Hydrogen is not a fossil fuel. It is an energy carrier, meaning it stores and delivers energy but must be produced from other sources. Coal, oil, and natural gas are fossil fuels because they formed over millions of years from ancient organic matter and can be extracted directly from the earth. Hydrogen, by contrast, rarely exists on its own in nature and has to be manufactured. The confusion is understandable, though, because more than 99% of the world’s hydrogen supply is currently made from fossil fuels.
Why Hydrogen Gets Confused With Fossil Fuels
The link between hydrogen and fossil fuels is practical, not chemical. Most hydrogen produced today comes from a process called steam methane reforming, where natural gas reacts with high-temperature steam (700°C to 1,000°C) to yield hydrogen, carbon monoxide, and carbon dioxide. The natural gas is the feedstock, not the hydrogen itself. In a second step called the water-gas shift reaction, the carbon monoxide reacts with more steam to produce additional hydrogen and more CO2.
Globally, hydrogen production consumed 290 billion cubic meters of natural gas and 90 million tonnes of coal equivalent in 2024, according to the International Energy Agency. That makes the hydrogen supply chain deeply entangled with fossil fuels even though the hydrogen molecule (H2) is not one. In the United States, about two-thirds of all hydrogen comes from steam methane reforming, with petroleum refiners using 68% of the total supply and fertilizer manufacturers using another 21%.
The Color System Explained
Because hydrogen can be made many different ways, the energy industry uses a color-coded system to distinguish production methods and their carbon footprints.
- Gray hydrogen comes from steam methane reforming with no emissions controls. It produces roughly 8.5 to 12 kg of CO2 for every kilogram of hydrogen, depending on how upstream methane leaks are counted. This is the dominant form on the market today.
- Blue hydrogen uses the same fossil fuel process but adds carbon capture and storage to trap most of the CO2. Emissions drop to roughly 1 to 5 kg of CO2 per kilogram of hydrogen, depending on how effective the capture system is and how much methane leaks during natural gas extraction.
- Green hydrogen is made by splitting water into hydrogen and oxygen using electricity from renewable sources like wind, solar, or hydropower. When the electricity is fully renewable, the process generates zero CO2 at the point of production.
- Turquoise hydrogen uses methane pyrolysis, which breaks natural gas into hydrogen and solid carbon instead of CO2. The solid carbon byproduct is easier to store or repurpose, resulting in roughly 2.6 kg of CO2 per kilogram of hydrogen.
The color you hear about most in policy discussions is green, because it represents a pathway to hydrogen with no fossil fuel involvement at all. Yellow hydrogen, produced through electrolysis using grid electricity, falls somewhere in between: its emissions depend entirely on how clean the local power grid is.
The Methane Leakage Problem
Even blue hydrogen, which is often marketed as “low-carbon,” carries a hidden environmental cost. Natural gas systems leak methane at various points during extraction, processing, and transport. Methane is a far more potent greenhouse gas than CO2 over shorter time horizons, so even small leaks can significantly erode the climate benefits of blue hydrogen.
Direct measurements over the past decade show large regional variations in methane leak rates, ranging from under 1% to over 3% of total gas production. Research published in Environmental Science & Technology modeled scenarios with leak rates between 0.6% and 2.1% based on data from the top 25 oil- and gas-producing countries, and found that higher leak rates can considerably reduce the climate benefits of switching to hydrogen in certain applications. At extremely high leak rates around 5.4%, the advantage of blue hydrogen over conventional fossil fuels shrinks dramatically.
How Clean Hydrogen Is Defined by Law
The U.S. government has set specific carbon intensity thresholds to define what counts as “clean” hydrogen. The Bipartisan Infrastructure Law defines clean hydrogen as having emissions equal to or less than 2 kg of CO2 equivalent per kilogram of hydrogen produced at the site of production. The Inflation Reduction Act uses a slightly different benchmark, setting the ceiling at 4 kg of CO2 equivalent per kilogram across the full lifecycle.
Gray hydrogen, at 8.5 to 12 kg of CO2 per kilogram, falls well outside both thresholds. Blue hydrogen can potentially qualify depending on the capture rate and upstream leak management. Green hydrogen, with zero production emissions, easily meets either standard.
Cost Is the Main Barrier to Change
The reason fossil-derived hydrogen still dominates is straightforward: it’s cheaper. Gray hydrogen costs $1.50 to $2.50 per kilogram. Blue hydrogen runs $2.00 to $3.50, with the added expense of carbon capture equipment. Green hydrogen currently costs $3.50 to $6.00 per kilogram, making it two to four times more expensive than gray.
Several forces are working to close that gap. The Inflation Reduction Act offers tax credits of up to $3.00 per kilogram for qualifying clean hydrogen, which could bring green hydrogen close to cost parity with gray in the near term. The Department of Energy’s Hydrogen Shot Initiative has set a target of $1.00 per kilogram for clean hydrogen by 2031, banking on cheaper renewable electricity, better electrolyzer technology, and economies of scale. Low-emissions hydrogen production grew 10% in 2024 and is projected to reach 1 million tonnes in 2025, but that still represents less than 1% of global output.
What This Means in Practice
Hydrogen itself is not a fossil fuel any more than electricity is. Both are energy carriers that take on the environmental profile of whatever source produces them. A kilogram of hydrogen made from solar-powered electrolysis has nothing in common, environmentally, with a kilogram made from natural gas reforming, even though both are chemically identical H2 molecules.
The practical reality is that the hydrogen economy today is overwhelmingly fossil-powered. When someone refers to “hydrogen energy” without specifying a color, it almost certainly means gray hydrogen derived from natural gas. That distinction matters if you’re evaluating hydrogen-powered vehicles, industrial processes, or home heating proposals. The climate benefit of hydrogen depends entirely on how it was made, and right now, the vast majority is made from the same natural gas that heats homes and generates electricity.