Technological Pathways for Gray, Blue, And Green Hydrogen: Economic and Environmental Assessments and Their Role in Energy Transition

Against the backdrop of global efforts to address climate change and pursue deep decarbonization of the energy structure, hydrogen energy is widely regarded as a key component of the future clean energy system due to its advantages such as zero carbon emissions from combustion, high energy density, and wide range of applications (covering industry, transportation, energy storage, and power generation).

The International Energy Agency (IEA), in its "Global Hydrogen Review 2023," points out that to achieve the net-zero emissions target by 2050, hydrogen's share of global final energy consumption needs to increase from less than 1% currently to approximately 10%. However, hydrogen energy itself is not a primary energy source; its environmental attributes depend entirely on the energy source and carbon footprint of its production process. Therefore, based on the carbon emission intensity of the hydrogen production process, the international community has developed a hydrogen energy classification system using "color" as a identifier, with gray hydrogen, blue hydrogen, and green hydrogen being the most core and widely discussed categories. Clarifying the differences between these three is not only fundamental to technological understanding but also a crucial prerequisite for formulating industrial policies, guiding investment direction, and assessing emissions reduction contributions.

This article systematically elaborates on the technological pathways of gray, blue, and green hydrogen, analyzes their economic viability and environmental impact through detailed data comparison, and explores their role and future prospects in the energy transition.

2. Definition and Technical Path

2.1 Gray Hydrogen

(1) Definition. Hydrogen produced by steam reforming (SMR) or coal gasification of fossil fuels (mainly natural gas, and secondarily coal), and in which the carbon dioxide (CO₂) produced during the production process is emitted directly into the atmosphere without any capture and storage treatment.

(2) Core Technologies. ① Steam Reforming (SMR). Currently the most important method of hydrogen production globally (accounting for over 60% of global hydrogen production). The reaction takes place at high temperatures (700-950°C) and under the action of a catalyst: CH₄ + H₂O → CO + 3H₂ . Subsequently, CO is converted into CO₂ and more H₂ through a water-gas shift reaction . This technology is mature, large-scale, and low-cost, but emits approximately 9-12 kg of CO₂ per kg of hydrogen produced . ② Coal Gasification. Coal reacts with steam and oxygen under high temperature and pressure to produce syngas (mainly composed of CO and H₂ ) , which is then converted and purified to obtain hydrogen. This process has a higher carbon emission intensity, emitting approximately 18-20 kg of CO₂ per kg of hydrogen , and is mainly used in coal-rich regions such as China.

2.2 Blue Hydrogen

(1) Definition. Based on the production of gray hydrogen, it integrates carbon capture, utilization and storage (CCUS) technology to capture most of the CO₂ generated during the production process and then geologically store or utilize it as a resource, thereby significantly reducing carbon emissions. It is an important bridge for the transition from gray hydrogen to green hydrogen.

(2) Core Technology. SMR or coal gasification + CCUS. The key lies in the carbon capture stage. Typically, after the conversion reaction, CO₂ is captured using technologies such as amine absorption , with a capture rate of over 90% (under ideal conditions). The captured CO₂ is transported via pipeline to suitable saline aquifers, depleted oil and gas fields, etc., for permanent storage, or used to produce chemical products (such as urea) and enhance oil extraction. The emission reduction effect of blue hydrogen directly depends on the capture rate, storage safety, and long-term reliability of CCUS technology.

2.3 Green Hydrogen

(1) Definition. Hydrogen is generated by using renewable energy sources (such as solar, wind, and hydropower) to drive an electrolyzer to decompose water into hydrogen and oxygen, with almost no carbon emissions throughout the process. This is the ultimate clean form of hydrogen energy development.

(2) Core Technologies. Renewable energy power generation + water electrolysis technology. Water electrolysis technology is mainly divided into: ① Alkaline electrolyzer (AEL). It is a mature technology with relatively low cost and long lifespan, and is currently the mainstream of commercialization, but its dynamic response capability is slightly weaker. ② Proton exchange membrane electrolyzer (PEMEL). It has high efficiency, fast start-up and shutdown, and a wide load adjustment range, making it more suitable for coupling with fluctuating renewable energy, but its cost is high (dependent on precious metal catalysts). ③ Solid oxide electrolyzer (SOEL): It has a high operating temperature and the highest theoretical efficiency, and can utilize the heat of reaction, but it is in the early stages of commercialization, and its long-term stability needs to be verified.

3. Multi-dimensional comparative analysis

3.1 Technology Maturity and Commercialization Status

(1) Gray hydrogen. The technology is highly mature and has been in large-scale industrial production for decades. The industrial chain is complete and it is currently the absolute main source of hydrogen (accounting for about 95% in 2023).

