Skip to main content


Hydrogen is increasingly recognized as a valuable pathway for meeting ambitious climate goals – particularly in reducing emissions from hard-to-abate sectors. Expanding the role of hydrogen in decarbonization requires cost-effective production of low-carbon hydrogen from all sources. Today, most hydrogen is produced with natural gas, which, if paired with CCUS, offers a promising and scalable low-carbon fuel source.

API supports policies that advance the technology-neutral development of low-carbon hydrogen and the use of hydrogen in carbon-reduction efforts. API will also advocate for and support policies that advance hydrogen infrastructure buildout – a critical and necessary component of expanding hydrogen demand. Based on the natural gas and oil industry’s research abilities and expertise, we can help further advocate for the development and promotion of promising hydrogen technologies.

What is Hydrogen?

Hydrogen is the world’s most abundant element, and already plays an important role in some segments of the energy value chain (refining and chemical manufacturing mostly). Despite its abundance, Hydrogen does not exist in a pure form naturally and must be separated and segregated. While there are several, and growing, hydrogen production/separation methods, they are typically categorized into three broad categories.

  • Traditional production—this is hydrogen produced by Steam Methane Reforming (SMR) that mainly uses natural gas as a feedstock, in which CO2 emissions are not captured. Sometimes people refer to this method of production as “gray hydrogen.”

  • Hydrogen production using CCUS—this generally refers to traditional production using SMR fitted with carbon capture. This is typically referred to as “blue hydrogen.”

  • Electrolysis—Rather than relying on the hydrogen molecules in methane, electrolysis splits water (H2O) to isolate the hydrogen. Sometimes, the electricity is supplied by renewable energy and is often referred to as “green hydrogen.” Electricity sources can vary and an electrolyzer can be connected to the power grid or co-located with an electric generating facility using renewables, natural gas, nuclear, or other sources.

Generally, API refers to all new, low-emissions methods of hydrogen production as “low-carbon hydrogen” rather than categorizing them by color.

About 95% of global hydrogen is produced using either natural gas or coal as a feedstock, but this number is expected to decrease as governments push green hydrogen production. Globally, today hydrogen production accounts for about 6% of natural gas demand.

Demand for Hydrogen?

Today, most hydrogen demand comes from heavy industry—primarily the chemicals and refining sectors. This hydrogen is also mostly produced as “gray hydrogen” and, globally, its production leads to about as much in CO2 emissions as the United Kingdom and Indonesia combined, or about 830 million tons. Hydrogen produced via electrolysis or with carbon capture can replace gray hydrogen production and, with a robust blue hydrogen economy, provide new markets for natural gas.

McKinsey estimates that with the right enabling policy/regulatory environment, new markets pickup can grow hydrogen demand by nearly six-fold by 2050. The report estimates that the transportation sector will be the largest driver of hydrogen demand growth with heavy industry, residential/commercial, and power generation coming behind.

Hydrogen and Decarbonization

When combusted, hydrogen emits no carbon. Thus, if hydrogen is produced through renewable powered electrolysis or SMR with carbon capture, its lifecycle emissions are minimal. The use of hydrogen in hard to decarbonize sectors (particularly those that are hard to power with electricity like heavy duty transportation or high heat industry) is widely recognized as a key pathway to for decarbonization.