Strait of Hormuz diesel shock threatens mining industry
Oil exports through the Strait of Hormuz have cut oil exports from approx 20 mb/d before the war to a “trickle“, driving diesel and petrol
March 18, 2026
Hydrogen is emerging as a potential tool for decarbonising refining, chemicals, steel, shipping and other hard-to-electrify industries.
Capital spending on low-emissions hydrogen nearly doubled to $7 billion in 2025 and could approach $10 billion in 2026, led by electrolyser projects in China and Europe and carbon-capture-based production in the US.
Hydrogen is the lightest and most abundant element in the universe. On Earth, however, it is rarely found in a pure form. It is usually bonded with other elements in substances such as water, natural gas and biomass.
To use hydrogen as a fuel or industrial material, it must first be separated from these compounds. This requires energy, meaning hydrogen is an energy carrier rather than a primary energy source. It can store, transport and deliver energy originally supplied by electricity, natural gas, coal, biomass or other sources.
Hydrogen can be consumed in a fuel cell to produce electricity, water and heat. It can also be burned in engines, turbines and industrial furnaces or converted into products such as ammonia, methanol and synthetic fuels.
Its climate impact depends on how it is produced. Hydrogen itself contains no carbon, but producing it can generate substantial greenhouse-gas emissions when fossil fuels are used without effective carbon capture.
Hydrogen is already an essential industrial feedstock.
Replacing conventionally produced hydrogen in these established markets with lower-emissions alternatives is one of the most direct opportunities to reduce emissions.
Refineries use hydrogen to remove sulphur and other contaminants from crude-oil products. It is also used in hydrocracking, which converts heavier petroleum fractions into lighter, higher-value fuels.
As demand for conventional petroleum products changes, hydrogen consumption in refining may decline in some markets. Production of biofuels and synthetic fuels could create alternative refining uses.
Hydrogen can replace coal or natural gas as the reducing agent used to remove oxygen from iron ore. When low-emissions hydrogen is used in direct-reduced iron production, it can substantially reduce emissions from primary steelmaking.
This application requires suitable iron ore, reliable hydrogen supplies and access to low-carbon electricity. New furnaces, storage systems and supporting infrastructure may also be needed.
Hydrogen and hydrogen-derived fuels may be useful where direct electrification is difficult.
Hydrogen is unlikely to be the most efficient option for every type of transport. Passenger cars and short-distance vehicles can often use electricity more directly.
Electrolysers can use electricity to split water into hydrogen and oxygen. The hydrogen can then be stored and later used in a fuel cell, engine or turbine.
This process may provide long-duration or seasonal energy storage where batteries become costly or impractical. Hydrogen can also support backup power, remote energy systems and electricity generation during prolonged periods of low renewable output.
However, converting electricity into hydrogen and then back into electricity involves significant energy losses. Direct electricity use and batteries are usually more efficient for short-duration applications.
Hydrogen can produce high-temperature heat for processes such as metals, ceramics and glass manufacturing. Its suitability depends on cost, equipment requirements, flame characteristics and competition from electric heating, biomass or carbon capture.
Steam methane reforming uses high-temperature steam to separate hydrogen from methane. A related process called autothermal reforming uses steam and controlled amounts of oxygen.
Both processes produce carbon dioxide. Without carbon capture, this hydrogen has a relatively high emissions footprint. Methane leakage during natural-gas production and transportation adds to its lifecycle impact.
Coal can react with oxygen and steam to produce a hydrogen-rich gas. This pathway is generally carbon-intensive unless a substantial proportion of the resulting carbon dioxide is captured and permanently stored.
Electrolysers use electricity to split water into hydrogen and oxygen. Several technologies are available or under development:
Electrolysis creates no carbon emissions at the point of production. Its lifecycle footprint depends on the electricity source, manufacturing supply chain and utilisation of the equipment. Hydrogen made with renewable or nuclear electricity can have low emissions, while electrolysis powered by a carbon-intensive grid may not. International Energy Agency
Hydrogen can be produced by gasifying biomass, reforming biomethane or using biological processes. The emissions depend on the feedstock, land use, processing energy and management of methane and carbon dioxide.
