- You have probably heard of hydrogen and know that it is the most abundant element in the universe. But did you know that hydrogen can be utilised as an energy and fuel source? Hydrogen can be used in a variety of different sectors including industry and transport. It can reduce the carbon footprint of fertiliser production, allow the storage of energy from solar panels and wind turbines, and be used as a fuel for vehicles.
What Is Hydrogen and Why Is It Important for Renewable Energy?
Hydrogen is attracting increasing attention as countries look for ways to reduce emissions from industry, transport and other parts of the economy that can be difficult to electrify directly.
Australia is particularly well placed to participate in the emerging hydrogen economy. The country has some of the world's strongest renewable energy resources, an established energy and resources sector, and a government strategy focused on developing a competitive clean hydrogen industry.
But what exactly is hydrogen? How is it produced? And why could renewable hydrogen become an important part of Australia's energy transition?
What is hydrogen?
Hydrogen is the lightest chemical element and the first element in the periodic table.
In its pure form, hydrogen is a colourless, odourless gas. However, molecular hydrogen is not generally found naturally in large quantities as a standalone gas at the Earth's surface. It is usually bound to other elements, including oxygen in water and carbon in hydrocarbons.
This means hydrogen generally needs to be separated from another substance before it can be used.
That distinction is important because hydrogen is an energy carrier rather than a primary energy source.
The environmental impact of hydrogen therefore depends largely on how it is produced.
Why is hydrogen considered an energy carrier?
An energy carrier is something that can store, transport and deliver energy, but which is not itself the original source of that energy.
Electricity is another example.
Hydrogen can be produced using electricity and then stored or transported for later use.
This creates an interesting possibility for renewable energy.
Wind and solar farms do not always generate electricity at exactly the time when demand is highest. Hydrogen electrolysers can potentially use electricity when renewable generation is available to produce hydrogen, which can then be stored and used later or supplied to industrial and transport applications.
In this sense, hydrogen can help connect renewable electricity with sectors that may be difficult to electrify directly.
How is hydrogen produced?
There are several ways to produce hydrogen.
The most common production methods today use fossil fuels.
Other pathways use electricity to split water into hydrogen and oxygen.
The industry often uses colours such as green, blue and grey as shorthand for different production pathways, although these terms are not universally standardised.
The production process matters because it determines the emissions associated with making the hydrogen.
What is green hydrogen?
Green hydrogen, also commonly called renewable hydrogen, is produced by splitting water into hydrogen and oxygen using electrolysis powered by renewable electricity.
The basic process is:
Renewable electricity + water → hydrogen + oxygen
An electrolyser uses electricity to separate the hydrogen and oxygen molecules in water.
When the electricity comes from renewable sources such as wind or solar, the hydrogen can be produced with very low greenhouse gas emissions.
However, it is more accurate to describe green hydrogen as a low-emissions or renewable hydrogen pathway rather than claim that every project has zero emissions across its entire lifecycle.
Manufacturing the electrolyser and other equipment, generating and transmitting electricity, sourcing water, constructing infrastructure and transporting equipment all have associated environmental impacts.
The emissions intensity therefore depends on the specific project and its energy and supply chains.
What is grey hydrogen?
Grey hydrogen is generally produced from natural gas through steam methane reforming without carbon capture.
The process produces hydrogen and carbon dioxide.
The carbon dioxide is generally released into the atmosphere.
Grey hydrogen is currently one of the dominant forms of hydrogen production globally.
The International Energy Agency reported that global hydrogen production remained dominated by unabated fossil fuels in 2025.
What is blue hydrogen?
Blue hydrogen is generally produced from natural gas using a reforming process combined with carbon capture, utilisation and storage (CCUS).
The intention is to capture a portion of the carbon dioxide generated during production rather than releasing it directly into the atmosphere.
Blue hydrogen can therefore have lower emissions than conventional grey hydrogen, but carbon capture does not necessarily eliminate all emissions associated with the production pathway.
