Oil companies are looking for avenues to move towards operations with net zero emissions. Options such as renewable energy, biofuels, hydrogen and low-carbon hydrogen – all of which have a low to zero net carbon footprint – present attractive alternatives for these players.

Leading players in the oil and gas industry are gradually incorporating aspects of the hydrogen economy into their portfolios. This primarily includes the production of blue and green hydrogen as well as investments in hydrogen distribution and refueling to facilitate the fuel cell electric vehicles market.

In 2022, more than one-third of the top 50 companies for low-carbon hydrogen capacity belonged to the oil and gas industry. Nevertheless, companies from various sectors have committed high investments to the low-carbon hydrogen value chain, which could transform the competitive landscape in the coming years.

Hydrogen is light and storable, and does not produce direct carbon emissions or greenhouse gases when combusted. It can be produced from numerous energy sources, such as natural gas and coal, as well as from the electrolysis of water using nuclear power or renewable energy sources, such as biomass, wind and solar. However, low-carbon hydrogen production is significantly more expensive compared to traditional hydrogen production methods from fossil fuels. Additionally, hydrogen takes a lot more space to store compared to other gases.

Refining and petrochemical will remain the core hydrogen demand centres for the foreseeable future, while applications such as metallurgy, transportation and power generation will emerge to be key growth avenues. Both blue and green hydrogen will find prominent demand from the newer avenues. Further details about trends influencing the hydrogen theme, an outlook for low-carbon hydrogen adoption in key verticals, and the role of oil and gas companies in the hydrogen economy are analysed in GlobalData’s new theme report, ‘Hydrogen (2023)’.