Hydrogen Production: Back to Basics

The Inflation Reduction Act of 2022 was signed on August 16, 2022, and included financial incentives that were intended to drive more investment and deployment of clean hydrogen and fuel cell technologies. This bill has sparked a significant amount of conversation surrounding the production and deployment of hydrogen. However, as we see more and more discussion, it is important to understand all the facts. This can be difficult with so much misinformation or incomplete information that circles around. I thought it was important at this stage to get back to the basics, ensuring everyone who has a stake in this conversation has a full understanding of the nuances involved.

Let’s start with the fact that “naturally occurring hydrogen” is not common. Thus, hydrogen for energy use must be produced. However, there are clean ways to produce hydrogen and there are dirty ways to produce hydrogen. The key function that dictates whether hydrogen can ultimately be classified as a clean energy has everything to do with how it is developed.

Types of Hydrogen Production

There are three distinct methods of producing hydrogen as an energy source: grey, blue, and green. (There are others including brown hydrogen, derived from gasification of carbon material such as coal; but that is beyond the scope of this discussion.) To determine the environmental impact of transitioning to a hydrogen-based energy source, first we must understand the differences between the three different types of methods of producing hydrogen.

Grey hydrogen is produced through a steam-methane reforming (SMR) process that utilizes natural gas. The issue with grey hydrogen concerns what is ultimately produced alongside it: carbon dioxide. Steam reacts with methane to create hydrogen and carbon monoxide. This carbon monoxide then reacts with water to create hydrogen and carbon dioxide. This carbon dioxide is then released as an emission. So, essentially, we’re creating a “clean” energy in hydrogen, but are simultaneously releasing a harmful byproduct in the process. It becomes very apparent that this SMR method, although effective for energy production, is essentially counterproductive if you’re looking for a long-term sustainable solution for the energy sector. However, the vast majority of the hydrogen being produced in the U.S. (more than 90%) is grey hydrogen.

Perhaps the main reason this is the most popular way of producing hydrogen today is because of the ease of entry. For more than 60 years, energy producers have huddled around natural gas. All the equipment that energy producers have on hand is designed around the concept of reforming fossil fuels. This makes it far more likely for these companies to commit to producing grey hydrogen as their existing infrastructure facilitates such a commitment. It is much more of an investment to produce blue or green hydrogen.

Moving toward blue and green hydrogen is the direction that most would prefer the energy industry to go from an environmental perspective. As all the electrification-resistant industries have a huge demand for energy and cannot be fully electrified, blue hydrogen becomes the most ideal solution.

Blue hydrogen is essentially the same type of hydrogen as the grey variety, utilizing natural gas in the SMR method. However, the big difference is that with blue hydrogen production, there is a step where the carbon emissions are captured and sequestered. Thus, it is an SMR process that is 100% contained. With this approach, the energy producer is either depositing these emissions into the ground or possibly selling them elsewhere.

The confusion lies when many energy producers that participate in this blue hydrogen production will make claims that they are incorporating a “green” process. This can be misleading. In fact, the process is not green; it is merely contained.

The ideal and cleanest hydrogen that can be produced is green hydrogen. This process is carbon free, similar to other sustainable methods like solar, wind, geothermal, etc. These are all then used as energy inputs to an electrolyzer. Thus, we are using renewable sources to power the electrolyzer, without the use of methane. This is the ultimate goal for the community because it doesn’t emit any carbon dioxide into the atmosphere.

The catch is that there is a need for a tremendous amount of water. In this process, water management and water feed are critical. There needs to be proper management of the water’s purity, flow access, and cost. However, through electrolysis, one can create renewable hydrogen.

Where Are We Today?

The U.S. government and policy creators are working to incentivize these hydrogen initiatives. One of the reasons this is so challenging is that the fossil fuel infrastructure we use today has existed for roughly 200 years. Additionally, as established in the discussion above, grey hydrogen costs less than blue and far less than green hydrogen. These are three very different price points when discussing the move to hydrogen, and they should not be lumped into the same category when discussing the industry’s adoption rates and the incentives associated with them.

For example, when a major energy company withdraws from a state under the investment infrastructure inflation reduction act, it doesn’t mean they’ve exited hydrogen, just one aspect of it. This withdrawal does not indicate that hydrogen as a clean energy source “isn’t working.” It may mean that too much of the funds aren’t properly allocated, or the return on the investment for an energy consumer may not be compelling. Take for example light-duty commercial transportation. The cost of electricity and capital equipment investments might not be justified for the light-duty commercial vehicle fleets already operating on diesel, fossil fuels, or even those operating an electric vehicle infrastructure. However, the same energy producer may be incentivized to shift their investment to projects where demand is greater, such as feedstock production or chemical industries whose demand can be met with grey or blue hydrogen investment projects. That is not to say the “shift to hydrogen” is failing, rather private industry is incentivized where the market has the greatest demand and current infrastructure could support the transition in a cost-competitive manner.

Hydrogen may not be 100% viable today for consumption at the individual consumer level, say for instance with commercial vehicles, but for the industrial processes in the country, it has been a relevant energy source, and now the goal is to continue to make it greener. The energy producers in the market want to go green, but there needs to be proper incentivization to do so. Fortunately, we are starting to see that come to fruition through investment tax credits on expenditures related to green hydrogen, as well as a greater embrace at the policy level of blue-hydrogen projects in addition to the ambitious green hydrogen projects previously envisioned. If we’re able to continue reducing the cost differential between grey and green hydrogen, and incentivize private industry to shift their existing infrastructure in a sustainably economical manner, the energy industry and its consumers can be assured it will continue moving in the right direction.

Cory Calderon is vice president of Sales at Valin Corporation, a subsidiary of Graybar, and the leading technical solutions provider for the technology, energy, life sciences, natural resources, and transportation industries. To browse Valin’s product portfolio, visit: