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What is hydrogen and why it matters in the energy transition

September 15, 2026

Mallory Bell & Víctor Suñol

How hydrogen can support hard-to-electrify sectors and renewable energy systems

As Europe works toward meeting its climate targets and reducing greenhouse gas emissions, the transition away from fossil fuels has become increasingly urgent. Fossil fuels met 80% of global energy demand in 2023,[1] while fossil fuel combustion and industrial processes generate around 40 billion tonnes of carbon dioxide emissions each year.[2]

Renewable energy sources such as wind and solar power are essential to this transition, but their intermittent nature means that additional solutions are needed to ensure a reliable and resilient energy system. Hydrogen has emerged as one of the most promising options because it can store energy, provide fuel for transport and industry, and support the integration of renewable energy sources.

Although hydrogen is the most abundant element in the universe, it is rarely found in its pure form and must be produced from other compounds. Its environmental impact therefore depends on how it is produced. Even so, hydrogen’s properties and range of potential applications mean it is expected to play an important role in achieving a low-carbon energy system.

1. Where hydrogen could make a difference

One of the biggest advantages of hydrogen is that, when used in a fuel cell, it generates electricity without producing carbon dioxide at the point of use. Water and heat are the only resulting by-products. This makes hydrogen an attractive alternative to fossil fuels such as coal, oil, and natural gas, which remain among the largest contributors to global greenhouse gas emissions.

This potential is particularly relevant in sectors that are difficult to electrify directly. Eight hard-to-abate sectors, including steel, cement, primary chemicals, aviation, shipping and trucking, collectively account for around 40% of global direct CO₂-equivalent emissions.[3] In several of these sectors, hydrogen could contribute to decarbonization, particularly where high-temperature processes, high-energy-density fuels or chemical feedstocks are required.

One reason it may be suitable for some of these applications is its high energy content by mass. One kilogram of hydrogen contains approximately 120 MJ of energy compared to around 44 MJ for one kilogram of gasoline.[4][5] However, this adva

ntage comes with a trade-off: as a gas, hydrogen occupies a large amount of space and therefore has a low

energy density by volume. It is commonly compressed or liquefied for practical storage and transport.

2. Storing renewable energy

Renewable energy generation varies depending on weather conditions and time of day. Wind turbines only generate electricity when the wind blows, while solar panels depend on sunlight. In 2025, wind and solar generated a record 30% of EU electricity, slightly more than the 29% generated from fossil fuels.[6] As renewable energy becomes a larger part of Europe’s energy mix, storing excess energy during periods of high generation becomes increasingly important.

Hydrogen can help bridge this gap. Surplus renewable electricity can be used to split water into hydrogen and oxygen through a process known as electrolysis. The hydrogen produced can then be stored for extended periods and used when energy demand is high or renewable generation is low.[7] This ability to provide long-term energy storage is one of hydrogen’s most important advantages and could help improve energy security while supporting greater deployment of renewable energy sources.

3. Existing uses and future roles

Hydrogen has been used by industry for decades, particularly in oil refining and the production of chemicals and fertilizers. In 2025, global hydrogen demand surpassed 100 million tonnes, with these traditional industrial uses accounting for almost all demand.[8]

Today, interest in hydrogen is rapidly expanding as countries seek cleaner alternatives to fossil fuels. Potential applications include long-term energy storage and electricity generation, heavy-duty transport, and industrial heating and manufacturing. This versatility means hydrogen can play a role across multiple parts of the economy, helping to create a more integrated and flexible energy system. Its future role, however, will depend on meeting existing demand through low-emissions production and determining where these newer applications offer a practical alternative to fossil fuels.

4. Production and deployment challenges

Despite its significant potential, the current hydrogen production mix remains a major challenge. In 2025, 61% of global hydrogen production came from natural gas without carbon capture, while 22% came from coal without carbon capture. Low-emissions hydrogen represented less than 1% of total production that year. As a result, hydrogen production generated around 1,000 Mt (million tonnes) of CO₂ that year.[9]

Changing this production mix requires wider use of lower-emissions pathways, including electrolysis powered by l

ow-emissions electricity and processes based on biomass. At present, though, these pathways generally remain more costly than conventional fossil-based methods in most parts of the world.

The size of this cost gap varies considerably according to the production route and location. It depends on factors such as energy prices, equipment costs and financing conditions. Reducing these costs is important, but investment in new production capacity also depends on reliable demand.

There are also challenges related to infrastructure, transport and storage. Most hydrogen is still used close to where it is produced, and the networks needed to connect production sites with users remain limited. Expanding hydrogen’s role in the energy system will require continued investment, innovation and collaboration between industry, policymakers and researchers.

5. A different route to hydrogen

Hydrogen is particularly relevant where direct electrification is difficult and where renewable energy needs to be stored for extended periods. However, its contribution to decarbonization will depend on how it is produced and whether lower-emissions pathways can become economically viable and operate at the required scale.

PYRAH2 focuses on this production challenge. The project is developing an integrated process that converts biogenic waste and renewable gases into high-purity hydrogen and solid carbon. A full-scale pilot plant will test how the process performs in practice and whether it can provide a viable alternative to conventional hydrogen production.