Hydrogen keeps door open for fossil fuels

Hydrogen is central to the vision sketched by Sultan Ahmed Al Jaber, the host of this year’s COP. But it's also just hot air.

Scaling green hydrogen requires time and state support, which, yet again, opens the door for governments to (re)consider the role fossil hydrogen can play in the interim. 

Hydrogen remains firmly rooted at the heart and centre of the global climate and energy agenda as the Hydrogen Transition Summit kicks-off at the Conference of the Parties 28 (COP28) in Dubai today (Wednesday, 7 December 2023). 

It may be organised as a side event at the most recent installment of the 2023 United Nations Climate Change Conference, but given the theme and ambition of the conference, it may just well be the main attraction. 


Hydrogen is central to the vision sketched by Sultan Ahmed Al Jaber, the host of this year’s COP, who indicated an ambition to double current global hydrogen production from 95 million tonnes to 180 million tonnes per year (Mtpa) by 2030, something that the European state-backed hydrogen industry eagerly supported as well.


Doubling hydrogen production would be “near impossible” or deeply reliant on fossil fuels. “Fortunately” the targets Al Jaber articulated are based on low carbon hydrogen, leaving room for it be produced from renewable (green) or nuclear (pink) electricity or natural gas paired with carbon capture and storage (CCS) (blue). 

In a sense, it seems that we are having the same conversation over and over, as we underscore the caveats of becoming overly excited about hydrogen, while it somehow still rises on the agenda. 

The composition of hydrogen production continues to paint a gloomy picture over just how green this energy carrier can be. The International Energy Agency (IEA) suggests that the overwhelming majority of hydrogen consumed was based on natural gas and emissions were unabated. 

Low emission hydrogen production in 2022 amounted to 285 thousand tonnes (0.3 per cent of total), up from 240 thousand tonnes in 2021, 90 per cent of which was based on natural gas combined with CCS. 

On the face of it, these are steps forward, but the ‘low carbonness’ of blue hydrogen has been regularly questioned due to methane leaks and venting throughout the supply chain and the questionable efficacy of CCS.


Green hydrogen meanwhile makes up minuscule fraction of total production and has only grown at a sluggish pace. A modest three electrolysers were added to the global portfolio in 2023 with a combined capacity of 30 MW. 

Scaling green hydrogen requires time and state support, which, yet again, opens the door for governments to (re)consider the role fossil hydrogen can play in the interim. 

This is certainly progress, but highlights the scale of the challenge and has led many to argue that blue hydrogen can be scaled quicker to meet targets. 

Large oil and gas companies have led these discussions, offering to take on immense projects to provide blue hydrogen directly to industrial consumers. 

After all, they are well positioned to produce natural gas, steam reform the methane to produce hydrogen, and pump carbon-dioxide back under ground. Blue seems to be well positioned to scale, if all of these processes fall into place – a big “if” to say the least.

Green hydrogen meanwhile faces an uphill battle. Issues begin with sufficient green electricity supply, as the deployment of wind turbines and solar photovoltaics needs to be accelerated substantially to green the electricity grid and make for hydrogen production. Then, the capacity of electrolysers needs to substantially scale while their value chains remain in their “infancy”. 


Green hydrogen also requires storage or flexible demand as it does not offer a continuous stream of output as does its blue variant, something that is also lacking. These are not insurmountable barriers, but they indicate that having green hydrogen play a substantive role in a nation state’s energy system is well in the future.

Scaling green hydrogen requires time and state support, which, yet again, opens the door for governments to (re)consider the role fossil hydrogen can play in the interim. 

It seemed that high and volatile natural gas prices rendered methane-based variants unappealing and EU – a key player in the field – funding for hydrogen projects tipped to favour green endeavours in recent years. 

However, it is becoming clear that many of those that seek to lead the hydrogen economy are moving back to a blue future as they realise the scale and challenges of an energy transition that seeks to maintain consumer practices.


Taxonomies that define what sort of hydrogen is permissible leave the door open for blue, as did the UK’s, the EU’s, or the US’. Meanwhile energy poor countries, such as Germany have begun to explore costly and inefficient hydrogen imports. Here too, blue is an option and hydrocarbon rich countries ranging from Australia to Qatar are exploring the opportunity.

Europe has looked to also establish itself as the purveyor of technologies essential for a hydrogen economy. 

Oil and natural gas companies (e.g. Shell or BP) as well as their service providers (e.g. Schlumberger) already have an edge in exploration and production, while experiments with carbon-dioxide pipelines (e.g. Equinor), carbon capture and storage (e.g. Topsoe or Teco), hydrogen pipelines (e.g. EHB), electrolyser manufacturing (e.g. ITM Power), and so on are all a part of the bloc’s industrial policy to lead the global energy transition. 

As leaders discussed in Dubai prior to COP28, Europe could export hydrogen technologies to other nations that could then produce the hydrogen and ship it back to Europe.


Producing hydrogen may be all the hype, but demand is eerily absent from discussions. This was certainly the case at the 2023 European Hydrogen Week held in Brussels a few weeks ago, where a presenter remarked that the pace of final investment decisions are nowhere near what Europe would need to bring to life a hydrogen economy because the demand is simply not there.

Speaking to hydrogen producers at the event, it seemed that projects were greenlit if they received state subsidies or found buyers that were willing to sign long-term purchase agreements – the latter being quite rare as it conflicts with the bottom line of companies. 

It would be up to the state to provide subsidies to help match supply and demand by effectively filling the gap between the costs of producing hydrogen and what consumers are willing to pay for it. 

The issue is that state coffers are empty and there is a cost of living crisis, invoking the rhetorical question of why Big Oil that posted blockbuster profits is not paying for a technology it believes in?

This Author

John Szabo is a British Academy visiting fellow at Brunel University London and a research fellow at the Institute of World Economics, Centre for Economic and Regional Studies, Budapest.

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