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When hydrogen burns, the only by-product is water—which is why hydrogen has been an alluring zero-carbon energy source for decades. Yet the traditional process for producing hydrogen, in which fossil fuels are exposed to steam, is not even remotely zero-carbon. Hydrogen produced this way is called gray hydrogen; if the CO2 is captured and sequestered, it is called blue hydrogen.

Green hydrogen is different. It is produced through electrolysis, in which machines split water into hydrogen and oxygen, with no other by-products. Historically, electrolysis required so much electricity that it made little sense to produce hydrogen that way. The situation is changing for two reasons. First, significant amounts of excess renewable electricity have become available at grid scale; rather than storing excess electricity in arrays of batteries, the extra electricity can be used to drive the electrolysis of water, “storing” the electricity in the form of hydrogen. Second, electrolyzers are getting more efficient.

Companies are working to develop electrolyzers that can produce green hydrogen as cheaply as gray or blue hydrogen, and analysts expect them to reach that goal in the next decade. Meanwhile energy companies are starting to integrate electrolyzers directly into renewable power projects. For example, a consortium of companies behind a project called Gigastack plan to equip Ørsted's Hornsea Two offshore wind farm with 100 megawatts of electrolyzers to generate green hydrogen at an industrial scale.

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