Often touted as essential to the transition to a climate-friendly economy, the use of hydrogen as a “clean” fuel is receiving a lot of attention. It is also receiving a new infusion of taxpayer subsidies as part of the Inflation Reduction Act.

Hydrogen fuel can be produced by using only water as a basic ingredient and energy from renewable sources like wind and solar. In theory, when it is made this way, hydrogen is a clean fuel -- although a very expensive one -- that emits no carbon dioxide or other contaminants when burned, only water, and has a relatively carbon-free supply chain. This is called “green hydrogen.”

But most hydrogen fuel today is not so clean, because it is produced using natural gas or coal. This hydrogen is used as an ingredient by dirty industries, such as oil refineries, petrochemical plants, and fertilizer factories. This fossil-fuel hydrogen is called “blue” or “gray” hydrogen, depending on whether the carbon dioxide pollution produced when making the hydrogen is captured and stored underground.  Carbon capture is a largely untested technology. But assuming it works, carbon capture could be used to produce “blue” hydrogen, which would (in theory) have a smaller greenhouse gas footprint than “gray” hydrogen, which is made the same way, but with no carbon capture.

However, a recent study published in the journal Energy Science and Engineering concluded that “blue” hydrogen (made with fossil fuels and carbon capture) could be worse for the climate than the burning of coal.

“Perhaps surprisingly, the greenhouse gas footprint of blue hydrogen is more than 20 percent greater than burning natural gas or coal for heat and some 60 percent greater than burning diesel oil for heat,” professors Robert W. Howarth or Cornell University and Mark Z. Jacobson of Stanford University wrote in their July 26, 2021, study “How Green is Blue Hydrogen.” “The use of blue hydrogen appears difficult to justify on climate grounds.”

Most hydrogen today is made using a process called steam methane reforming, which thermally separates methane gas (the main ingredient in natural gas) into its component parts. That process generates hydrogen and a lot of carbon dioxide: 8 to 12 tons, roughly, for every ton of hydrogen. Hydrogen made from coal, which is more common in China and India, results in 18 to 20 tons of carbon dioxide per ton of hydrogen.

Over 100 U.S. hydrogen producers in 2021 reported emitting nearly 46 million tons of greenhouse gases (as carbon dioxide equivalents). That’s about as much as 8.9 million gas-powered cars driven constantly for a year.

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But many hydrogen advocates point to the promise of a new generation of hydrogen plants that will use only renewable energy sources and water to produce the cleaner “green” hydrogen. It’s still to be seen whether this “green” hydrogen industry will turn out to be economically viable, potentially aided by the new tax credits in the Inflation Reduction Act and other government initiatives.

But, despite the questions, the hydrogen industry is pushing for the fuel to be used in aviation, shipping, and blended with natural gas to generate electricity and heat at power plants and other energy-intensive industries like steel manufacturing. The industry has ambitious goals, with as many as 680 large-scale projects to make hydrogen or advance its use globally announced in recent years, according to the Hydrogen Council, a trade group for the industry. According to the Oil & Gas Watch Database, there are at least 39 proposed hydrogen projects in the U.S. that rely on natural gas, make ammonia, or will supply hydrogen to refineries and petrochemical plants.

In the U.S., development of additional hydrogen infrastructure has become a government priority and a key part of the Biden Administration’s plan to address climate change. The Inflation Reduction Act created new production tax credits for clean hydrogen, with a maximum credit that could cover more than half the cost of making it in the least carbon-intensive way (up to $3 per kilogram).

The U.S. Department of Energy is also investing $8 billion in regional hydrogen hubs to be built around the country, funded by the November 2021 Infrastructure Investment and Jobs Act, while providing additional funding for research and development. Big industries like oil, gas, and fertilizer manufacturing are also demonstrating significant interest in hydrogen production.

Using hydrogen as fuel isn’t a new concept. People have been testing the limits of invention (and financing) for decades to create and scale up affordable and sustainable methods to make, store, and transport it in large quantities. The conventional way of making hydrogen from natural gas or coal comes with an enormous carbon footprint. Some of the proposed methods for shrinking that footprint, like using carbon capture, use, and sequestration to re-direct carbon emissions, also come with notable uncertainties and risks.

According to the Oil & Gas Watch Database, there are at least 10 proposed conventional or “gray” hydrogen projects in the U.S. today. One is under construction, six have applied for or received federal air quality permit approvals under the Clean Air Act, and three have not yet applied for Clean Air Act permits. Half of the projects are affiliated with expanding nitrogen fertilizer production.

To reduce carbon dioxide emissions, more companies are exploring capturing the carbon dioxide generated during the hydrogen-making process and sequestering it underground permanently or injecting it into spent oil fields to increase oil production. When hydrogen is made from natural gas with the addition of carbon capture, use, or storage, the hydrogen industry labels it “blue” hydrogen. At least 19 blue hydrogen projects are in planning stages today in the U.S., according to the Oil & Gas Watch Database.

Some proposed blue hydrogen projects have been met with significant local opposition. In March 2022, Air Products Blue Energy LLC applied for an initial air permit for its proposed “clean energy complex” in Darrow, Louisiana. Air Products plans to spend $4.5 billion constructing infrastructure to produce 750 million standard cubic feet per day of hydrogen, most of which would be used to make ammonia.

Air Products proposes to transport a share of the associated carbon dioxide emissions via pipeline to nearby parishes, including Livingston, where it would be injected into the ground. But early last month, Livingston Parish council members voted unanimously to impose a year-long moratorium on carbon injection wells due to resident concerns over the safety and effectiveness of the technology. Residents showed up in force to protest the proposal to inject carbon dioxide below the waters of Lake Maurepas, asking how the proposed injection wells may impact recreation, fisheries, and drinking water. The Louisiana Department of Environmental Quality has yet to issue the necessary air permit for initial construction of the facility.

In south Texas, residents living near the coastal community of Ingleside on the Bay near Corpus Christi are challenging the proposed expansion of the Ingleside Energy Center—the largest oil storage and export terminal in the U.S. The $2.5 billion expansion project, which is being jointly developed by Enbridge and Humble Midstream, would add a new blue hydrogen and ammonia production and export facility to the sprawling site. The Ingleside Independent School District is considering to lower the company’s property taxes under the controversial Chapter 313 program in exchange for creating one new job.

One of the major questions about these new blue hydrogen projects is whether they can deliver on their promises to effectively sequester carbon emissions, and whether those promises, if met, would be anywhere near enough to deliver climate benefits. Globally, only two commercial projects are currently in operation, and they appear to fall short of their carbon capture goals. One is in Texas, in the coastal refinery city of Port Arthur near the Texas-Louisiana border.

Air Products operates carbon capture equipment at its Port Arthur facility, which in 2021 reported emitting the most greenhouse gases out of all hydrogen producers to EPA’s greenhouse gas reporting program— about 2.9 million tons of mostly carbon dioxide, including emissions from on-site power and heat generation. (A typical coal-fired power plant emitted about 4.1 million tons per year in 2019.)

Air Products claims it captures over 1 million tons of carbon dioxide each year from this plant, but limited public data are available to verify the number. Even if this amount were captured, the capture efficiency in 2021 would have been around 49 percent, well short of the 75 percent that the facility was designed to capture. The amount of carbon dioxide captured is even lower—34 percent—if carbon emissions from energy generation and other on-site equipment are considered.

Scientists are still evaluating whether blue hydrogen is better or worse overall than conventional hydrogen production, or even burning coal. For now, the answer depends on the supply chain.

The 2021 study by professors Howarth and Jacobson mentioned earlier in this article found that burning blue hydrogen would emit more than 20 percent more greenhouse gases than natural gas or coal. Even under the most optimistic scenario in which methane leakage rates were reduced significantly, the study concluded that greenhouse gas emissions from making blue hydrogen could only be 18-25 percent less than from traditional gray hydrogen. The variability largely depends on how companies power carbon capture equipment and whether that power comes from burning fossil fuels or renewables.

Other scientists have pointed out that hydrogen itself is a greenhouse gas 100 times more times potent than carbon dioxide over a 10-year period. Because it’s the smallest molecule, hydrogen its more prone to leaking into the air from tanks and pipelines if they’re not properly designed and maintained. As with methane, anyone storing, transporting, or using hydrogen will need to prevent and control leaks.

Companies are also exploring opportunities to make green hydrogen, which (as mentioned earlier) is made from water and renewable electricity. At least 11 green hydrogen projects have been proposed in the U.S. that would supply the fertilizer, petrochemical, refining, or shipping industries. This process doesn’t rely on fossil fuels and arguably has a smaller environmental footprint, especially where water supplies are available, but it’s expensive. Green hydrogen also comes with other notable hurdles. Like gray and blue hydrogen, it requires a lot of purified water and may not be practical in areas where freshwater is scarce. It is also very energy intensive and requires a lot of renewable electricity.

It’s uncertain that these hydrogen projects would ultimately result in a net decrease in greenhouse gas emissions compared to current levels, especially in the near term. All but five of the 39 hydrogen projects listed in the table below involve construction of new plants or expansions, not conversions or retrofits. And, given that demand for hydrogen is expected to increase, many existing fossil-fuel dependent hydrogen plants are unlikely to completely change the way they operate while new ones continue to be proposed and built.

Several projects do aim to convert some existing gray hydrogen production to blue or green processes, but their potential impact on carbon reductions would be relatively minor. Only one project, OCI’s Iowa Fertilizer Complex in Weaver, IA, aims to eventually mitigate all carbon dioxide emissions from an existing plant.  

LSB Industries’ Pryor Chemical in May 2022 announced plans to convert a small part of its existing fertilizer facility in Pryor, Oklahoma, to make green hydrogen, and ultimately up to 30,000 metric tons per year of green ammonia. The plant currently has the capacity to make up to 240,000 metric tons of ammonia per year, according to the U.S. Geological Survey, so the conversion to green ammonia would be small (12.5 percent) relative to the overall size of the plant, even though the company claims their green ammonia plant would be the largest in North America.

CF Industries has proposed to install carbon capture equipment on part of the country’s largest fertilizer plant in Donaldsonville, Louisiana, enabling it to apply the “blue” label to up to 1.7 million tons of ammonia per year. The plant reported emitting nearly 10 million tons of greenhouse gases in 2021, making it the largest source of greenhouse gas emissions in the state. Even if operated as designed, the carbon capture project would make a small dent in those total emissions, with the capacity to keep 2 million tons, or 20 percent, of the plant’s reported total carbon dioxide emissions out of the air.  

CF Industries is also planning to add carbon capture equipment to its fertilizer plant in Yazoo City, Mississippi, with the capacity to capture about 500,000 tons of carbon dioxide per year from its hydrogen units. That plant reported emitting the fourth-highest amount of greenhouse gases in the state last year, with over 2.3 million tons. Again, the carbon capture rate would only be around 20 percent of the plant’s total emissions.

While green hydrogen could offer significant climate benefits, it’s unclear that subsidies will be enough to incentivize companies to choose green instead of building blue or gray hydrogen plants in the U.S. Any project that claims to capture and sequester high percentages of carbon dioxide should be viewed with skepticism and needs to be held to strong performance standards.  

Alexandra Shaykevich, research manager, and Lottie Mitchell, research analyst, contributed to this analysis.

Lead photo: Sept. 14, 2022, Bavaria, Wunsiedel: A sticker reading "Hydrogen" is affixed to pipes of a hydrogen generation plant. Bavaria's largest green hydrogen generation plant was ceremonially commissioned at the Wunsiedel Energy Park. Photo by: Nicolas Armer/picture-alliance/dpa/AP Images