Advancing a Low-Carbon Hydrogen Economy: Challenges, Solutions, and Policy Perspectives

1. Introduction

Hydrogen, discovered in 1776 by Cavendish, is the universe’s most abundant element and has been transformed from a fossil fuel-derived (grey, blue, turquoise hydrogen) as well as a coal-derived product (black hydrogen) to sustainable energy sources (green hydrogen) and nuclear (pink hydrogen) (Das et al., 2022; Williams et al., 2019; Yang et al., 2019). Its biggest selling point is its ability to substantially lower the world’s carbon dioxide emissions, as energy sources are responsible for more than 73% of all emissions. Low-carbon hydrogen and hydrogen’s transition are crucial to decarbonizing industry, transport, and electricity. A complete hydrogen system depends on production, conversion, transport, and end-use developments (Azni et al., 2023; Salvi & Subramanian, 2015; Shafiee & Topal, 2009).

2. Comprehending the Colours of Hydrogen and Their Emissions

Hydrogen is sorted by “colour” depending on its production process and resulting emissions: green (renewable), blue (fossil with carbon capture), turquoise (methane pyrolysis), and others. Whereas green hydrogen is usually regarded as being emission-free, life cycle analyses show that even renewable-based production (e.g., wind, solar) can lead to non-negligible greenhouse gas emissions due to production and installation activities (see Figure 1) (Feyer et al., 2010; Vezirolu & Barbir, 1992; Yanxing et al., 2019). Hence, there has to be a subtle distinction between hydrogen types, beyond naive colour codes, to one based on greater specificity of emissions (Glenna et al., 2023; Gür, 2022; Yan et al., 2019).

3. Hydrogen Demand: Current Policies and Promised Commitments

Global demand for hydrogen was more than 94 million tonnes in 2021, greater than 91 million tonnes in 2019, and most of the increase has occurred in established sectors like refining and chemicals. However, hydrogen remains mostly produced from fossil fuels, limiting its climate benefits since low-carbon hydrogen accounts for less than 1% of production. Uptake in new markets like heavy industry, transport, and power generation is still extremely low-less than 0.04% of total demand in 2021-despite China’s experience of significant deployment of fuel cell vehicles (Chew et al., 2023; Leachman et al., 2009; Zhang et al., 2008). Future projections to 2030 vary depending on policy direction. Based on the Current Policies Perspective (CPP), global demand for hydrogen would be 115 million tonnes, and growth would be primarily from the conventional applications. The Promised Pledges Perspective (PPP), based on governments fulfilling their climate commitments, projects much higher demand, led especially by new consumers like transport, buildings, and power generation, as shown in Figure 2. This underscores the urgent need for firm policy action (Demirbas, 2008; Mittal et al., 2024; Rahimirad & Sadabadi, 2023).

4. Economic and Technological Hurdles to Hydrogen Up-Take

Even as hydrogen is so promising, there are still a series of issues. Green hydrogen production by electrolysis remains five times more costly than traditional production, and storage facilities are technically demanding and expensive (Baykara, 2018; Jiang et al., 2015; Yadav, Sehrawat, et al., 2025). It would take 3–4 times more storage space to replace natural gas with hydrogen by 2050, at an estimated cost of $637 billion. Even blue hydrogen, which involves carbon capture, has high costs and losses of efficiency. The economic viability of hydrogen is based on lowering the costs of production and storage while increasing efficiency and scalability (see Figure 3) (Clark & Rifkin, 2006; Liu et al., 2022; Panchenko et al., 2023).

5. Life Cycle and Environmental Impacts

While hydrogen does provide a route to decarbonization, how much and if at all it will lower the impact on the environment will depend on the production method. Hydrogen produced using steam methane reforming (SMR) produces high amounts of CO₂ unless it is used with efficient carbon capture and storage (CCS) (Mittal et al., 2025; Rout et al., 2025; Thomare, Magadum, et al., 2025). Even hydrogen production based on renewables is not completely emission-free because of embodied emissions in wind turbines and solar panels (see Figure 2a–d). Life cycle assessments need to be thorough to guarantee that the hydrogen transition brings real climate benefits (Thomare, Nagappagol, et al., 2025; Yadav, Mittal, et al., 2025a, 2025b).

6. Policy Implementation and the Role of Governance

Policy structures are the most important element in driving the hydrogen economy. Existing policies frequently fall behind innovations, and so the low-carbon hydrogen tends to be adopted at a slower pace. A successful implementation of policy calls for policymakers, researchers, and business stakeholders to coordinate (McNeil et al., 1989; Ren et al., 2023; Xiao et al., 2015). A range of incentives to produce green hydrogen, infrastructure investments, and targeted emissions regulations must be tapped to drive the process. A hierarchical policy action framework, from local to global, is proposed in the report to fill gaps and support a strong LCH economy (Deepanshu et al., 2025; Murgod et al., 2025; Sehrawat et al., 2025; Yadav et al., 2025).

7. Bridging Research Gaps and Future Directions

Despite nearly two centuries of hydrogen research, there is no globally green, efficient, and affordable production method yet. Cost control, infrastructure development, and environmental protection are the key research areas (Arena et al., 2007; Griffiths et al., 2021; Saeidi et al., 2017; Urakawa et al., 2007). These have to be addressed through interdisciplinarity, innovation in production and storage technology, as well as robust policy backing. The new strategy focuses on continuing research, public-private cooperation, and international cooperation to tap the full potential of hydrogen as a pillar of the low-carbon energy transition (Borgarello et al., 1985; Gondal et al., 2018; Rahmad et al., 2022).

8. Conclusion

The path to a low-carbon hydrogen economy is one of potential as much as complexity. Hydrogen is widespread, versatile, and energy-dense, which are compelling characteristics in a decarbonization tool for hard-to-abate uses such as industry, transport, and power. The transition will not be seamless, though, as the incumbent dominance of hydrogen from fossil fuels underscores the critical need for technologies to break through and reduce costs in green and blue hydrogen production. Life cycle assessments demonstrate that even hydrogen produced from renewables is not fully emissions-free, and that underlines the need for open emissions accounting and ongoing process optimisation. The high production, storage, and infrastructure costs are the principal deterrents. Closing the research and policy loopholes means inducing innovation, imposing enforceable emissions limits, and opening investment across the value chain of hydrogen. Eventually, it will be the concerted effort of researchers, industry, policymakers, and the public that brings a low-carbon hydrogen future into existence, with hydrogen emerging as a cornerstone of global decarbonization and a cleaner, more secure energy system for future generations.