The Breakthrough That Finally Makes Green Hydrogen Cost-Competitive

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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By Haley Zaremba – Jan 07, 2026, 4:00 PM CST

A new system developed by researchers uses sugars from agricultural waste in the production process, successfully lowering the cost of green hydrogen to $1.54 per kilogram, which undercuts fossil fuels.
This breakthrough involves selectively electrooxidizing glucose to formate instead of water to oxygen, which removes the need for costly membranes and makes the process more efficient.
Despite the new affordability, organizations like IRENA caution that the extensive use of green hydrogen may still be inefficient as it requires dedicated renewable energy that could be used for other end purposes.

For decades, green hydrogen has been touted as the “next big thing” in clean energy technology, with particularly promising potential applications in hard-to-abate sectors like transport, steelmaking, and shipping. However, the long-predicted green hydrogen renaissance has never come to fruition due to several factors, including the prohibitively high cost of production and the energy losses and inefficiencies associated with using green hydrogen rather than clean energy directly.

Hydrogen can be combusted at high temperatures but leaves only water vapor when it burns, making it an ideal candidate for industries that require high-temperature fuels. Moreover, unlike solar and wind energy, green hydrogen isn’t variable – it’s available as needed and can be easily stored and transported, offering greater flexibility and resilience.

But green hydrogen isn’t cheap, and it isn’t the most direct use of clean energy resources. Green hydrogen is hydrogen produced using renewable energy, making its life cycle more sustainable than that of gray hydrogen, which is produced using fossil fuels. Hydrogen produced using natural gas is sometimes referred to as ‘blue hydrogen’ and is viewed as more sustainable than gray hydrogen and more cost-effective than green hydrogen. For years now, the cost of green hydrogen has been about three to five times that of grey hydrogen.

To date, green hydrogen has been crippled by a persistent gap between (ambitious) project planning and implementation. At the global level, fewer than 10% of planned green hydrogen projects had been implemented as of 2023. Tracking 190 projects over 3 years, a 2025 study identified “a wide 2023 implementation gap with only 7% of global capacity announcements finished on schedule.”

It’s clear that the considerable challenges faced by an industry-level switch to green hydrogen still outweigh the benefits in many, if not most, target sectors. But that equation may change in 2026. Scientists have persisted in green hydrogen research even as the industry has soured on its potential – and researchers have continued to make critical breakthroughs in recent months, proving that green hydrogen isn’t a lost cause after all.

A new breakthrough system using waste material in the production process “successfully produced green hydrogen at a price that finally undercuts fossil fuels,” according to a recent report from Interesting Engineering. The new system, developed by a joint team from China Agricultural University and Nanyang Technological University, uses sugars derived from agricultural waste (such as wheat stalks) in the place of oxygen, making the overall production cycle far cheaper than standard methods, at just $1.54 per kilogram (around $0.70 per pound).

The study, published late last year in the scientific journal eScience, describes that “glucose is selectively electrooxidized to formate with high yields of up to 80%, instead of water being oxidized into oxygen; the former circumvents the need for costly membranes to separate the hydrogen and oxygen gaseous products.” The result is a much more efficient and low-cost process with lower levels of energy required to achieve electrolysis. “The revenue from the formate co-product can lower the levelized cost of hydrogen from water electrolysis by $4.63/kg of hydrogen produced, making it competitive with grey hydrogen generation,” the study continues.

The potential ramifications of this breakthrough are enormous. “This could effectively end the decade-long economic standoff between clean energy and natural gas,” reports Interesting Engineering. However, just because green hydrogen is finally an affordable alternative does not necessarily mean that it’s the best alternative.

A 2022 report by the International Renewable Energy Agency (IRENA) warned against the “indiscriminate use of hydrogen,” cautioning policy-makers to weigh their priorities carefully and to consider that extensive use of hydrogen “may not be in line with the requirements of a decarbonised world, since green hydrogen “requires dedicated renewable energy that could be used for other end uses.” In other words, just because we can use green energy for hydrogen without losing money, we are still losing efficiency, and those clean energy resources may be better used elsewhere.

By Haley Zaremba for Oilprice.com

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