As a colourless, odourless, and cleanly combustible gas, hydrogen has recently drawn a lot of attention from people around the world. Even Elon Musk, founder of Tesla, the world's largest electric vehicle producer, has mentioned the properties of such a unique gas[1]. In fact, the use of hydrogen as an energy carrier is not new. In 1671, Robert Boyle, an Irish chemist, first discovered the chemical reaction between iron filings and dilute acids that produced hydrogen gas[2]. The most famous example of hydrogen application in history was Hindenburg[3], the hydrogen-powered airship that embarked on its maiden voyage on 4 March 1936 in Friedrichshafen, Germany, with 87 passengers and crews on board. Unfortunately, the revolutionary airship exploded and crashed when it attempted to land on 6 May of the following year.

What is Hydrogen?

With an atomic number of 1, Hydrogen is a chemical element represented by a symbol H in the periodic table. Hydrogen usually exists in molecular form (H2) and is non-toxic at room temperature and pressure. However, it can condense into liquid form at very low temperatures (-423°F or -253°C). Elemental hydrogen is present in compounds such as water (H2O), ammonia (NH3), and hydrocarbons such as natural gas, coal and petroleum.

Hydrogen has been regarded as a low-carbon energy carrier in recent years. In the process of combating climate change and transitioning to a low-carbon economy, governments and energy companies around the world, upon spotting the potential of hydrogen, have committed to explore the possibilities of utilising hydrogen fuel and launched related development strategies. Such policies have attracted the attention of lobbyists in the industry, investors and governments[4], who hoped that hydrogen can become an alternative to fossil fuels. In addition, hydrogen fuel can play a role in reducing carbon emissions in industries such as chemical engineering, steel manufacturing and long-distance transportation including lorries and shipping. Based on the above premise, many countries have made hydrogen fuel a core part of their energy strategies. While the International Renewable Energy Agency (IRENA) has estimated that hydrogen fuel could provide up to 12% of total global energy demand by 2050, the Hydrogen Council (the Council) further predicted that hydrogen could meet up to 18% of global energy demand and create a unique industry with a turnover of $2.5 trillion per year.

Through the process of national strategic planning, governments over the world are expanding the development of hydrogen fuel and reducing fossil fuel consumption. The report released by the Council suggested that more than 30 countries, including Mainland China[5], have published their roadmaps for hydrogen fuel production and also committed to the provision of a total of more than USD$70 billion in public spending on hydrogen fuel development. The Council also estimated that the total planned investment in hydrogen fueling projects could exceed US$300 billion by 2030. In fact, some investors who described green hydrogen* as a powerful antidote for climate change have demanded huge subsidies and incentives from governments. They claimed that green hydrogen, together with renewable energy, will become "the world's largest industry" in the future.

Hydrogen Fuel based on Energy Classification Fuel for Hydrogen Production Classification Based on Carbon Intensity
Black Hydrogen Bituminous Coal High Hydrocarbon Fuel
Grey Hydrogen Natural Gas or Methane
Brown Hydrogen Lignite
Blue Hydrogen Natural Gas or Methane and Carbon Capture and Storage Low Hydrocarbon Fuel
Green Hydrogen* Electrolysis Powered by Renewable Energy
Pink Hydrogen Electrolysis Powered by Nuclear Energy

Table 1: Classification of Hydrogen Fuel Based on Energy and Carbon Intensity.
Source: NREL & USAID

This paper will conduct a comprehensive analysis, covering the prospect of production methods, conversion efficiency as well as storage and transportation of hydrogen fuel, along with the environmental impacts of production projects.

The Working Principle of Fuel Cells

A fuel cell is made up of two electrodes -- a negative electrode (or anode) and a positive electrode (or cathode) -- sandwiched around an electrolyte. The fuel, such as hydrogen, is sent to the anode, while air is sent to the cathode. In a hydrogen fuel cell, the anode's catalyst separates hydrogen molecules into protons and electrons, which take different paths to arrive at the cathode. By passing through an external circuit, the electrons create an electric current. Meanwhile, the protons migrate through the electrolyte to the cathode, where they combine with oxygen and the electrons to produce water and heat.

