Green Hydrogen Reaches Cost Breakthrough as Production Scales
Green hydrogen production costs have fallen below $3 per kilogramme for the first time, bringing the fuel within reach of commercial viability for heavy industry.
The Hydrogen Milestone
Green hydrogen — produced by splitting water using renewable electricity — has reached a long-awaited cost milestone. Several large-scale projects are now producing the fuel for below $3 per kilogramme, a threshold widely seen as the point at which hydrogen becomes competitive for industrial use.
Why Costs Are Falling
The cost reduction is driven by two factors: the continued decline in renewable electricity prices and dramatic improvements in electrolyser efficiency and scale. New gigawatt-scale electrolyser factories are coming online in Europe, China, and Australia, driving down the capital cost of production equipment.
Target Sectors
Green hydrogen is not a silver bullet for all decarbonisation, but it is critical for sectors that are difficult to electrify directly: steelmaking, cement, shipping, and long-duration energy storage. Several steel plants in Sweden and Germany have already begun replacing coking coal with green hydrogen in their furnaces.
The Scaling Challenge
Despite the progress, green hydrogen still accounts for less than 2% of global hydrogen production. Reaching the scale needed for deep decarbonisation will require sustained government support and private investment over the coming decade.
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