Green Hydrogen: The Fuel of the Future or an Expensive Distraction?

Few energy technologies have attracted as much excitement — or as much scepticism — as green hydrogen. Proponents see it as the key to decarbonising sectors that cannot easily be electrified: heavy industry, long-distance shipping, aviation, and high-temperature industrial processes. Critics argue that it is expensive, inefficient, and unlikely to achieve commercial scale within the timeframes that climate targets require.

The truth, as usual, lies somewhere in between. Green hydrogen is a genuinely promising technology with real potential to play a significant role in a net-zero energy system. But the path to commercial deployment is longer and more challenging than many advocates acknowledge.

What Is Green Hydrogen?

Hydrogen is the most abundant element in the universe, but it does not exist in pure form on Earth — it is always chemically bound to other elements. Producing hydrogen requires energy to break those chemical bonds.

"Green" hydrogen is produced by electrolysis — passing an electric current through water to split it into hydrogen and oxygen. When the electricity used for electrolysis comes from renewable sources (solar, wind, hydro), the process produces no direct CO₂ emissions, making the hydrogen genuinely low-carbon.

This distinguishes green hydrogen from "grey" hydrogen (produced from natural gas via steam methane reforming, with CO₂ emitted as a byproduct) and "blue" hydrogen (grey hydrogen with carbon capture and storage). Grey hydrogen currently accounts for the vast majority of global hydrogen production.

The Economic Challenge

The fundamental challenge for green hydrogen is cost. Electrolysis is an energy-intensive process, and the cost of the electricity used is the dominant driver of green hydrogen production costs.

At current electricity prices and electrolyser costs, green hydrogen typically costs three to five times more than grey hydrogen. For green hydrogen to compete with fossil fuels in most applications, production costs need to fall dramatically — by 50 to 80% from current levels.

The good news is that costs are falling. Electrolyser manufacturing is scaling up, driving down capital costs. Renewable electricity prices continue to decline. And the carbon price signal — through emissions trading schemes and carbon taxes — is gradually improving the economics of low-carbon alternatives.

The bad news is that the cost reductions required are large, and the timeline for achieving them is uncertain. Most credible analyses suggest that green hydrogen will not be cost-competitive with fossil fuels in most applications before the mid-2030s at the earliest.

Where Green Hydrogen Makes Sense

Not all applications are equally challenging for green hydrogen. The technology is most promising in sectors where:

• Electrification is technically difficult or economically unattractive
• High-temperature heat is required (steel, cement, chemicals)
• Energy density requirements favour hydrogen over batteries (long-distance shipping, aviation)
• Existing hydrogen demand can be decarbonised (ammonia production, oil refining)

In these sectors, green hydrogen has a credible pathway to commercial deployment. In sectors where electrification is straightforward — passenger cars, light commercial vehicles, residential heating — green hydrogen faces much stiffer competition from batteries and heat pumps.

The Infrastructure Challenge

Beyond production costs, green hydrogen faces a significant infrastructure challenge. Hydrogen is difficult to store and transport — it has a very low energy density by volume, requires either compression to very high pressures or liquefaction to very low temperatures, and can cause embrittlement in conventional steel pipelines.

Building the infrastructure required to distribute green hydrogen at scale — pipelines, storage facilities, refuelling stations, port terminals — will require enormous investment and decades of development. The Netherlands, with its existing gas infrastructure and port facilities, is well-positioned to become a major hub for hydrogen imports and distribution — but even here, the infrastructure buildout is in early stages.

Implications for the Petroleum Industry

For petroleum trading companies like Traduco, green hydrogen represents both a long-term competitive challenge and a potential business opportunity.

The challenge is clear: if green hydrogen achieves commercial scale in sectors currently served by petroleum products — shipping, aviation, industrial processes — it will reduce demand for those products over time.

The opportunity is equally clear: the infrastructure required to import, store, and distribute green hydrogen at scale — port terminals, pipeline systems, logistics networks — is closely analogous to the infrastructure used for petroleum products. Companies with deep expertise in energy logistics and trading are well-positioned to play a role in the emerging hydrogen supply chain.

Conclusion

Green hydrogen is not a silver bullet, and it is not an expensive distraction. It is a promising technology with real potential in specific applications, facing real challenges in cost and infrastructure that will take years to overcome. The companies and countries that invest wisely in green hydrogen development today — building the technology, infrastructure, and market knowledge required for commercial deployment — will be well-positioned to benefit as the technology matures. The rest will be playing catch-up.