Combining sustainable biomass with carbon capture may potentially remove carbon dioxide from the atmosphere, but results are highly dependent on the full supply chain.
Hydrogen can occur naturally in underground geological formations. Interest in this resource—sometimes called geological, natural, white or gold hydrogen—is growing, but its commercial potential remains uncertain.
Questions include how deposits form, whether they can be produced economically, how quickly they replenish and what environmental effects extraction might create.
Hydrogen is colourless. Terms such as green, grey and blue describe production pathways rather than the physical appearance or chemical properties of the gas.
There is no universal colour standard, and labels do not provide a complete assessment of environmental performance. Carbon intensity depends on factors including electricity generation, methane leakage, carbon-capture rates, water use, transport and equipment manufacturing.
For this reason, regulators and buyers are increasingly focusing on measured lifecycle emissions rather than colour alone.
Hydrogen has high energy content by weight but low energy density by volume. This makes storage and transportation more challenging than for many conventional fuels.
Hydrogen can be compressed and stored in high-pressure tanks. This is used in fuel-cell vehicles, industrial facilities and smaller distribution systems.
Compression consumes energy, and tanks must withstand high pressure while preventing leakage.
Cooling hydrogen to approximately −253°C turns it into a liquid. Liquefaction increases its volumetric energy density but requires substantial energy and highly insulated cryogenic equipment.
Some hydrogen gradually evaporates as heat enters a storage tank. Managing this boil-off gas is an important part of liquid-hydrogen systems.
Dedicated pipelines can transport large volumes of hydrogen between producers and industrial users. Some existing natural-gas infrastructure may be repurposed, but hydrogen’s small molecules and its effect on certain metals can require pipeline modifications or replacement.
Blending limited amounts of hydrogen into natural-gas networks is also possible in some systems. The value of blending depends on pipeline compatibility, end-user equipment and whether the hydrogen can be used efficiently.
Hydrogen can be converted into ammonia, methanol, synthetic methane or liquid organic hydrogen carriers for storage and shipping.
These carriers may be easier to transport than pure hydrogen, but conversion and recovery consume energy. Ammonia can be used directly in fertiliser production and potentially as a fuel, avoiding the need to convert it back into hydrogen in some applications.
Potential hydrogen demand is influenced by:
The strongest early opportunities are generally concentrated in industrial clusters where large producers and consumers can share pipelines, storage and other infrastructure.
Scaling lower-emissions hydrogen requires more than building electrolysers.
Key constraints include:
Producing renewable hydrogen for widespread use could require significant new electricity generation. Using existing clean power for hydrogen can also create competition with direct electrification.
Hydrogen is not yet traded through a single transparent global market. Most production is consumed near where it is made, often within refineries, chemical plants and industrial complexes.
Its cost depends on:
Hydrogen-derived products such as ammonia may become internationally traded energy carriers because they are generally easier to ship than pure hydrogen.
Hydrogen is not automatically clean. Fossil-based production without carbon capture releases carbon dioxide, while natural-gas supply chains may emit methane.
Carbon capture can reduce emissions from certain production processes, but it rarely captures every source. The final footprint depends on the capture rate, energy used by the facility, upstream methane leakage and permanent storage of captured carbon.
Electrolysis is only as low-carbon as the electricity that powers it. Projects using new renewable or nuclear generation can produce low-emissions hydrogen, while projects relying on fossil-heavy grids may have a much larger footprint.
The timing and location of electricity consumption also matter. Certification systems may require producers to demonstrate a close relationship between hydrogen output and qualifying clean generation.
