Most hydrogen gas is manufactured from fossil fuels, not found in nature. About 83% of the world’s hydrogen supply comes from natural gas or coal, processed at high temperatures to strip hydrogen atoms free. The United States alone produces roughly 10 million metric tons of hydrogen per year, and over 80% of that comes from a single method: steam methane reforming. But hydrogen also comes from water, biological processes, and even deep underground, and these alternative sources are growing in importance.
Natural Gas: The Dominant Source
Steam methane reforming, or SMR, is the workhorse of the hydrogen industry. The process blasts natural gas with high-temperature steam, between 700°C and 1,000°C, under pressure ranging from 3 to 25 bar. A catalyst helps methane and water molecules react, producing hydrogen gas and carbon monoxide. A second step called the water-gas shift reaction then combines that carbon monoxide with more steam to squeeze out additional hydrogen and carbon dioxide.
The final step purifies the gas. A technique called pressure-swing adsorption strips away carbon dioxide and other impurities, leaving nearly pure hydrogen. The entire process is well established and relatively cheap. Capital costs for an SMR plant run about $2.00 per kilogram of hydrogen capacity, making it far less expensive to build than the alternatives. The trade-off is carbon dioxide: every kilogram of hydrogen produced this way releases CO₂ into the atmosphere. This is what the industry calls “gray hydrogen.”
Adding carbon capture equipment to an SMR plant creates “blue hydrogen.” The CO₂ is captured before it reaches the atmosphere and stored underground. The capital cost roughly doubles to $4.47 per kilogram of capacity, and the process still relies on natural gas as a feedstock.
Coal Gasification
Coal can also be converted into hydrogen through gasification, a process that heats coal to extreme temperatures in the presence of oxygen and steam. The coal breaks down in three stages. First, the mixture heats itself through chemical reactions. Then it passes through a high-temperature zone where it decomposes into lighter hydrocarbons, tar, and char. Finally, carbon dioxide and water are chemically reduced into carbon monoxide, hydrogen, and methane.
Higher temperatures, higher pressures, and more steam all push the process toward greater hydrogen output. The resulting mix of gases, called syngas, goes through the same water-gas shift reaction used in natural gas reforming to extract more hydrogen. Coal-derived hydrogen is sometimes labeled “black” or “brown” hydrogen depending on the type of coal used. It produces more CO₂ per kilogram of hydrogen than natural gas reforming, making it the most carbon-intensive production method.
Electrolysis: Splitting Water
Electrolysis takes a fundamentally different approach. Instead of breaking apart fossil fuels, it runs an electric current through water to separate hydrogen and oxygen. The minimum energy needed to produce one kilogram of hydrogen this way is about 33 to 40 kilowatt-hours, depending on how you account for thermodynamic losses. In practice, real-world systems use more.
Two main types of electrolyzers compete for dominance. Proton exchange membrane (PEM) electrolyzers use a thin polymer membrane and can operate at high pressures, above 30 bar. They respond quickly to changes in power supply, which makes them a good match for wind and solar energy that fluctuates throughout the day. Alkaline electrolyzers are an older, more established technology that uses liquid electrolyte solutions and nickel-based electrodes. They generally consume more energy per kilogram of hydrogen than PEM systems.
When powered by renewable electricity, electrolysis produces “green hydrogen” with zero direct carbon emissions. When powered by nuclear energy, the result is called “pink hydrogen.” Despite the environmental appeal, electrolysis contributes less than 1% of hydrogen production in the United States, and projections from the U.S. Energy Information Administration suggest that share will remain small through 2050, even with tax credits designed to encourage it. The capital cost of a PEM electrolyzer sits at about $5.24 per kilogram of capacity, more than double the cost of a standard SMR plant.
Methane Pyrolysis: Turquoise Hydrogen
A newer approach splits natural gas without any steam or air involved. Methane pyrolysis heats methane above 1,000°C, causing it to decompose into hydrogen gas and solid carbon. Because there’s no oxygen in the reaction, no CO₂ is produced. The solid carbon comes out primarily as carbon black, a material used in tires, inks, and industrial coatings.
The economics of turquoise hydrogen depend heavily on selling that carbon black. Revenue from the solid byproduct can significantly improve profitability. There’s a catch, though: if turquoise hydrogen ever scaled to meet global demand, the carbon black produced would be roughly 12 times larger than the current global market for that material. Oversupply would crash the price and undermine the business case.
Biological Production
Certain bacteria produce hydrogen gas as a natural byproduct of digesting organic material. In a process called dark fermentation, microorganisms break down sugars (typically glucose) in the absence of light. The bacteria convert glucose to pyruvate through their normal metabolic pathways, and hydrogen gas is released along the way.
The most studied hydrogen-producing organisms are Clostridium species, which are strict anaerobes that generate butyric acid and hydrogen as their main outputs. Facultative anaerobes like E. coli and Enterobacter also produce hydrogen by decomposing formic acid through their own metabolic pathways. Researchers are particularly interested in using organic wastewater or food waste as the feedstock, which would simultaneously treat waste and generate fuel. Biological hydrogen production remains experimental and far from commercial scale, but it represents one of the few ways to produce hydrogen from waste materials rather than virgin resources.
Natural Hydrogen in the Earth’s Crust
Hydrogen also forms naturally underground through geological processes. When iron-rich minerals in the Earth’s crust react with water, they can release hydrogen gas. This “white” or “geologic” hydrogen accumulates in underground reservoirs, trapped beneath rock layers the same way natural gas is.
In 2024, the U.S. Geological Survey released its first-ever map of potential geologic hydrogen deposits across the United States. The map identifies several promising regions: a mid-continent zone covering Kansas, Iowa, Minnesota, and Michigan; the Four Corners states of Arizona, Colorado, New Mexico, and Utah; the California coast; and areas along the Eastern seaboard. These regions have the right combination of hydrogen-generating rock, porous reservoir rock to hold the gas, and impermeable seals to trap it. If geologic hydrogen can be extracted economically, it would provide a source of clean hydrogen with no production energy costs at all.
The Color-Coded System
The hydrogen industry uses a color system to quickly communicate how hydrogen was made and what its carbon footprint looks like:
- Gray: Natural gas reforming without carbon capture. The cheapest and most common.
- Blue: Natural gas reforming with carbon capture and underground storage.
- Green: Water electrolysis powered by renewable energy. Zero direct emissions.
- Pink: Water electrolysis powered by nuclear energy.
- Turquoise: Methane pyrolysis producing solid carbon instead of CO₂.
- Black/Brown: Coal gasification, distinguished by coal type.
- White: Naturally occurring geologic hydrogen.
The system started simply, with just “green” and “gray” to distinguish clean from dirty production. As new methods emerged, the palette expanded. The colors carry no regulatory meaning. They’re industry shorthand, but they’ve become the standard way to talk about hydrogen’s origins and environmental impact in a single word.