(2) Blue Hydrogen. CCUS technology itself is in the commercial demonstration and early deployment stage. Although there are several integrated projects of SMR and CCUS around the world (such as the Quest project in Canada and the Net-Zero Hydrogen Energy Complex of Air Products in the United States), a large-scale, low-cost CO₂ transportation and storage network has not yet been built, and the whole is in the early stage of transitioning from demonstration to large-scale.

(3) Green Hydrogen. Renewable energy power generation technologies are mature, but large-scale water electrolysis for hydrogen production is in the accelerated commercialization phase. AEL and PEMEL technologies are advancing rapidly, with megawatt- to megawatt-scale projects being put into operation or planned in many parts of the world (such as China, Europe, the Middle East, and Australia), but gigawatt-scale projects still require time. Supply chain (such as PEM proton exchange membranes and catalysts) and system integration capabilities are the current development priorities.

3.2 Economic Cost Analysis (Levelized Cost of Hydrogen Production, LCOH)

Cost is the core factor determining competitiveness in various hydrogen markets. LCOH comprehensively considers capital expenditure, operating expenditure, fuel/electricity costs, equipment utilization rate, and lifespan.

(1) Gray hydrogen. Lowest cost, extremely dependent on natural gas or coal prices. For example, the cost of natural gas SMR soared during the 2021-2022 energy crisis. In the normal range of natural gas prices (e.g., $3-5/MMBtu), its LCOH is about $1.5-2.5/kg.

(2) Blue Hydrogen. Cost = Gray Hydrogen Cost + CCUS Additional Cost. CCUS costs include capture, compression, transportation, and storage. IEA data shows that under moderate natural gas prices and suitable storage locations, blue hydrogen LCOH costs approximately $2.5-4.0/kg. Among these, carbon capture adds approximately $0.7-1.2/kg to the cost. The cost is sensitive to natural gas prices and the geographical conditions of carbon storage.

(3) Green Hydrogen. The core cost drivers are renewable energy electricity prices and capital expenditures for electrolyzer systems. In regions rich in renewable energy (such as Chile, the Middle East, and Northwest China), wind or solar power prices can be below $20/MWh, at whic4h point green hydrogen LCOH can be close to $3-4/kg . However, in regions with higher renewable energy electricity prices, such as Europe, Japan, and South Korea, the cost may exceed $5/kg or even higher. With the continuous decline in renewable energy costs and the large-scale production of electrolyzers (learning curve effect), the potential forgreen hydrogen cost reduction is huge. The International Renewable Energy Agency (IRENA) predicts that by 2030, the cost of green hydrogen in some parts of the world is expected to fall below $2/kg, driven by advancements in industrial hydrogen generator technology.

Table 1. Comparison of core indicators for gray hydrogen, blue hydrogen, and green hydrogen (based on data integration from recent literature and reports)

Comparison Dimensions	Grey hydrogen (saturated natural gas SMR)	Blue Hydrogen (SMR+CCUS)	Green hydrogen (renewable energy electrolysis)
Core technologies	Steam methane reforming (SMR)	SMR + CCUS (capture rate >90%)	Renewable energy + electrolyzer (PEM/AEL)
Technology maturity	Fully commercialized and mature	Commercial demonstration/early deployment	Commercialization Acceleration Period
Carbon emission intensity (kg CO₂ eq /kg H₂ )	9 -12	1 - 3 (depending on capture rate and upstream emissions)	<1 (mainly from indirect emissions such as equipment manufacturing)
Current LCOH range (USD/kg H₂ )	1.5 - 2.5 (Gas price driven)	2.5 - 4.0	3.0 - 6.0+ (Driven by wind and solar resources and electricity prices)
2030 LCOH Outlook (USD/kg H₂ )	Largely affected by fossil fuel prices and carbon prices	2.0 - 3.5	1.5 - 3.0 (Optimistic Scenario)
Main cost components	Natural gas feedstock (60-75%)	Natural gas feedstock + CCUS system CAPEX/OPEX	Renewable energy power (50-70%) + Electrolyzer CAPEX
Environmental impact	High carbon emissions, air pollutants	Carbon emissions have been significantly reduced, but there are risks associated with storage and methane leakage.	Near-zero carbon emissions require attention to water consumption.
Role in the energy transition	The current main body needs to be gradually replaced.	Key transitional measures to support near-term carbon reduction and market development	The long-term ultimate goal is to achieve deep decarbonization.

3.3 Carbon Emission Intensity and Life Cycle Environmental Impact

(1) Gray hydrogen. It has the highest carbon emission intensity and is a "high carbon hydrogen". It is already very high when considering only direct production emissions. If methane leakage (methane is a strong greenhouse gas) in upstream natural gas extraction and transportation is taken into account, its carbon footprint over the entire life cycle is even higher.

