Hydrogen economy and its critical role in future low carbon energy systems

Global energy systems are undergoing significant structural changes in response to the overarching aim of mitigating and adopting to the geophysical impacts of climate change. One of the key strategies for enabling this structural change is the incremental transition away from fossil fuels and gradual uptake of renewable and low carbon energy sources. While remarkable progress has been achieved in electricity decarbonisation - which contributed around 35% global GHG emissions in 2025, a significant part of the energy system pie is still exploring suitable solutions especially for “hard-to-abate" sectors—such as steel manufacturing, chemical production, and long-haul shipping—where direct electrification is technically or economically challenging. With increased decarbonisation of electricity sectors using variable renewable generation technologies like solar and wind, there is also a growing need to balance and store the wasted energy from intraday supply and demand mismatch. Additionally, increasing severity of climate change impacts globally is accelerating these structural changes where some nation states have also attempted to raise the climate change mitigation ambition by suggesting complete phaseout of fossil fuels at UNFCCC’s COP28 and COP30. Consequently, there is renewed interest in global hydrogen economy and its direct benefits in circumventing majority of the issues highlighted above.

 

Pursuant to this, under the Horizon Europe’s HyWay project, researchers are generating future scenarios for hydrogen economy and analysing the warming impacts of subsequent fugitive hydrogen emissions. In this research, hydrogen economy scenarios are being generating using MESSAGEix-GLOBIOM-GAINS modelling framework of IIASA. The modelling framework generates bottom-up energy system futures for 12 Global regions, while also capturing intra-regional and inter-regional energy commodity trade. The framework generates a least cost solution under various technology transition and climate mitigation constraints using linear programming-based optimisation. Using this framework, we generate a set of scenarios using national implemented policies, nationally determined goals, regional net zero targets, hydrogen generation infrastructure and trade policy data, and different global temperature targets for various Shared Socioeconomic Pathway narratives. In addition, some specialised scenarios also looked at more wide-spread use of hydrogen in the energy system vs. more confined use in industrial clusters. These broad policy and techno-climatic levers along with discussions with key industry stakeholders enabled us to analyse in detail a) the future hydrogen generation configuration at various time steps, b) displacement of fossil-fuels from global energy systems, and 3) sectoral utilisation of hydrogen especially in the industrial sector. Across the scenario solution space, we observe that from a current production volume of 100Mt H₂ at a global level mainly for industrial use, hydrogen economy can surpass 400Mt H₂ production by 2050 and upwards of 1000 Mt H₂ by 2100. This would require significant investment in hydrogen economy infrastructure and possibly underwriting and repurposing of fossil fuel-based energy generation units. We also observe that from current domination of “grey hydrogen”, the energy system will transition completely to “green hydrogen” generation by 2050, with “blue hydrogen” acting as a transition enabler. The results also provide significant insights into regional and global dynamics of hydrogen economy including its climate impacts.