What Drove The Hydrogen Madness? The Detour Was Avoidable
The problems were known long before the latest hype cycle.
In May 2023, a senior executive responsible for decarbonization at a multibillion-dollar transportation company asked me, with considerable exasperation, what drove the “madness on hydrogen.” They had an engineering degree, an MBA, serious strategy experience and direct responsibility for making a large transportation business less carbon intensive. Hydrogen proposals kept arriving for applications where the energy balance and economics looked awful. That conversation became What Drives This Madness On Hydrogen?, in which I described a many-headed hydra of fossil-fuel interests, technology companies protecting investments, governments protecting industries and revenues, financiers following advisers and enthusiasts reinforcing the whole structure through confirmation bias, familiarity and loss aversion.
Three years later, I would keep the broad diagnosis but change its weighting. I put too much explanatory emphasis on individual psychology and not enough on organized economic interests, long-range corporate strategy, competence preservation, lobbying and institutional processes capable of producing adverse evidence and then preventing it from terminating a favoured pathway. The cancellations, missing customers, cost overruns and operating failures that have accumulated since 2023 are useful because they validate earlier analysis, not because they revealed problems that could not have been understood beforehand. By the time I wrote the Madness article, the case against a general-purpose hydrogen economy had already been made repeatedly from first principles by credible engineers, scientists and energy analysts, and I had spent several years independently reaching much the same conclusions through work on synthetic fuels, transportation, hydrogen demand and proposed North African hydrogen exports.
I certainly was not first. Ulf Bossel, Baldur Eliasson and Gordon Taylor had laid out the thermodynamic problem in The Future of the Hydrogen Economy: Bright or Bleak? in 2003, tracing the electricity required to produce, compress, transport, store and use hydrogen and showing why a hydrogen infrastructure was intrinsically much more energy intensive than using high-quality electricity more directly. The US National Academies examined the complete hydrogen supply chain in 2004, including production costs, efficiency, distribution, storage and end use, and warned that the barriers were formidable and that even an aggressive transition would take decades to have substantial effects. Joseph Romm, who had served in senior US Department of Energy roles, brought the argument to a much wider policy audience with The Hype About Hydrogen, warning during the previous hydrogen boom that promises of future hydrogen vehicles risked deferring technologies capable of reducing emissions much sooner.
The warnings continued as the current hype cycle emerged. Chemical engineer Paul Martin was publicly dissecting fuel-cell vehicle energetics by 2017 and by March 2019 was working through the much larger implications of making hydrogen from renewable electricity. Cambridge engineering professor David Cebon brought the same first-principles approach to heavy transport, heating and storage, eventually framing the strategic choice as a hydrogen economy versus an electron economy. By 2022 Jan Rosenow could publish a review of 32 independent studies of hydrogen heating and find that none supported widespread use for space and water heating. This was not a tiny contrarian literature that appeared after deployments began failing. Serious analysts had been repeatedly pointing to the same structural problems.
I happened to be fortunate in one respect. Instead of receiving a future green-hydrogen price from a trusted analytical source and treating it as an input, several assignments forced me to build the chain myself. In 2019, my assessment of Carbon Engineering’s air-to-fuel proposition required putting direct-air carbon capture, electrolytic hydrogen, synthesis losses and electricity consumption into the same calculation. The completed cost comparison with direct use of electricity found the synthetic-fuel pathway dramatically more expensive than putting the electricity directly into a battery vehicle even when I made assumptions favourable to the process. Hydrogen was not a detail in the result; making it and then processing it again was one of the principal reasons the energy and cost chain deteriorated so badly.
By 2020 I was explicitly arguing that the latest hydrogen-economy cycle was mostly hype while retaining hydrogen’s legitimate industrial uses. In 2021 my hydrogen-demand projection was already taking most road transportation, building heat and routine energy storage out of hydrogen’s future growth story. The 2022 Northern Africa work then forced the supply economics into the foreground. Europe was imagining Morocco, Algeria, Egypt and other countries making enormous quantities of renewable hydrogen cheaply enough to export north as a new energy commodity. My conclusion in Hydrogen Can Be Green, But Won’t Be Cheap was that those countries would generally obtain more value by using renewable electricity domestically and exporting electricity where practical. Green hydrogen could certainly be produced. There was no convincing basis for expecting it to become remotely as cheap as the export, transport and energy-carrier narratives required.
Michael Liebreich provides a useful example of how even a very strong analyst could reach the right conclusion about hydrogen demand while inheriting the wrong assumption about hydrogen supply. His 2020 work was already sharply skeptical of most proposed uses, and his subsequent Hydrogen Ladder became one of the most influential ways of explaining why direct electrification should come first. On supply, however, BloombergNEF’s analysis assumed steep electrolyzer learning, extraordinarily cheap renewable electricity and green hydrogen eventually approaching roughly a dollar per kilogram in favourable markets. BloombergNEF was a source Liebreich had every reason to trust, but that meant much of the complete electrolysis-plant economics sat inside an institutional black box rather than being rebuilt from the components upward.
Liebreich opened that box much faster than most institutions. Within a few years he was interrogating electricity prices, utilization, hydrogen transport, ammonia conversion and full project economics much more aggressively. His later Clean Hydrogen’s Missing Trillions challenged the very low electricity prices and capital costs required to make major hydrogen strategies work, and his subsequent analysis has moved to the conclusion that green hydrogen has no plausible pathway to the affordability once assumed because electrolyzer stacks are only one component while electricity and heavy electrical, chemical and civil engineering do not have five- or tenfold cost reductions available. The episode is instructive precisely because Liebreich is such a capable analyst. If someone able to tear apart the assumptions can temporarily inherit the wrong answer from a source he reasonably trusts, ministers, executives and journalists consuming the headline numbers are even more vulnerable.
The core supply problem was straightforward. Electricity dominates the variable cost of electrolytic hydrogen, so operators want it to be extremely cheap. The cheapest wind and solar electricity is intermittent, however, and restricting production to the lowest-price hours leaves a capital-intensive industrial facility idle for much of the year. Raising utilization requires overbuilding generation, combining resources, adding transmission or storage, or purchasing electricity during increasingly expensive periods. Cheap electricity and high utilization both make hydrogen cheaper, but they cannot simply be assumed independently at their most favourable values. My 2022 analysis called this an economic seesaw because pushing one side down tends to push the other up.
The electrolyzer stack was also repeatedly confused with the electrolysis plant. A real facility needs transformers, rectifiers, water treatment, pumps, cooling, controls, purification, compression, piping, buildings, safety equipment and substantial grid infrastructure. Much of that comes from mature industrial supply chains that have already experienced decades of cost optimization. Solar modules and battery cells are very different products: standardized, produced in enormous quantities, amenable to extensive factory automation and accumulating huge numbers of manufacturing doublings. A site-engineered chemical and electrical plant does not acquire the cost curve of a solar module merely because both technologies are associated with decarbonization.
By 2025, actual project costs were confirming what the reference class had suggested. My comparison of major institutional electrolyzer-system forecasts with observed project costs found earlier projections undershooting real-world evidence by roughly 60% to 300%, with major organizations progressively revising their assumptions upward. The embarrassing aspect was not that forecasts can be wrong. Electrolysis was not a mysterious new industrial process, balance-of-plant engineering was familiar, learning-curve analysis was mature and reference-class forecasting existed precisely to prevent analysts from assuming that a favoured technology would enjoy exceptional cost decline merely because advocates expected huge scale.
Storage and distribution made the cheap-green-hydrogen proposition harder again. Hydrogen leaving an electrolyzer has to be compressed and stored, moved through pipelines or trailers, liquefied at considerable energetic expense, or converted into another molecule and processed again. Pipelines become cheaper per kilogram when enormous volumes flow consistently, which generated one of the recurring circular arguments of hydrogen policy: cheap hydrogen would produce demand, demand would fill pipelines, pipelines would lower delivery costs and those lower costs would make hydrogen cheap. Similar reasoning surrounded “surplus” renewable electricity, which was treated as though enormous quantities of nearly free clean power would sit around waiting for electrolyzers rather than being competed for by batteries, heat pumps, electric vehicles, transmission, industry and other flexible loads capable of extracting considerably more useful work from each megawatt-hour.
The distinction between green hydrogen and cheap hydrogen was therefore never peripheral. Expensive green hydrogen can decarbonize applications that genuinely require hydrogen molecules. Ammonia, methanol and some prospective iron-production pathways can justify paying a premium because hydrogen has chemical value. A general-purpose hydrogen energy economy required something much more ambitious: hydrogen had to consume multiples of the electricity used by direct-electric competitors, pay for additional conversion equipment and carry the cost of a new storage and distribution system while somehow reaching customers at a competitive price. The recurring $1 and $2 per kilogram forecasts were not harmless optimism about a component cost. Vast portions of the proposed hydrogen economy disappeared if those prices did not materialize.
Up to this point, the story is about why cheap green hydrogen was never a credible foundation for a new energy economy. The more uncomfortable part is why fossil-fuel companies and automakers had long-range reasons to keep that future politically alive, and why some public institutions ended up telling executives and policymakers almost the opposite of what their own technical evidence showed.
