Where is hydrogen energy useful? And where not? Report sheds light
16.04.2026, DPA
Hydrogen is becoming increasingly important as an alternative to oil and gas for energy, but whether it is really climate friendly depends on how it is produced.
The Fraunhofer Institute for Systems and Innovation Research (ISI) in Germany evaluated more than 100 fact checks about the substance and found where hydrogen will become the technology of choice, where it will not and what is needed for its success.
Hydrogen can be produced in many different ways. In the end, it is always a gas with molecules made up of two hydrogen atoms whose origin is not immediately apparent.
Where hydrogen comes from varies widely. Grey and black or brown hydrogen is produced using gas (grey) or coal (black or brown) and generates carbon dioxide (CO2).
Blue and turquoise hydrogen is also produced from gas, but the CO2 produced is either captured and stored (blue) or the carbon is produced as a solid (turquoise).
With red, orange or green hydrogen, the gas is produced by electrolysis. The key here is where the electricity comes from. The authors cite nuclear energy (red), biomass (orange) and renewable energy such as wind or solar (green).
Production method and costs are key
When it comes to hydrogen, origins matter, as today the gas is currently produced worldwide "almost entirely" from fossil sources, mainly natural gas and coal. For it to contribute meaningfully to climate protection, the share of production from climate-friendly sources would have to rise massively. The authors say sustainable hydrogen will "probably only be available on a larger scale in the 2030s."
"At present, green hydrogen in particular, produced using renewable energies, is significantly more expensive than fossil alternatives," the analysis says. The authors see grey hydrogen as the cheapest option, at $1 to $2 per kilogram. Green hydrogen currently costs around $7 to $19 per kilo and is therefore much more expensive. However, this figure is expected to fall. Forecasts differ on how quickly. The authors assume it will still be at least twice as expensive as grey hydrogen in 2030.
Today's biggest hydrogen users are refineries and plants that produce ammonia, which the authors say will remain important. They see steel production, the transport sector and the energy sector as further major future buyers.
"Hydrogen is particularly highly relevant where direct electrification reaches physical or economic limits," the authors write. In the transport sector, they see this above all in heavy goods transport, international shipping and aviation.
Lead author Nils Bittner does not believe hydrogen will be able to save gas heating. "Hydrogen heating systems are technically feasible but not cost-efficient for use in private households," he says. "For the foreseeable future, there will not be enough low-cost hydrogen available for widespread use." However, he says larger local use, such as in district heating or for combined heat and power plants could be considered depending on regional conditions.
Bittner is also sceptical about using hydrogen to store energy for the electricity supply. Producing green hydrogen with the aim of generating electricity from it again currently makes sense "only in exceptional cases due to the high conversion losses" - for example for emergency generators.
China the leader, Europe behind
There is much debate about using hydrogen-powered fuel-cell cars, with some saying they could help the climate, while others see the benefits as limited.
The authors put global hydrogen production of all types at around 100 million tons. The largest producer is China, where the gas is mainly produced using coal.
The European Union wants to produce 10 million tons of green hydrogen by 2030. Germany wants to produce about a quarter of that. However, that is not enough to cover demand.
On the industrial side, Europe would actually have a strong starting position. Europe has a "historically strong industrial base in the field of electrolysis technologies," the authors write. "Earlier analyses show that European companies at times held around 60% of global electrolyser manufacturing capacity and around 40% of the relevant patents." German companies were also very active.
But current developments point to a shift: "China in particular has significantly expanded its production capacities in recent years and has now taken on a central role in global electrolyser manufacturing."
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Depleted Oil Fields Offer Hydrogen Storage Sites
Hydrogen is a clean-burning gas that could help to tackle climate change by reducing our dependence on fossil fuels. But storing and transporting hydrogen is expensive and technically challenging, typically requiring high-pressure gas tanks or cryogenic systems that operate at very cold temperatures.
One promising alternative involves incorporating hydrogen into carbon-based molecules known as Liquid Organic Hydrogen Carriers (LOHCs), which are safer and easier to handle than the gas itself. KAUST researchers have shown that certain LOHCs could reliably store hydrogen underground in depleted oil fields, and then help to recover residual oil from those reservoirs[1].
“Together, these advantages make LOHCs a compelling alternative to conventional hydrogen storage technologies,” says Hussein Hoteit, who led the research team.
LOHC systems use a catalyst to chemically combine hydrogen with a liquid organic molecule, forming a hydrogenated liquid that can be stored or transported like a conventional fuel. A second catalytic reaction is subsequently used to release the hydrogen and regenerate the initial carrier molecule.
Crucially, LOHCs can be handled using existing petrochemical infrastructure, such as pipelines, tankers, and large-scale storage facilities. “This significantly reduces the cost and complexity of building new hydrogen-specific infrastructure, which is one of the major barriers to widespread hydrogen deployment,” says Zeeshan Tariq, a member of the team.
The researchers simulated how two different LOHC systems would perform in a depleted sandstone reservoir at a depth of about 2,200 meters, typical of oil fields in Saudi Arabia. Their calculations included a wide range of factors, including the viscosity, stability, and hydrogen-storage capacity of the LOHC molecules.
In the first system, hydrogen is combined with toluene at the surface to produce methylcyclohexane. Both molecules are stable, widely available, and already used in above-ground LOHC facilities. Toluene stores about 6.2 percent of its weight in hydrogen, while methylcyclohexane has a low viscosity that enables it to flow easily underground.
In one simulation, methylcyclohexane was injected into the reservoir for five months, left for two months, and then extracted over five months. The yearlong cycle was repeated 15 times. Calculations suggest that about three-quarters of the methylcyclohexane could be recovered after each cycle. By the end of the simulation, more than half of the residual oil trapped in the field had also been recovered. This additional oil would offset storage costs, and the researchers estimate that the whole project would generate $70 million more in value than it consumed.
The second LOHC system could store more hydrogen per molecule, but its higher viscosity caused greater resistance during injection and extraction, leading to much poorer performance.
Although recovering residual oil would ultimately lead to downstream CO2 emissions, these would be small compared with the climate benefits offered by large-scale hydrogen use. “Carrier-based storage does not undermine climate goals,” says Hoteit. “Instead, it helps make hydrogen storage deployable at scale today, using existing assets, while supporting a gradual and economically viable transition to a low-carbon energy system.”
The team now plans to extend their study to multi-well reservoir systems, in which several injection and production wells operate simultaneously across a depleted oil field.
Reference
- Tariq, Z., AlSubhia, M., Alia, M., Kumara, N., Alissab, F., Ghamdi, A. and Hoteit, H. Techno-economic assessment of field-scale storage for liquid organic hydrogen carriers: dual benefits of energy storage & incremental oil recovery. Fuel 410, 137906 (2026).|
