ICCT green hydrogen production cost estimates for 2030 in the European Union and United States under different technology-improvement scenarios. Circles represent the regional average and bars show the range of estimated production costs in all U.S. regions and EU countries.
2 · Depending on production methods, hydrogen can be grey, blue or green – and sometimes even pink, yellow or turquoise – although naming conventions can vary across countries and over time.
To quantify the cost of green hydrogen production and its renewable characteristics in the subsequently derived power purchase scenarios, the operational cost (C OPEX) and the annualized
Without a price on carbon emissions, grey hydrogen is inexpensive (€1 to €2 per kilogram), but it compounds the challenge of improving environmental sustainability. Green hydrogen, in contrast, uses renewable electricity to power electrolysis that splits water molecules into hydrogen and oxygen.
"Gray hydrogen, which comes from natural gas, costs $0.98-$2.93 per kilogram to produce. Blue hydrogen, or hydrogen produced with fossil fuels but subject to carbon capture, costs $1.8-$4.7 per kilogram.
Global average levelised cost of hydrogen production by energy source and technology, 2019 and 2050 - Chart and data by the International Energy Agency.
Producing hydrogen from low-carbon energy is costly at the moment. IEA analysis finds that the cost of producing hydrogen from renewable electricity could fall 30% by 2030 as a result of declining costs of renewables and the scaling up of
After 2025, nearly all new hydrogen production coming online is expected to be clean hydrogen. This coincides with the start of the expected phaseout of grey hydrogen, driven by the growing cost competitiveness of clean hydrogen and commitments to decarbonize.
A massive scale-up is underway. According to McKinsey, an estimated 130 to 345 gigawatts (GW) of electrolyzer capacity will be necessary to meet the green hydrogen demand by 2030, with 246 GW of
The levelized cost of hydrogen (LCOH2) has risen slightly in 2023 due to inflation and higher financing costs. Still, green hydrogen (H2) will become competitive with existing gray H2 plants running at marginal cost in five markets by 2030.