(2) Blue Hydrogen. It offers significant emission reduction, but is not carbon-zero. Its carbon footprint depends on: ① CCUS capture rate. Current technology can achieve 90-95%, but the remaining 5-10% of CO₂ will still be emitted. ② Upstream emissions. Methane leaks in the natural gas supply chain are a key variable affecting the carbon intensity of blue hydrogen throughout its life cycle. Studies show that if the methane leakage rate exceeds 3-4%, the century-long climate benefits of blue hydrogen may not be better than direct use of natural gas. ③ Storage safety. There is a risk of potential leakage from long-term geologically stored CO₂ , requiring strict monitoring.

(3) Green hydrogen. Under ideal conditions (using 100% renewable energy and not considering indirect emissions from equipment manufacturing and transportation), its direct carbon emissions during production are almost zero. However, a life cycle assessment (LCA) needs to consider the implicit carbon emissions from the production of equipment such as electrolyzers, the manufacturing, installation, and maintenance of wind turbines/photovoltaic panels, as well as water consumption (approximately 9 liters of deionized water are required per kilogram of hydrogen). Overall, its carbon footprint is far lower than that of gray hydrogen and blue hydrogen, making it a truly low-carbon/zero-carbon hydrogen.

4. Conclusion

Gray hydrogen, blue hydrogen, and green hydrogen constitute a clear spectrum of hydrogen energy's transition from high-carbon to zero-carbon. These three are not simply substitutes, but rather a symbiotic system in which different stages of development and regions with varying resource endowments play different roles.

(1) In the short term (until 2030), blue hydrogen serves as a bridge, while green hydrogen builds momentum. The current dominance of gray hydrogen is unlikely to change immediately. Blue hydrogen, with its relatively low cost and significant emission reduction potential (provided methane leakage is well controlled), is a realistic choice for achieving large-scale hydrogen supply, launching the hydrogen energy market (especially replacing existing gray hydrogen in the industrial sector), and simultaneously constructing hydrogen pipeline networks and end-use infrastructure within the next 5-10 years. Policies should support CCUS technology research and development and industrial cluster construction, and establish a strict methane emission monitoring and reporting system to ensure the authenticity of blue hydrogen's emission reduction claims. During the same period, green hydrogen needs to complete the "momentum building" process of key technology breakthroughs, a sharp cost reduction, and the construction of a gigawatt-level industrial chain.

(2) In the medium to long term (after 2030), green hydrogen will dominate, and its color will trend towards "green". With the continuous decline in the cost of renewable energy, the maturity and large-scale production of electrolyzer technology, and the widespread implementation of carbon pricing mechanisms, the economic competitiveness of green hydrogen will continue to increase. It is expected to achieve parity with blue hydrogen in more and more regions between 2030 and 2040, and eventually become the absolute mainstay of hydrogen energy supply. Gray hydrogen will be gradually phased out under carbon constraints. Blue hydrogen may continue to exist for a long time as a peak-shaving or supplementary role in specific regions, but the overall color of the hydrogen energy system will rapidly change towards "green".

5. Outlook

(1) Technology-driven cost reduction. We will continue to promote the technological innovation of electrolyzers such as PEM, the localization of key materials, and the improvement of system efficiency, and further reduce the cost of wind and solar power generation.

(2) Policy and market mechanism innovation. Implement differentiated carbon pricing, introduce a green hydrogen consumption quota system, and establish hydrogen energy certification standards based on carbon emissions throughout the entire life cycle (such as the EU's "renewable energy hydrogen" standard) to guide the formation of a green premium market.

(3) Integrated planning of infrastructure. We will coordinate the integrated layout of renewable energy power generation, power grid, electrolysis hydrogen production, hydrogen pipeline/storage and transportation and downstream applications to reduce system costs.

International cooperation and standardization. Promote globally unified standards for hydrogen energy trade, measurement, safety, and sustainability, and facilitate the formation of cross-border hydrogen energy supply chains.

In short, the evolution from "gray" to "blue" and then to "green" is not only a path of upgrading hydrogen production technology, but also a profound green revolution in the energy system. As a leading high-tech enterprise, HOVOGEN is dedicated to this advancement through the research and development of PEM (Proton Exchange Membrane) electrolysis hydrogen technology. Only by clearly distinguishing and scientifically planning the development paths of these three types of hydrogen energy can we maximize hydrogen energy's contribution to the global carbon neutrality goal and truly make it a pillar for building a sustainable energy system in the future.

Wei Zhijiang: Professor-level Senior Engineer of Hebei Iron and Steel Xuanhua Steel