Current hydrogen demand is dominated by petroleum refining and fertilizer production, and is supplied largely by fossil-fuel-based steam-methane reforming (SMR). Increasingly, however, demand for hydrogen will come from the energy transition, and will be supplied by a more diverse range of production schemes. This one-page reference provides an overview of the traditional and emerging uses of hydrogen, as well as the current and emerging methods of production.
Traditional H2 markets
Currently, hydrogen demand is 94 million metric tons, and is concentrated in a few industrial applications, including the manufacture of transportation fuels, fertilizer production and chemical manufacturing. These are sources of most hydrogen demand today.
Petroleum refining. The greatest current demand for hydrogen is from hydrocracking and hydrotreating processes at petroleum refineries. Hydrocracking catalytically breaks C-C bonds and hydrogenates to convert heavy oil fractions to lower-molecular-weight hydrocarbons for fuels, such as diesel. Hydrotreating removes heteroatoms, such as sulfur, from hydrocarbon molecules.
Ammonia manufacturing. A significant amount of hydrogen is used to make ammonia for synthetic fertilizers and other uses via the Haber-Bosch process. Using atmospheric nitrogen from air-separation units, the Haber-Bosch process combines hydrogen with N2 over a finely dispersed iron catalyst, accompanied by promoters.
Chemical production. Hydrogen is a critical component of many important industrial chemicals, such as methanol, hydrochloric acid, hydrogen peroxide, cyclochexane and oxo-alcohols. Hydrogen is also used in making some vitamins and pharmaceuticals.
Hydrogenation of oils. In food production, hydrogen is used for hydrogenate oils to prevent oxidation and to raise the smoke point of cooking oils, for example, partially hydrogenated vegetable oil.
Metals. Hydrogen is mixed with inert gases to generate a reducing atmosphere for some applications in the metallurgical industry, such as heat-treating of steel and welding.
Emerging H2 end-use markets
Emerging demand for hydrogen in a number of areas is nascent, but poised to grow rapidly over the next 10 to 15 years.
Power generation. Hydrogen could be used to blend with natural gas for commercial and residential heating, and could be used to generate electricity in the power sector.
Industrial heating. Hydrogen can replace natural gas or other fuels to fire industrial burners and heat boilers to provide low-carbon heat for industrial processes, and act as a reducing agent for the steel industry.
Renewable energy storage (Power-to-X). Hydrogen can be made using surplus renewable energy as a flexible offtake and storage medium to secure and balance renewable power supply.
Transportation. Hydrogen can be used as a zero-carbon transportation fuel for road vehicles, aviation and maritime applications, including in fuel cells, or for making synthetic, low-carbon fuels.
Rocket fuel. In liquid form, hydrogen can be a powerful propellant for the space industry.
H2 production methods
Hydrogen production processes are categorized by H2 “colors,” depending on the initial molecule being broken down, the energy source used to take hydrogen from it, and the byproducts of the chemical reaction. At present, most hydrogen produced is derived from fossil fuels (mostly natural gas, and some coal).
Production of low-carbon hydrogen is expected to grow rapidly in coming years. Table 1 outlines the different production schemes.
References
1. Gulli, C. Heid, B. and others, Global Energy Perspective 2023, McKinsey & Co., 2024. mckinsey.com.
2. U.S. Energy Information Administration, Energy Explained, www.eia.gov, accessed June 2024.
3. Moniz, E. and others, Hydrogen Market Formation: An Evaluation Framework, EFI Foundation, www.efifoundation.org, 2024.