It is a Global Consensus that Green Hydrogen Will Dominate the Hydrogen Fuel Market

A major challenge that the ambitious plan of replacing fossil fuels with hydrogen fuel faces is that 96% of the hydrogen used today is produced through a thermal combustion process that relies on fossil fuels such as coal and natural gas. During the production process, a significant amount of carbon emission is produced. In fact, the amount of carbon emission in the production process of hydrogen fuel is even higher than that of coal burning.

Therefore, people use colours to distinguish the various production methods of hydrogen fuel, in which different colours are used to describe the greenhouse gas emission intensity of hydrogen fuel production processes (see Table 1). For example, blue hydrogen represents the use of natural gas for production and the use of carbon capture, utilisation and storage (CCUS) technology to minimise direct emission of carbon dioxide. However, blue hydrogen production will generate methane emissions (a potent greenhouse gas) in the production and transportation of natural gas. Hence, we do not support using fossil fuels to produce hydrogen fuel as a means of mitigating climate change.

How is hydrogen fuel produced?

Hydrogen can be produced through decomposition from various compounds. Currently, around 80% of the hydrogen fuel supply comes from dedicated production plants for hydrogen fuel. The remaining 20% is produced as a by-product from other technologies. The four most common methods of hydrogen production are:

  1. Steam-methane reforming: By using natural gas as the main fuel, this is a widely used and well-established hydrogen production method. This technology is used for three-quarters of global annual production and around 95% of dedicated production of hydrogen fuel in the United States. It consists of three stages: in the first stage, high-temperature steam (700°C-1000°C) first reacts chemically with methane under catalytic action to generate hydrogen, carbon monoxide and a small amount of carbon dioxide. The carbon monoxide and water vapour later undergo a chemical reaction (water-gas shift reaction) under the influence of a catalyst in generating carbon dioxide and hydrogen fuel. Finally, pure hydrogen fuel is extracted by removing carbon dioxide and other impurities (usually through pressure swing adsorption). This process can also be done with other fuels such as ethanol, propane or gasoline.
  2. Gasification: Carbon-based substances in coal include carbon, hydrogen, oxygen, nitrogen and sulphur. To produce hydrogen fuel, coal is partially burned to catalytically generate the heat and chemical reactions needed for producing carbon dioxide, which reacts with coal to generate carbon monoxide. The carbon monoxide reacts with water vapour to produce hydrogen fuel (water-gas shift), followed by a purification process similar to steam-methane reformation. This method accounts for about 23% of global dedicated hydrogen fuel production.
  3. Electrolysis: This is the process of using electricity to split hydrogen and oxygen from water molecules, the system is called electrolyser (thermal energy used in some technologies). Currently, less than 0.1% of dedicated hydrogen fuel production is generated through electrolysis. Electrolysers consist of anodes and cathodes in water, while some technologies also include electrolytes. Electric current is applied to the cathode and flows through the water, causing the water molecules to split into hydrogen and oxygen. There are three main electrolysis technologies used nowadays, namely alkaline electrolysis, proton exchange membrane electrolysis and solid oxide electrolysis.
  4. Methane pyrolysis: This is a new technique that thermally decomposes methane into hydrogen and sequestered carbon. Since most of the carbon produced is in solid form, the amount of carbon dioxide emissions can be lower than that of the steam methane reforming process. Improvements are still underway to overcome the need for higher temperatures, hydrogen fuel purity, and decomposition of solid carbon from gaseous hydrogen.
Other methods, such as biomass gasification, reforming of renewable liquid fuels, biological processes, and direct solar water splitting processes, can also be used for hydrogen production.

Governments and investors around the world are currently using green hydrogen fuel as an important tool for energy transition, where renewable energy is used to produce hydrogen fuel. Representatives of some giant energy enterprises pointed out that as solar and wind energy cannot produce electricity all day long, a large storage container must be deployed to smoothen the output of wind and solar energy. Luckily, hydrogen can be that very large container. Hydrogen fuel is a technology that can store energy all year round, regardless of climatic conditions. As a result, the excess energy from spring and autumn can be used in both summer and winter, when renewable resources are scarce. If renewable energy is to become the largest portion of the power generation mix, the need for long-term storage will become more urgent, as the commonly-used lithium-ion batteries are usually depleted within several hours. Therefore, hydrogen fuel will be indispensable during the process of energy transition[6].