The overall emissions profile depends on factors including capture rates, energy consumption, methane emissions associated with natural gas production and transport, and the effectiveness of carbon storage.
What are the other hydrogen colours?
The hydrogen industry also uses other colour terms, including:
Turquoise hydrogen
Produced using methane pyrolysis, which creates hydrogen and solid carbon rather than directly producing carbon dioxide as the main carbon-containing product.
Pink hydrogen
Generally refers to hydrogen produced through electrolysis using electricity generated by nuclear power.
Yellow hydrogen
Often used to describe hydrogen produced through electrolysis powered by solar electricity, although terminology varies between sources.
White or geological hydrogen
Refers to naturally occurring hydrogen found underground. This is an emerging area of exploration and remains at an early stage of commercial development.
Because colour terminology is not globally standardised, the most useful way to compare hydrogen projects is to look at the actual production technology and emissions intensity, rather than the colour alone.
Why is everyone talking about green hydrogen?
Hydrogen has been used for decades in established industrial applications, particularly in refining and chemical production.
What is changing is the possibility of producing hydrogen with significantly lower emissions and using it in new applications.
The International Energy Agency estimates that global hydrogen demand surpassed 100 million tonnes in 2025. However, most demand remains concentrated in traditional applications such as refining and industry, while newer uses still account for a relatively small share.
Low-emissions hydrogen production grew by around 20% in 2025, reaching almost 1 million tonnes.
That is significant growth, but it remains a small share of total global production.
The industry is therefore moving forward, but it is still in the process of scaling.
Why does hydrogen matter for the energy transition?
Hydrogen could help decarbonise sectors where direct electrification is technically difficult, expensive or impractical.
Potential applications include:
- heavy industry
- steel and metals
- chemicals
- fertiliser production
- heavy transport
- shipping
- aviation-derived fuels
- industrial heat
- long-duration energy storage.
The most promising applications are not necessarily those where hydrogen is simply another way to use energy.
Instead, hydrogen can be particularly valuable where electricity cannot easily provide the required energy density, chemical properties or high-temperature heat.
Hydrogen and hard-to-abate industries
Some industrial processes require molecules rather than electricity.
This is particularly relevant to sectors such as fertiliser production, chemicals and parts of the metals industry.
For example, hydrogen is an important feedstock for producing ammonia, which is widely used in fertiliser manufacturing.
Replacing fossil-fuel-derived hydrogen with renewable hydrogen can therefore reduce emissions from an existing industrial process without fundamentally changing the role hydrogen plays in that industry.
Other applications could involve using hydrogen as a reducing agent in the production of lower-emissions metals.
Hydrogen in transport
Hydrogen can also be used as a transport fuel.
Fuel-cell electric vehicles convert hydrogen into electricity through an electrochemical reaction, producing water as the main direct by-product at the vehicle.
Hydrogen can be particularly relevant to applications where long range, rapid refuelling and high vehicle utilisation are important.
Potential applications include heavy trucks, buses and some other commercial vehicles.
However, hydrogen mobility remains at an earlier stage of deployment than battery-electric vehicles in many markets.
The most appropriate technology depends on factors such as vehicle type, distance, payload, refuelling infrastructure and total operating cost.
Hydrogen and energy storage
One of hydrogen's potential advantages is its ability to store energy for longer periods.
Electricity can be converted into hydrogen through electrolysis.
The hydrogen can then be stored and subsequently used in industrial processes, transport, power generation or other applications.
This is different from short-duration battery storage.
Batteries are often particularly effective for storing and releasing electricity over relatively short periods.
Hydrogen could potentially play a role where energy needs to be stored for longer periods or transported over longer distances.
However, converting electricity into hydrogen and then converting hydrogen back into electricity involves energy losses.
Hydrogen is therefore not automatically a better storage solution than batteries.
The appropriate technology depends on the application.
Why is renewable hydrogen important for Australia?
