Economics of blue hydrogen strong in near-term

Panellists agree it will take time and incentives to reduce cost of green hydrogen to a level where it is competitive with the blue variety

Blue hydrogen can be produced for as little as $1/kg in the US, but this is still twice the cost of grey hydrogen, meaning government intervention will be vital to spur production of the cleaner fuel, according to various speakers at conferences this week. Blue hydrogen will always cost more to produce than grey hydrogen because of the additional carbon capture and storage processes required, Richard Mew, director at consultancy Koyos Resources, told the First Element conference. “The general consensus is that you need a cost of producing hydrogen at $1.5/kg in order for significant carbon abatement to occur,” he said, noting this was possible only in jurisdictions with low gas prices.