What Does it Mean by Describing Hydrogen as an Energy Carrier?

Since hydrogen can only be produced from other sources of energy, it is considered an energy carrier rather than an energy source. Once produced, hydrogen can be stored, transported, and then used in hydrogen fuel cells, ammonia production, biofuels, industrial metalworking and welding, and other applications.

What are the Uses of Hydrogen Nowadays?

Hydrogen is mainly used in industrial processes such as refining (33%), ammonia production (27%), methanol production (27%) and steel production (3%). In the United States, nearly all hydrogen fuel produced is used in oil refining, ammonia production (as a precursor for fertiliser production) and methanol production. Meanwhile, around 10% of the hydrogen is used in processing metals, processed foods and other applications. Hydrogen can also be used as a fuel for power generation, transportation and heating buildings. Although this kind of use is limited nowadays, it actually has the potential to reduce global carbon emissions in the long run.

With Low Efficiency in the Conversion Process, Storage and Leak Prevention for Hydrogen Fuel Remain Challenging

Despite the above-mentioned advantages and the high expectations from the public, there are still many technical challenges that need to be overcome in order to adopt green hydrogen on a large scale. As failing in the expectations of green hydrogen will largely affect the global carbon reduction process, such challenges must be tackled as soon as possible. In fact, green hydrogen technology is currently still in its infancy and has not yet been tested on an industrial scale. When we produce hydrogen fuel by using the electrolysis process, the electron reacts with water during the process of electrolysis, leaving only oxygen as a by-product. The fact that only 4% of current hydrogen fuel production uses electrolysis is largely because of the process of green hydrogen production, which is less energy efficient and even more expensive than producing hydrogen fuel through thermal combustion. In other words, green hydrogen production is still much more expensive than coal or natural gas in producing hydrogen fuel.

No matter which type of renewable energy is used, the production of hydrogen fuel is still far less efficient than directly using the renewable energy itself. The hydrogen fuel produced through thermal combustion or electrolysis processes can be stored and used for generating electricity. This conversion process, known as "electricity-to-gas-to-electricity", is not only inefficient, but also expensive. Whether it is the breaking of molecular bonds between hydrogen and oxygen in water, in the process of hydrogen production through burning in the turbine, or in the conversion, compression and transportation process, the round-trip efficiency is only about 40% at most. Hence, 60% or more of the energy is lost during the conversion process[7].

Another example - if we store hydrogen fuel in a fuel cell and use it for household heating later, the energy used would be five to six times more than using renewable energy directly. Likewise, using hydrogen fuel cells in a car is estimated to consume three times more energy than using electricity to charge an electric vehicle. Previous research has also shown that the energy required to install green hydrogen production capacity may be 2 to 14 times more than using direct electrification alternatives. Although the storage capacity of green hydrogen will provide a more stable supply of renewable energy to the grid, converting renewable energy into electricity to produce hydrogen fuel is much less efficient. Hence, the cost is higher than consuming electricity directly from the energy source. It will also be one of the most expensive energy storage options available on most grids. Meanwhile, the storage and transportation of hydrogen fuel is also notoriously difficult and expensive.

How is Hydrogen Fuel Stored?

Hydrogen fuel can be stored directly or converted to hydrogen-based fuel. The choice of storage medium will depend on the accessibility to the geological storage site as well as the duration and scale of storage and transportation needs. For processes of smaller scales, storage tanks are very useful. Meanwhile, geological storage sites such as salt caverns can hopefully be used to store large amounts of hydrogen. Due to the lower volumetric energy density of hydrogen, more storage capacity is required for hydrogen with the same energy content as compared to other kinds of fuels. To overcome the obstacles, hydrogen can also be converted into hydrogen-based fuels and resources, such as ammonia, liquid organic hydrogen carriers, synthetic hydrocarbons, or synthetic liquid fuels, which can be stored in storage tanks and transported over long distances. In case the end uses require pure hydrogen, this method will require an additional hydrogen extraction step and affect the efficiency as well as the final cost of hydrogen as an energy carrier.

As for the transportation of hydrogen fuel[8], there are still technical challenges in hydrogen storage, i.e., how to store the amount of hydrogen required for conventional driving distance (>300 miles) under the constraints of vehicle weight, volume, efficiency, safety and cost. While their durability throughout service life has to be validated, these systems must also achieve an acceptable refueling time. Off-board bulk storage requirements are generally less restrictive than on-board requirements. For example, although there may be no or less restrictive weight requirements, specifications on volume or floor space may still exist.

In addition, hydrogen itself is a greenhouse gas with an average global warming potential of about 11, which is 11 times higher than that of carbon dioxide[9]. Scientists have paid attention to the leak rate in the utilisation of hydrogen fuel. Some studies have pointed out that under the best circumstances, even a 1% leak rate throughout the entire hydrogen fuel production process is assumed (i.e. 1% of the methane was leaked in the natural gas supply chain with carbon capture technology installed) when generating hydrogen from natural gas, it can still reduce the global warming impact by 70% in 20 years when compared with using traditional fossil fuels. Meanwhile, using zero-emission electricity to produce green hydrogen can reduce the impacts on the climate by more than 95%. However, if the hydrogen leak rate rises to 10%, blue hydrogen fuel can actually increase the warming impact by 25% over 20 years. Despite the fact that green hydrogen can reduce the warming impact by two-thirds in 20 years when compared to fossil fuels, it will still keep us from reaching our carbon neutrality goal[10].

The graph above has compared the ratio of energy loss for the two different processes of directly using renewable energy and using renewable energy to generate hydrogen fuel. It was obvious that the energy loss in directly using renewable energy was only half as much as that in using renewable energy to generate hydrogen fuel. However, since renewable energy is difficult to store, the concept of using green hydrogen as a supplement to "store" renewable energy should not be ignored.
Source :

While we are happy to see the expansion of green hydrogen production and utilisation, the Government needs to provide significant incentives and investments, especially in regions where green hydrogen is mainly exported, in order to further reduce the cost of renewable energy, build the required infrastructure for the production, transportation, storage and utilisation of hydrogen fuel. Such incentives and investments should include the strengthening of scientific research to improve the energy efficiency of the conversion process and overcome technical challenges in hydrogen storage for vehicle applications. In addition, there is a need to develop sufficient electrolysis capacity, transform port infrastructure, change existing natural gas pipelines or build designate new pipelines for hydrogen fuel, build new railways and container ship, and create safe storage capacity. Meanwhile, attention must be paid to the maintenance of the green hydrogen production system in order to significantly reduce the hydrogen leak rate to 1% or less. In fact, hydrogen trade can bring about cheaper energy supply in the long run, as energy can be imported through the use of cheaper methods. At the same time, we can offer more alternatives to improve the ability for replacing fossil fuels in the future[11].

How is Hydrogen Fuel Transported?

Currently, most hydrogen production and consumption are co-located or built very closely together. However, the various forms of hydrogen discussed above are also frequently transported in gaseous or liquid state through gas pipelines, liquid tankers, or dedicated pipelines. In fact, the most feasible method of hydrogen fuel delivery often depends on the size and stability of regional demands on hydrogen fuel. Gas tube trailers and liquid tankers can typically store up to 1 tonne and 4-5 tonnes of hydrogen fuel respectively. Gas pipelines, often used when regional delivery demands are several hundred tonnes per day, are expected to remain stable for decades. Although shipping of hydrogen fuel is uncommon today, many countries in the world have commenced early deployments in order to support the global hydrogen trade.

