, the review says, mainly because the electricity is cheaper: renewable plants there cost less to build and the cost of capital is lower. The gap against fossil hydrogen widened again after the gas-price spike faded and electrolyser costs rose with inflation and slow deployment. The IEA's conclusion is blunt. Support schemes are still required. Announcing a gigawatt is not the same as a final investment decision.
A worked kilogram: kilowatt-hours in, dollars out
The lower heating value of hydrogen is about 33.3 kWh per kilogram. That is the chemical energy you can get back if you burn it and the water vapour leaves as vapour. The higher heating value, about 39.4 kWh/kg, counts the extra heat if you condense that vapour. Electrolysis has to put at least the chemical energy in, and in practice more, because the cells are not perfect.
A 2025 review in Discover Electrochemistry (Younus and colleagues) puts alkaline electrolysers around 50–55 kWh per kilogram, PEM around 57 kWh/kg, and solid oxide around 40–45 kWh/kg. The same paper, citing the IEA, puts unabated natural-gas hydrogen at about 10–12 kg of CO2 per kg of hydrogen. Use 50 kWh/kg as a round alkaline-range example, and label it as that. Efficiency against the lower heating value is 33.3 / 50 = 67%. The other third is heat.
| Electricity price | Electricity in 1 kg at 50 kWh/kg | What this leaves out |
|---|---|---|
| $0.02/kWh | $1.00 | The electrolyser, the renewable plant, water, compression and the hours the plant stands still. Electricity is necessary and not sufficient. |
| $0.03/kWh | $1.50 | |
| $0.06/kWh | $3.00 |
Now the machine. A 100 MW electrolyser at the IEA's non-Chinese range is 100,000 kW × $2,000–2,600 = $200–260 million for the electrolyser installation. The same 100 MW at Chinese domestic costs is $60–120 million. The wind and solar that feed it are a second project, often a larger one. If that 100 MW ran 4,000 hours a year at 50 kWh/kg, hydrogen output would be 100,000 × 4,000 / 50 = 8,000 tonnes a year. The 4,000 hours is an assumption about how well the renewable supply matches the electrolyser, not an IEA promise. Fewer hours means the same capital spread over fewer kilograms, and the cost per kilogram climbs even if the electricity was cheap.
When it makes sense, and when a battery is enough
Green hydrogen makes sense where someone already buys hydrogen, because the pipes, the tanks and the chemical plant exist. Refineries and ammonia plants are that customer. It also makes sense where electricity cannot do the job directly: some steel routes, some shipping fuels, some chemical feedstocks. The IEA points out that the premium shrinks by the time it reaches a final product. In its illustrations, low-emissions fertiliser would add about 0.05% to the price of a cup of coffee in the United States, and low-emissions ammonia would add about 0.9% to the cost of a shipped good. Those are IEA examples of a lead market, not a forecast for your grocery bill.
It does not make sense as a household storage scheme. A lithium battery commonly returns most of the electricity put into it, often around 85% or better. [CHECK the round-trip figure on the battery you are comparing.] Hydrogen throws away about a third at the electrolyser, then more if a fuel cell turns the gas back into electricity. Even a generous fuel cell, around half the chemical energy back as power, leaves you near a third of the electricity you started with. For an evening of solar, that is an expensive way to avoid a battery. For a steel mill that needs a molecule, the battery was never an option.
Real: the molecule is useful, the electrolyser industry exists, and China is ahead on cost. Replacing grey hydrogen in chemicals is a serious climate project.
Hype: green hydrogen for every job electricity can already do, including cars that already have batteries, and home heating that a heat pump can do at several times the efficiency.
Verdict: ask what is being replaced. If the answer is "grey hydrogen we already use", keep listening. If the answer is "a battery, but more modern", it is the wrong tool.
Frequently asked questions
What is green hydrogen in one sentence?
Hydrogen made by splitting water with renewable electricity. The gas is ordinary hydrogen. "Green" describes the electricity, not a different element.
How is green hydrogen different from blue and grey?
Grey is fossil hydrogen with the CO2 released. Blue is fossil hydrogen with capture. Green is electrolysis on renewables. The IEA's "low-emissions" category can include more than green.
Why does green hydrogen cost more?
Because you are buying electricity and a capital-heavy plant to make a molecule that gas can make more cheaply. The IEA's range is 1.5 to 7 times the unabated fossil cost, depending on location. Cheap electricity and a high number of running hours are the only way down.
How many kilowatt-hours are in a kilogram?
About 33.3 kWh of chemical energy on the lower heating value. Making the kilogram often takes about 50 kWh or more of electricity. The difference is the loss in the electrolyser.
Does a cheap electrolyser from China fix the cost?
It helps, and the IEA shows Chinese domestic costs far below Europe and the US. Installed abroad, the advantage shrinks. Electricity price and full-load hours still dominate the kilogram.
Should I use hydrogen to store my rooftop solar?
No, not for hours or days. A battery is the efficient tool at that scale. Hydrogen belongs where you need a fuel or a chemical feedstock, in bulk.
See a project that is actually under construction on our project atlas: NEOM in Saudi Arabia is marked there as a large solar-and-wind hydrogen plant. For the household job hydrogen should not be doing, the solar calculators and the battery sizing tool are the practical ones. Morocco's plans have their own article: green hydrogen in Morocco.
Sources
- IEA Global Hydrogen Review 2025, executive summary
- IEA Global Hydrogen Review 2025 (PDF)
- IRENA: hydrogen
- US Department of Energy: hydrogen production from electrolysis
- NREL: hydrogen and fuel cells
- IEA: Global Hydrogen Review 2025, full report page
- IPCC Sixth Assessment, Working Group III, energy chapters
