Hydrogen is emerging as a potential low-carbon alternative to fossil fuels, but its climate benefits rely heavily on production methods. The Fraunhofer Institute's recent study evaluates over 100 fact checks to determine where hydrogen is most effective. Currently, the majority of hydrogen is produced from fossil fuels like natural gas and coal, generating significant CO2 emissions. Sustainable options such as green hydrogen, produced via electrolysis powered by renewable energy, are more environmentally friendly but remain costly, ranging from $7 to $19 per kilogram compared to just $1 to $2 for fossil-based variants.

The report highlights that hydrogen’s primary industrial uses include refining and ammonia production, with future growth expected in steel manufacturing, transportation, and energy sectors, especially where direct electrification isn't feasible. However, its role in residential heating and energy storage is limited due to economic and technical constraints. The global landscape shows China leading hydrogen production, mostly from coal, while Europe has strong technological expertise but faces increased competition from China's expanding capacity. The authors predict hydrogen will play an increasingly significant role in heavy transport and industrial processes by the 2030s, but widespread adoption in households remains unlikely for some time.