Local Community and Ecological Rights Must be Respected During the Production of Green Hydrogen

In addition to the technical and cost issues, the social and ecological impacts of energy projects must also be taken into account. Even with renewable energy projects, there is often a lack of opportunities for affected communities to fully understand those projects and defend their rights. Meanwhile, they often receive little or no benefit from such projects. Some projects have even resulted in the loss of land for residents without providing compensation to them. For examples, the development in Lake Turkana Wind Farm in Kenya and the Noor Ouarzazate Solar Power Station in Morocco have affected the lives of herdsmen who live around the areas. Apart from affecting the migration routes for their livestock and destroying the local livestock cultures, the resilience of pasture land systems was reduced. Likewise, the Wayuu indigenous people living in the La Guajira Department in Northern Colombia were also bothered by the issues of land rights and interests that have arisen from the acquisition of land for the local construction of wind farms and development of hydrogen fuel production bases. The plundering of land for the production of renewable energy has exacerbated the marginalisation of many local herdsmen. If there continues to be a lack of legal system that emphasises human rights protection and recognises public land rights, more and more herdsmen will lose their land. Moreover, switching to large-scale renewable energy projects will only worsen the poverty of these vulnerable groups, fuel more conflict and intensify the problem of refugee displacement[12].

In addition, the large-scale hydropower projects, which have all-along been controversial, are looking to capitalise on the return of the green hydrogen boom. Apart from emitting methane, a greenhouse gas, through the generation of hydropower, over 80 million people worldwide have lost their homes, livelihoods and cultures due to the construction of dams. Around 472 million people in the downstream of dams have been adversely affected, including the destruction of the most biodiverse river ecosystems, fisheries and soil loss. The new capacity of the hydropower industry has also slowed down in recent years. However, industry groups such as the International Hydropower Association (IHA) have attempted to rebrand hydropower by repositioning as the key fuel for green hydrogen production, thereby facilitating the demands for new hydropower plants around the world. Although the establishment of hydropower is two to three times more expensive than that of solar and wind energy, investors have been promoting the development of new large-scale hydrogen-fueled generators to rationalise hydropower construction.

Local governments and project investors need to work with the public and the society. In particular, open discussions with the affected people in the project areas have to be held to ensure the rights of local communities to land and natural resources while carefully managing the energy transition process. In fact, the United Nations Human Rights Council has adopted the "Guiding Principles on Business and Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework" from as early as 2011. It has also released The United Nations Guiding Principles on Business and Human Rights (UNGPs), which listed out 31 principles to guide the various governments and businesses on ways to implement protection, respect and remediation frameworks. In addition to committing to policies that respect human rights in all investment activities, governments and companies will also conduct due diligence to identify, prevent and mitigate the impacts of corporate investment practices that violate human rights. It is only through such practices that damage to the rights and livelihoods of the local population can be avoided. By achieving an equitable transition to renewable energy, the public can be benefited from the transformation.

The development of green hydrogen can also benefit local communities. Some examples would be Canada, Kenya and Mexico[13], where local people have benefited through sharing the income generated from the renewable energy projects. Research has shown that power generation through renewable energy can coexist with grazing activities of the herdsmen in Kenya and Morocco. Better still, it can even improve the well-being of the animals. Energy projects can accommodate multiple functional land uses. By taking an inclusive approach, people can participate in designs that improve the overall land use efficiency in agriculture, stock farming, biodiversity, rural social and economic activities, and energy. Hence, there is a win-win potential for herdsmen and renewable energy. However, there must be ways to strengthen the voice and administrative capacity of herdsmen’s' communities so that they can negotiate for favourable terms for their members.

Hong Kong Should Actively Explore its Role Under the Green Hydrogen Boom

Like any new technology, the sustainability of green hydrogen production and utilisation cannot depend solely on technology itself. Investor-driven plans to produce hydrogen from hydropower have neglected both the negative climate impacts and the damaging social and environmental impacts of large-scale hydropower plants. Hence, the various social and environmental impacts must be reviewed and examined carefully before local governments use public resources to promote and develop green hydrogen technology.

As for Hong Kong, the SAR Government has in 2021 announced the Hong Kong Roadmap on Popularisation of Electric Vehicles and the Hong Kong's Climate Action Plan 2050, both of which proposed to actively explore the feasibility of using hydrogen fuel vehicles in Hong Kong. In their latest publications of "2021 Sustainability Report" and "ESG Report 2021", the CLP Power and Towngas have respectively promised to explore the feasibility of using hydrogen fuel and invest in infrastructure to prepare for the supply of green hydrogen. Recently, franchised bus operators and energy companies in Hong Kong have formed the "Zero Emissions Mobility Consortium" to jointly commit to developing a roadmap with a clear timetable for zero-carbon emission transportation[14]. Such initiatives have proven that hydrogen fuel is now regarded as the rising star of new energy in Hong Kong.

Looking forward to Hong Kong becoming a city that emphasises hydrogen fuel consumption in the future, we can actively participate in scientific research projects in order to improve the technology and cost of conversion efficiency, storage and transportation. In addition to the introduction of hydrogen-fueled buses in public transportation, the two local electricity suppliers should also continue to study the use of green hydrogen as a fuel. Meanwhile, the introduction of supporting facilities such as hydrogen refueling stations and hydrogen storage will have to be seriously considered by the SAR Government. In addition, it is possible to explore how the fields of finance and trade can promote hydrogen trade and green hydrogen project financing. Relevant authorities can also investigate means of reducing the cost of hydrogen production in the long run while following international principles and compliance procedures for business and human rights.

[Special thanks to Mr Tsang Cheuk Pan (intern) for assisting part of the data collection in this article.]


  1. Frangoul A., ‘The most dumb thing’: Elon Musk dismisses hydrogen as tool for energy storage, CNBC, 12 May 2022.
  2. Winter, M. Hydrogen: historical information. WebElements Ltd., 2007.
  3. Hindenburg Statistics,, 2009.
  4. Examples include the European Union, the United States, Australia, Japan, and some multinational energy companies.
  5. The National Development and Reform Commission of the People's Republic of China, Medium and Long-Term Plan for Hydrogen Energy Industry Development (2021-2035)", 23 March 2022.
  6. Collins, L., Why hydrogen-fired power plants 'will play a major role in the energy transition', Recharge, 29 July 2021. .
  7. Mayer G., Thomas N., Hydrogen: the future of electricity storage? Financial Times, 5 April 2021. ; Collins, L., Why hydrogen-fired power plants 'will play a major role in the energy transition', Recharge, 29 July 2021.
  8. US Department of Energy, Hydrogen Storage Challenges.
  9. Collins L., Hydrogen ‘twice as powerful a greenhouse gas as previously thought’: UK government study, Recharge, 8 April 2022.
  10. Environmental Defense Fund, STUDY: Emissions of Hydrogen Could Undermine Its Climate Benefits; Warming Effects Are Two to Six Times Higher Than Previously Thought, Environmental Defense Fund, 19 July 2022.
  11. International Renewable Energy Agency (IRENA), Global hydrogen trade to meet the 1.5°C climate goal: Part I – Trade outlook for 2050 and way forward, International Renewable Energy Agency, 2022.
  12. Waters-Bayer, A. et al., Pastoralism and large-scale REnewable energy and green hydrogen projects, Heinrich-Böll-Stiftung, Brot für die Welt, May 2022.
  13. Ibid
  14. Zero Emissions Mobility Consortium, Zero Emissions Mobility Consortium Calls for Collaboration with Government on Decarbonisation of Hong Kong’s Public Road Transport, 26 July 2022.

Other References:

  1. International Energy Agency (IEA), The Future of Hydrogen – Analysis. IEA, June 2019.
  2. IEA, Global Hydrogen Review 2021. IEA, 2021.
  3. International Rivers, Seeing Green: Hydropower to "Green" Hydrogen is the latest false climate solution,2022.
  4. Mohit J. et al., National Renewable Energy Laboratory, Hydrogen 101: Frequently Asked Questions About Hydrogen for Decarbonization, USAID and National Renewable Energy Laboratory (NREL), July 2022.
  5. US Department of Energy, Fuel Cells.
  6. Vickers, J. et al., Cost of Electrolytic Hydrogen Production with Existing Technology, US Department of Energy, 2020.

Mr Kevin Li, Researcher of the CarbonCare InnoLab

September 2022