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New Energy Expert Insights: The Truth about Blue Hydrogen – a Necessity in the Energy Transition?

In this two-part New Energy Expert Insights series, we sat down with Nicohan van der Merwe, Senior Process Engineer at GHD, to discuss the truth about blue hydrogen and explore the role it has to play in the global transition towards clean, renewable energy. Nicohan has substantial experience in blue hydrogen projects and has been an engineer in the energy sector for over 10 years. GHD is a global professional services firm committed to solving the world’s biggest challenges in the areas of water, energy and urbanisation. It provides advisory, engineering, architectural, environmental and execution phase services. GHD is providing significant services for clients to support their decarbonisation journey, including the development of both green and blue hydrogen projects and believes that production via both routes should form part of the energy transition, given the complexity of challenges with transitioning energy systems globally.

In this Part I, we discuss some of the obstacles facing the transition to a green hydrogen economy. In Part II, we take an in-depth look into the specifics of blue hydrogen emissions and how blue hydrogen is already well placed to facilitate the transition to a green hydrogen future.

Part I

Green hydrogen has received significant attention as an efficient low-carbon fuel and has been heralded as the hero to net-zero. Recent negative media coverage of blue hydrogen, on the other hand, has left many people questioning its role in our future energy system. However, is all hydrogen fundamentally the same?

Green hydrogen is produced through water electrolysis with the electricity that powers the process originating from renewable energy sources such as wind and solar. Blue hydrogen on the other hand refers to hydrogen that has been produced using natural gas but with a portion of the carbon emissions captured and stored using carbon capture and storage (CCS) technologies.

The end-product of both blue and green hydrogen production – a source of fuel that can be used without emitting harmful emissions into the atmosphere – is exactly the same. It is the lifecycle greenhouse gases emitted during its production that really matter in considering what role it should play in the decarbonisation of our global energy systems  The issue is not what the definition of blue and green hydrogen is, but rather the lack of a clear regulatory framework defining what “low-carbon” hydrogen is (read more here).

Blue hydrogen does not necessarily equate to low carbon hydrogen, but it is reduced carbon hydrogen. For instance, it’s possible to have a 60% carbon capture rate and it still be considered blue hydrogen. Notwithstanding the uncertainty regarding a general definition for “low-carbon” hydrogen, several blue hydrogen projects have a carbon capture rate of between 90% and 95%. Therefore, blue hydrogen that achieves a very low lifecycle carbon footprint is a viable and important low carbon energy source.

Some countries have started introducing carbon intensity thresholds for low-carbon hydrogen, including the European CertifHy scheme and Australia’s Guarantee of Origin scheme. A globally accepted, clear framework to classify low-carbon hydrogen is required to boost the credibility and business case of low-carbon hydrogen producers and ensure that Australia’s future hydrogen exports are accepted in importing countries and are able to compete in a market where the assessment of the carbon footprint is globally standardised.

GHD maintains it is vital that any potential low carbon hydrogen project is very carefully configured and analysed to confirm that it genuinely achieves very substantial lifecycle decarbonisation. From its own analysis it has confirmed that it is possible and practical to do so. Particular attention is also required. More detail about this will be provided in Part II.

What are the main obstacles to green hydrogen being produced at scale and what advantages does blue hydrogen currently have compared with the green alternative?

Green hydrogen is likely to dominate for small scale domestic requirements and in the long term at larger scale. However, in the short and medium term, blue hydrogen is a necessary step to reduce greenhouse gas emissions quickly at large scale. There are three important reasons why blue hydrogen should be considered a viable low-carbon energy source.

The Cost of Electricity

While there are cases for larger electrolysers and economies of scale to minimise the cost of green hydrogen, the single most significant cost contributor is the cost of electricity. We need to break down the variables that contribute to the cost of electricity and realise that if those variables do not come down in price over the next few years, green hydrogen will remain several times more expensive than the incumbent hydrocarbon fuels and also blue hydrogen.

Competition for Renewable Electricity

The production of blue hydrogen does not rely on renewable sources of electricity, although it can be incorporated to further reduce the carbon intensity of a blue hydrogen supply chain. Even with the most ambitious deployment of renewable electricity and the necessary grid firming and electrical transmission infrastructure, it will take decades to substantially transition from the current state where approximately 80% of our total energy needs are met by fossil fuels. More decarbonisation is achieved by using renewable power to decarbonise current power systems and to electrify as much of the other energy demands, rather than by using renewable electricity to produce hydrogen. Nevertheless, it is important that we produce significant volumes of low carbon hydrogen in order to decarbonise some of the hard to abate sectors where direct electrification is not practical. Being able to produce low carbon hydrogen from a source that does not compete for significant renewable power helps to de-risk the global path to net zero.

Mature Technology for production at scale

Much of the expertise and infrastructure required for blue hydrogen is already in place. The coal and gas industries are both mature with well-established supply chains. Access to enough coal or gas to sustain blue hydrogen production in any potential location will be a routine process, and investment in the required CCS solutions has never been higher. The blue hydrogen technologies at scale are mature and facilitate the decarbonisation of fuel at large scale. Green hydrogen technology is also mature but at comparatively small scale. Currently, large scale green deployment would be achieved through vast replication of an essentially small scale technology.

To this end cumulative emissions can be significantly reduced if blue hydrogen is also deployed compared with only deploying green hydrogen.

In your view, is it simply a case of blue first, green second?

Green hydrogen will undoubtedly play a significant role in our future energy system. Although blue hydrogen has  higher lifecycle emissions than fully green hydrogen, it is unlikely that we can meet the decarbonisation goal timelines without blue hydrogen as part of the energy mix.

We need to be realistic about our transition to green hydrogen and sustainability. As blue hydrogen is commercially available at scale, rapidly deployable and still the cheaper fuel source, it can pave the way for future supply chains, a hydrogen economy, and the progression of regulatory standards and policies.

Stay tuned for Part II of this New Energy Expert Insights as we look into the specifics of blue hydrogen emissions and how blue hydrogen is already well placed to facilitate the transition to a green hydrogen future.


Matt Baumgurtel leads the New Energy sector team at Hamilton Locke.

Adriaan van der Merwe is a Senior Associate in Hamilton Locke’s New Energy team.

David O’Carroll is an associate in Hamilton Locke’s New Energy team.

Ally Frizelle is a graduate in Hamilton Locke’s Corporate and New Energy teams.