Australia has several characteristics that could support a competitive renewable hydrogen industry.
These include:
Abundant renewable resources
Australia has extensive wind and solar resources that can provide electricity for electrolysis.
Available land
Large-scale renewable energy and hydrogen projects can potentially be developed in regions with strong renewable resources.
Existing energy and resources expertise
Australia has extensive experience in large-scale energy, mining, resources and infrastructure projects.
Industrial demand
The country has existing industries that could potentially use low-emissions hydrogen and hydrogen-derived products.
Export potential
Australia could potentially export hydrogen-derived products to markets with more limited renewable energy resources.
The Australian Government's National Hydrogen Strategy 2024 identifies clean hydrogen as an important part of Australia's economic and energy transition and aims to build a globally competitive industry.
Australia's National Hydrogen Strategy
The 2024 National Hydrogen Strategy replaced the original 2019 strategy.
Its vision is for a clean, innovative, safe and competitive hydrogen industry that supports Australia's net-zero transition while creating benefits for communities and the economy.
The strategy focuses on four broad objectives:
- competitive hydrogen supply
- domestic demand and decarbonisation
- community benefits
- trade, investment and partnerships.
The strategy also recognises that Australia is competing with other countries to develop a commercially viable hydrogen industry.
Government support for renewable hydrogen
One of the biggest challenges facing renewable hydrogen is cost.
The IEA reports that, in most parts of the world, fossil-fuel-based hydrogen remains cheaper than renewable hydrogen in the near term. Policy support therefore remains important to help close the cost gap and encourage investment.
Australia has introduced several measures to support the sector.
These include the Hydrogen Production Tax Incentive, designed to support renewable hydrogen production, and the Hydrogen Headstart Program.
Hydrogen Headstart Round 2 has A$2 billion of Australian Government funding and is designed to support large-scale renewable hydrogen production, accelerate commercial development and help build new hydrogen supply chains.
This type of support is intended to help projects move from early development towards commercial scale.
ACCIONA and green hydrogen
ACCIONA has been developing green hydrogen capabilities internationally for several years.
The company works across the hydrogen value chain, including renewable energy generation, hydrogen production, storage, transport and potential end uses.
One example is the Power to Green Hydrogen Mallorca project in Spain.
The project combines photovoltaic generation with an electrolyser and hydrogen distribution infrastructure.
It is designed to produce more than 300 tonnes of green hydrogen per year for applications including public and commercial transport, heat and power and port operations.
The project demonstrates the underlying concept of renewable hydrogen: use renewable electricity to produce hydrogen that can then be used in sectors beyond the electricity system itself.
ACCIONA's hydrogen activity in Australia
ACCIONA has also explored opportunities for renewable hydrogen in Australia.
In 2021, ACCIONA Energía signed a Memorandum of Understanding with Queensland's Stanwell Corporation to explore supplying renewable electricity from the proposed Aldoga Solar Farm to Stanwell's proposed large-scale green hydrogen project near Aldoga in Central Queensland.
The proposed Central Queensland Hydrogen Project, known as CQ-H2, was designed to investigate large-scale renewable hydrogen production for domestic industrial applications and potential exports.
The agreement demonstrated how renewable electricity generation and hydrogen production could be integrated within a wider industrial ecosystem.
ACCIONA also continues to develop renewable energy infrastructure in Queensland, including the MacIntyre Wind Precinct.
MacIntyre Wind Farm and renewable hydrogen
Large renewable energy projects can provide the electricity required to produce renewable hydrogen.
ACCIONA's MacIntyre Wind Farm in Queensland is an example of the scale of renewable generation being developed in Australia.
The project consists of 162 turbines and has a capacity of 923 MW. It forms part of the wider MacIntyre Wind Precinct in south-east Queensland.
MacIntyre began exporting its first renewable electricity to Australia's National Electricity Market in October 2024, with generation progressively increasing as the project was commissioned.
