Hydrogen, hype or hope?
Where can hydrogen decarbonise for real?
Based on our February 2025 analysis. Figures are those published at the time.
Hydrogen stores and moves energy that has to be produced first.
Hydrogen (H2) is one of the most abundant natural elements in the universe. It exists as an invisible, odorless gas and is used mainly in industrial applications.
It is an energy carrier. It has to be produced from another energy source before it can be stored, transported and used. Today it is produced mainly in two ways: from hydrocarbons such as methane through steam reforming, the most widespread method, which emits a lot of greenhouse gas; and from water through electrolysis, which uses electricity to separate hydrogen from oxygen.
Because it can be transformed in many ways, hydrogen matters for the energy transition, in particular for energy storage and decarbonised transportation.
- 1
Start with how it is made
The production route decides the carbon footprint: gray, green or white.
- 2
Check the conversion technologies
Electrolysis turns electricity into hydrogen and fuel cells turn it back. Both still have to improve.
- 3
Test costs and policy
Price against gray hydrogen and the strength of public support decide how fast green hydrogen grows.
An industrial market, still gray
The global hydrogen market today is primarily industrial. Hydrogen is used in refining and in the chemical industry.
Global industrial hydrogen market, of which 95% is gray.
Of industrially produced hydrogen comes from fossil fuels, mainly natural gas steam reforming.
French industrial hydrogen market.
Projected CAGR for the global market, 2024 to 2032.
The Energy Transition Law for Green Growth sets goals for 2030: 32% renewable energy in final energy consumption, 40% in electricity production, 30% less fossil fuel consumption and 10% of the gas supply decarbonised. Hydrogen is seen as a crucial lever for these goals and for carbon neutrality by 2050. The challenge is to replace polluting gray hydrogen with hydrogen produced from renewables.
Same molecule, very different footprints
The colour describes how the hydrogen is made. Each route has a different cost, carbon footprint and maturity.
Gray
Produced from hydrocarbons such as methane through steam reforming. It is the most widespread method and results in significant greenhouse gas emissions. 95% of industrial hydrogen is gray.
Cost: €1.50 to €2 per kg.
Green
Produced by electrolysis of water. To count as green, the electricity has to come from renewable sources such as solar, wind or hydro power, which keeps greenhouse gas emissions low.
Cost: €5 to €10 per kg.
White
Also called natural or native hydrogen. It is found in the Earth's subsurface and does not require industrial transformation. It is formed by natural geological processes.
Cost: an estimated $0.50 per kg, according to Stanford University.
Replacing gray hydrogen is the real prize, because gray hydrogen is where the volume and the emissions are today. Each alternative has to close a cost gap to get there.
Two technologies to unlock the potential
To reach hydrogen's potential in the energy transition, two conversion technologies have to improve. Electrolysis converts surplus energy into hydrogen. Fuel cells convert stored hydrogen back into electricity.
Alkaline electrolysis is cheaper and suits stable sources such as hydropower. PEM suits intermittent solar and wind and costs more. On the other end of the chain, fuel cells depend on platinum, a rare and expensive material, so platinum-free electrodes are a research priority.
A technology struggling to scale
Power-to-Gas converts surplus energy from intermittent renewables into hydrogen by electrolysis of water. It opens up new ways to store and use energy.
Long-term storage
Potential to supply the grid during periods of high demand.
Clean mobility
Fuel for electric vehicles: cars, buses, trucks and more.
Injection into existing networks
Used in gas grids, in stationary applications or in mobile applications.
Production cost
€5 to €10 per kg, against €1.50 to €2 for gray. Cost reductions depend on cheaper renewable electricity and on mass industrialisation of electrolysis technology.
Time to market
Electrolysers, transport networks and refuelling stations are costly and slow to build. Current global production capacity is too low to meet climate goals in the short term.
Water
Electrolysis needs large amounts of purified water. Using seawater can require desalination, which is energy-intensive.
Energy efficiency
Electrolysis takes about 50 kWh per kg of hydrogen, and significant energy is lost in storage, transport and reconversion into electricity.
The growth of green hydrogen is tied to government ambition and subsidy policy, and to the price of renewable electricity. Its potential as energy storage is real, and so are the efficiency losses along the way.
A possible game changer
White hydrogen is found in the Earth's subsurface. It forms through natural geological processes: oxidation of iron-rich rocks and water radiolysis, caused by ionizing radiation. Once unknown, the resource now attracts growing interest as a potentially sustainable and carbon-free source of energy.
Mali is the only country actively exploiting a white hydrogen deposit. It was discovered by chance in 1987 near the village of Bourakébougou, about 60 km from Bamako. The company Hydroma has used it for over a decade to supply the village with decarbonised electricity.
Estimated exploitable reserves of the Malian deposit, about 5% of current global hydrogen production from all sources. Hydrogen is generated continuously underground by natural chemical reactions.
Estimated potential cost, according to Stanford University, and a naturally carbon-free resource.
Australia
Recent drilling has revealed promising deposits with high concentrations of pure hydrogen.
United States
Koloma, backed by Breakthrough Energy Ventures, raised $245 million in 2023 to identify, access and produce geologic hydrogen.
United Kingdom
Snowfox, a spin-off from Oxford University, partnered with mining group Rio Tinto. Getec is increasing its investments in white hydrogen research.
White hydrogen could become a key pillar of the energy transition thanks to its low potential cost. Its growth depends on progress in geological research, on public and private investment, and on political incentives.
Who is working on natural hydrogen
Companies named in our February 2025 analysis, grouped by where they stand. The list is non-exhaustive. Inclusion is for context and is not an endorsement.
French innovators are standing out in this emerging market. Several of them position as the tools to find where to explore, and one already holds an exclusive government research permit.
Prioritise, then decarbonise industry.
The hydrogen market is highly complex. It is a major strategic lever for the energy transition, and the sector struggles to reinvent itself. Its development depends largely on price competition, and the growth of green hydrogen is closely tied to government ambitions and subsidy policies.
Prioritisation is essential: we start with decarbonising hydrogen in industrial sectors, the primary consumers. Hydrogen's potential as energy storage is significant, with efficiency losses to keep in view. White hydrogen emerges as a promising alternative that could revitalise the sector, and initiatives to identify viable extraction zones are multiplying.
Building in this space?
Talk to us- Ternel. Hydrogen, a key player for a successful energy transition? (Medium, 27 February 2025). Market figures, technology comparison, green and white hydrogen analysis.
- Les Echos, 12 February 2025 (GTT and Elogen) and 19 February 2025 (TotalEnergies and Air Liquide agreement).
- Stanford University. Estimated cost of white hydrogen, as cited in the Ternel article.
- France. Energy Transition Law for Green Growth.