Electrolysis consumes purified water, while additional water may be required for cooling and electricity generation. The quantity can be manageable in many locations but may create concerns in water-stressed regions.
Seawater can be used after desalination, adding cost, energy consumption and brine-management requirements.
Escaped hydrogen is not itself a greenhouse gas in the same way as carbon dioxide or methane. However, it can indirectly affect atmospheric chemistry and extend the lifetime of methane.
Leak detection and prevention will therefore be important as production, pipeline and storage networks expand.
Fuel cells produce water and heat at the point of use. Burning hydrogen, by contrast, can create nitrogen oxides because of high combustion temperatures.
Burners and turbines may require emissions-control technologies even when the hydrogen itself contains no carbon.
Hydrogen has been used safely in industry for decades, but its physical properties require specialised design and operating procedures.
It is highly flammable, ignites easily and can burn with a flame that is difficult to see. Its small molecules can escape through tiny openings, while prolonged exposure can weaken some metals through hydrogen embrittlement.
Safe systems use ventilation, leak detection, suitable materials, pressure control, separation distances and emergency shutdown equipment. Hydrogen is non-toxic, but a large release in an enclosed space can displace oxygen.
Hydrogen development is increasingly concentrating on applications where direct electrification is difficult or hydrogen is already required. Fertiliser, refining, steel and chemical production offer clearer demand than broad proposals to use hydrogen everywhere.
Industrial hubs can connect multiple producers and consumers through shared pipelines, storage, ports and carbon-management infrastructure. Concentrating demand may lower costs and reduce the risk of building underused networks.
Ammonia, methanol and synthetic fuels may develop faster as traded commodities than pure hydrogen. They can use established shipping practices and have direct applications in industry and transport.
Definitions of renewable, clean and low-carbon hydrogen vary among countries. Certification systems are being developed to measure production pathways, electricity sources and lifecycle emissions.
These standards will influence eligibility for subsidies, international trade and the premium buyers are willing to pay.
Hydrogen must compete with batteries, heat pumps, electric furnaces and direct renewable electricity. Because every conversion step loses energy, hydrogen is most compelling where its chemical properties, storage potential or energy density provide a clear advantage.
Important indicators include:
Hydrogen could become an important part of a lower-carbon energy and industrial system, particularly in applications that cannot easily use electricity directly. Its strongest roles are likely to include replacing emissions-intensive hydrogen already used in industry, producing fertiliser and chemicals, reducing emissions from primary steelmaking and supplying selected long-distance transport fuels.
It is not a universal substitute for fossil fuels. Producing, compressing, transporting and converting hydrogen requires energy, infrastructure and investment. In many applications, direct electrification will be simpler and more efficient.
Hydrogen’s strategic value will ultimately depend on using it selectively and producing it with genuinely low lifecycle emissions. The key question is therefore not whether hydrogen is clean, but how it is made, how it is transported and where it delivers more value than the alternatives.
Oil exports through the Strait of Hormuz have cut oil exports from approx 20 mb/d before the war to a “trickle“, driving diesel and petrol
The global market for ammonia is forecast to increase x3 — from 200MT in 2020, to 600-700MT by 2050 — and 66% of this growth
The US is investing US$7billion to leverage nearly US$50 billion in private investment for the launch of seven hydrogen hubs across the country. “The nearly
Announced subsidies for low-carbon hydrogen have increased four times in the last two years, to US$280 billion, according to a new analysis by BloombergNEF. US$137
The most valuable US power company, NextEra Energy, is reportedly focusing on green energy for new growth. The new strategy comes as the company’s profits
BP have announced plans to invest up to US$2 billion by 2030 in a new green hydrogen cluster in Spain’s Valencia region. The 2GW plant
Welcome to The Oregon Group, an investment research team focused on critical minerals, mining, energy and geopolitics.
Our independent capital markets experts are sharing their boardroom expertise and institutional experience to help you profit and hedge your investment exposure during this time of unmissable opportunity.