Projects such as MacIntyre are relevant to hydrogen because producing large quantities of renewable hydrogen requires access to substantial volumes of low-emissions electricity.
This is one reason renewable energy generation and hydrogen development are increasingly being considered together.
How could hydrogen support Australia's renewable electricity system?
Hydrogen production could potentially provide a flexible source of demand for renewable electricity.
Electrolysers can use electricity when renewable generation is available and electricity prices are favourable, producing hydrogen that can be stored or used elsewhere.
In this way, hydrogen could act as a form of energy conversion and storage.
Australia's National Hydrogen Strategy notes that on-grid renewable hydrogen projects could provide flexible electricity demand and potentially complement other system technologies as Australia moves towards its target of 82% renewable electricity by 2030.
However, hydrogen production is not simply a substitute for batteries.
The economics and technical characteristics of each technology are different.
Why is renewable hydrogen difficult to scale?
Hydrogen has significant potential, but there are still major challenges.
Cost
Renewable hydrogen remains more expensive than fossil-based hydrogen in many regions.
The cost of renewable electricity, electrolyser equipment, financing, water and infrastructure all influence the final cost.
Infrastructure
Hydrogen needs systems for production, storage, transport, distribution and end use.
Building this infrastructure at scale requires major investment.
Demand
A project cannot be financed purely on the expectation that customers will eventually buy hydrogen.
Long-term offtake agreements can be important for creating investment certainty.
Regulation
Hydrogen crosses multiple parts of the economy, including energy, transport, industry, safety and trade.
Clear and consistent regulatory frameworks are therefore important.
Certification and traceability
As hydrogen becomes a traded commodity, customers need confidence about how it was produced and what its associated emissions are.
Certification systems can help provide that information.
The IEA identifies high costs, uncertain demand, regulatory complexity and infrastructure gaps among the main barriers currently limiting faster deployment of low-emissions hydrogen.
Why hydrogen alone will not solve the energy transition
Hydrogen is sometimes described as a fuel that could replace fossil fuels across the entire economy.
That is too broad.
In many applications, direct electrification is more efficient.
For example, using renewable electricity directly in an electric motor generally involves fewer conversion steps than using that electricity to produce hydrogen and then converting the hydrogen back into electricity.
Hydrogen is therefore most valuable where its specific properties provide an advantage.
These include:
- chemical feedstocks
- high-temperature industrial applications
- some heavy transport
- hydrogen-derived fuels
- potential long-duration energy storage
- industrial processes where direct electrification is difficult.
The energy transition will therefore involve a combination of electricity, batteries, renewable fuels, hydrogen and other technologies.
Green hydrogen and renewable energy: how do they work together?
The relationship between renewable energy and green hydrogen can be illustrated simply.
Step 1: Generate renewable electricity
Wind and solar farms generate electricity without fossil-fuel combustion during operation.
Step 2: Use electricity in an electrolyser
The electrolyser uses electricity to split water into hydrogen and oxygen.
Step 3: Store or distribute the hydrogen
The hydrogen can be compressed, stored or transported depending on the application.
Step 4: Use hydrogen where it provides an advantage
It can then be used in industry, transport, chemical production or potentially power generation.
This creates a pathway for renewable electricity to become a molecule that can be stored and used in applications where direct electricity may not be sufficient.
What is the future of green hydrogen?
The future of renewable hydrogen will depend on whether the industry can move from demonstration projects to commercially competitive large-scale production.
The signs are mixed.
Low-emissions hydrogen production grew significantly in 2025, and the IEA expects another record year of growth in 2026. Electrolyser capacity also doubled during 2025 to exceed 4 GW globally.
At the same time, the IEA reports that investment momentum slowed in 2025 and that many announced projects face delays, cancellations or uncertainty around final investment decisions.
The next phase of the industry will therefore depend on more than technological progress.
It will require:
Competitive renewable electricity
Large quantities of affordable renewable power are fundamental to green hydrogen economics.
