• A significant challenge lies in scaling up the hydrogen production capacity, storage and distribution infrastructure, and end-use technologies needed to replace the energy delivered by existing energy systems.
• A major hurdle to hydrogen making a meaningful contribution to net-zero targets is ensuring its production becomes sustainable. As of 2023, only around 0.1% of global hydrogen production was green hydrogen and only around 3% blue hydrogen.
• More pilot projects are needed to prove the economic, environmental, and social benefits to businesses and communities. Addressing regulatory and public acceptance concerns, particularly regarding the safety and integrity of new technologies, will be vital.

Scaling the production, storage, and distribution of hydrogen will require significant energy, investment, and resources, alongside effective risk mitigation. The main challenges include safety, economic viability, and scaling production of sustainable, low carbon supplies. Additionally, securing acceptance from policymakers, regulators, and end-users - whether industrial, commercial, or residential - is crucial. Without strong demand signals, developers and investors across the supply chain may struggle to gain traction and grow.

The UK’s Hydrogen Strategy also highlights technical, policy, and regulatory uncertainty as hurdles to overcome, alongside the need for infrastructure development, supply-demand coordination, and securing ‘first-of-a-kind’ and ‘next-of-a-kind’ investments to advance and scale emerging technologies.

Public acceptance

One of the biggest challenges, particularly in demonstrating the role hydrogen could play in residential heating, is to gain the public’s trust. Concerns are often centred on hydrogen’s safety and cost for such use of hydrogen. Beyond residential applications, broader societal acceptance will also be critical for hydrogen-carrying pipelines, fuel cell vehicles, hydrogen storage and dispensing at depots. Proving the viability of these technologies and providing transparent, balanced information on the safety, reliability and cost implications of choosing hydrogen over non-hydrogen alternatives for heating, transport, or storage is essential for building trust.

Safety

Concerns regarding hydrogen’s safety and flammability must be addressed. As a non-toxic gas with no colour, taste, or smell, hydrogen burns with a nearly invisible pale blue flame, producing no hot ash or smoke. This makes it difficult to detect both when it is burning and when it is leaking.

Beyond leakage risks, hydrogen can also act as an asphyxiant at high concentrations, posing additional safety challenges. To mitigate these risks, an odorant such as mercaptan - a harmless but strong-smelling compound - may need to be added, similar to how natural gas is treated for household use. However, odorant additives can potentially contaminate fuel cells, which require a high level of hydrogen purity.

To ensure safe hydrogen use in homes, several precautionary measures are recommended, including enhanced ventilation (which may involve permanent vents) and the installation of hydrogen detectors or other advanced monitoring systems to identify leaks and ensure safety.

Regulation and codes of practice

For hydrogen to be used in new applications, industries and sectors, either new regulations and codes of practice will need to be developed, or existing ones extended or adapted. Since its first use in industrial applications in the 1930s, companies and governments have worked together to create regulations and codes that promote the safety and minimise the risk of using hydrogen. A range of international standards already apply to hydrogen, including those developed by the Energy Institute, the International Standards Organisation (ISO), the International Electrotechnical Commission (IEC), the European Industrial Gases Association (EIGA), the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE), and the European Hydrogen Safety Panel. These standards cover a wide range of aspects, from how to store hydrogen securely to guidance on the types of pipes and valves to be used.

Sustainability

Developing international standards is also crucial for verifying the source of any hydrogen being supplied.

While the different colour-coded sources of hydrogen (green, blue, grey, pink, etc.) are chemically identical, their production costs and carbon intensities vary significantly across the entire value chain, as demonstrated by a comprehensive life-cycle analysis conducted by the Energy Institute. This highlights the need for new standards and certification to clearly define what qualifies as low-emissions hydrogen and to ensure its origin. In 2023, the UK government launched a consultation seeking views on the design elements of a low carbon certification scheme.

Equipment costs

Whilst technologies for producing low-emissions hydrogen already exist, at present they tend to be more expensive than other production methods or alternative fuels. Significant investment is needed to scale up new production facilities and supply chains, build the necessary equipment for plants and infrastructure, ensure adequate supply, and reduce unit costs.

The installed cost of electrolysers has increased significantly in recent years, due to increases in materials and labour costs, along with wider system issues impacting the energy sector. However, the IEA anticipates that these capital costs could start to decline due to economies of scale through mass production by 2030. Based on announced new projects, the cost of an installed electrolyser might reduce by 60% by 2030 compared to 2023, reaching about USD 720-810/kW of installed capacity.

Infrastructure and technology development

Technology will be critical to the role hydrogen plays in the wider energy transition going forward. In some instances, new technologies - particularly in electrolysis and storage - must be developed, commercialised, and scaled. In other cases, it may be possible to leverage and re-purpose existing technologies and infrastructure, such as parts of existing natural gas networks. However, in areas where new technologies are needed, the hydrogen industry is starting from a very small baseline, especially with green hydrogen.

Support from both public and private investors will be essential to kick-start the development of new hydrogen infrastructure. In addition to government support, funding for new hydrogen projects could come from a range of sources, including gas companies, car manufacturers, transporters, shippers, or engineering firms. For instance, the UK Hydrogen Council is an initiative involving several companies across the energy, transport, and industrial sector, all aiming to boost investment in hydrogen and fuel cells. However, private investment is unlikely to occur without significant policy support or tax incentives to reduce financial risk, stimulate demand, and support the competitiveness of low-carbon hydrogen.

Moreover, certain segments of the hydrogen industry will depend on the development of enabling technologies. For instance, blue hydrogen depends entirely on the successful development, commercialisation, deployment, and operation of CCUS technologies. Today, the use of CCUS across its potential applications is extremely limited, with its development, deployment, and cost reduction significantly undermined by a combination of market, social, and political barriers.

New jobs and skills

Alongside the broader energy transition, the emergence of a hydrogen economy holds the promise of creating a significant number of new and skilled jobs in the construction, manufacturing, and machinery industries. Skilled technical workers will be particularly needed in companies focused on hydrogen-related and enabling technologies, vehicles, and appliances. Additionally, once hydrogen plants are operational, there will also be ongoing demand for roles in plant operation, maintenance, safety management, and logistics, ensuring a continued need for a skilled workforce throughout the hydrogen value chain.

However, while the promise of new jobs is seen as a major benefit, a key challenge facing the entire energy transition - including the development of hydrogen economies and the achievement of net zero targets - is the availability of workers, particularly those with skills in clean energy technologies. In recent years, global demand for workers in the renewable energy sector has grown faster than in other industries, and this pressure continues to mount.

A report by the Boston Consulting Group (2023) concluded that by 2030, there will be a global shortage of seven million skilled workers needed for the critical climate and energy projects, such as installing solar panels, heat pumps, electric car charging stations, and wind farms. In the UK alone, there is an estimated current gap of around 200,000 workers, which poses a challenge to meeting net-zero targets. As well as competing within itself for talent, the renewables industry is competing with other sectors for the same highly sought-after skills.