Efficient electrolysers
Electrolyser costs, efficiency and performance will influence project economics.
Reliable demand
Long-term customers and offtake agreements can help support investment.
Infrastructure
Production, storage, transport and distribution networks need to develop alongside the market.
Policy support
Governments can help create the conditions required for early-stage markets to scale.
Hydrogen, renewable energy and Australia's net-zero transition
Australia's energy transition is broader than replacing coal-fired electricity with wind and solar.
The country also needs to reduce emissions from industry, transport, chemicals, mining and other sectors.
Some of these emissions can be reduced through direct electrification.
Others may require molecules such as hydrogen.
This is where hydrogen could become an important complement to renewable electricity.
Australia's National Hydrogen Strategy specifically identifies applications such as green metals, heavy transport, shipping, aviation, chemicals and energy storage as potential areas for hydrogen-based decarbonisation.
What role could hydrogen play in green metals?
Australia is a major producer of iron ore and other mineral resources.
Hydrogen could potentially be used as a reducing agent in processes for producing lower-emissions iron and steel.
Instead of using carbon-intensive reducing agents, hydrogen can be used in some direct reduction processes, producing water rather than carbon dioxide at the point of the reduction reaction.
This is one of the applications where hydrogen can provide a function that direct electrification alone cannot necessarily replicate.
The commercial viability of green iron and steel will depend on technology, renewable electricity costs, hydrogen costs, infrastructure, access to markets and demand for lower-emissions products.
Hydrogen and Australia's export opportunity
Australia's geography gives it significant renewable energy potential, but not every country has the same access to low-cost renewable electricity.
This creates a potential export opportunity.
Instead of exporting hydrogen itself, Australia could also export hydrogen-derived products.
These could include:
- ammonia
- methanol
- low-emissions iron and steel
- synthetic fuels.
Exporting derivatives may sometimes be easier than transporting pure hydrogen over very long distances.
Australia's National Hydrogen Strategy highlights both hydrogen and hydrogen-derived products as potential areas for future trade and industrial development.
Hydrogen and the broader ACCIONA energy ecosystem
Hydrogen cannot be separated from the wider renewable energy system.
It requires renewable generation.
It may require storage.
It needs electrical infrastructure.
It can support industrial decarbonisation.
And ultimately, it needs customers.
This is why ACCIONA's work across renewable generation, transmission, infrastructure and energy solutions is relevant to the development of the hydrogen economy.
ACCIONA Energía's energy portfolio includes wind, solar photovoltaic, energy storage and green hydrogen, alongside other renewable technologies.
In Australia, projects such as MacIntyre Wind Farm demonstrate the scale of renewable generation that can provide the electricity foundation for future clean-energy applications.
Transmission projects such as HumeLink East are also important because renewable electricity needs to be transported from areas of strong generation to centres of demand. The project includes 459 transmission towers and more than 6,000 kilometres of conductor between Bannaby and Wondalga in New South Wales.
Hydrogen is therefore one part of a much larger infrastructure transition.
Frequently asked questions about hydrogen
What is hydrogen?
Hydrogen is the lightest chemical element. In its pure molecular form, it is a colourless gas. It is an energy carrier rather than a primary energy source because energy is required to produce it.
Is hydrogen a renewable energy source?
Not necessarily.
Hydrogen is an energy carrier. Whether it is renewable or low-emissions depends on how it is produced and what energy sources and technologies are used.
What is green hydrogen?
Green hydrogen is generally produced by electrolysis, using electricity from renewable sources such as wind or solar to split water into hydrogen and oxygen.
What is the difference between green and grey hydrogen?
Green hydrogen is produced using renewable electricity and water through electrolysis. Grey hydrogen is generally produced from natural gas without carbon capture.
Is green hydrogen completely carbon-free?
The production of hydrogen using renewable electricity can have very low emissions, but it is not accurate to assume that every green hydrogen project has zero emissions across its entire lifecycle.
Equipment manufacturing, construction,