In buildings, hydrogen could be blended into existing natural gas networks, with the highest potential in multifamily and commercial buildings, particularly in dense cities while longer-term prospects could include the direct use of hydrogen in hydrogen boilers or fuel cells. Shipping and aviation have limited low-carbon fuel options available and represent an opportunity for hydrogen-based fuels. In transport, the competitiveness of hydrogen fuel cell cars depends on fuel cell costs and refuelling stations while for trucks the priority is to reduce the delivered price of hydrogen. Virtually all of this hydrogen is supplied using fossil fuels, so there is significant potential for emissions reductions from clean hydrogen. Hydrogen use today is dominated by industry, namely: oil refining, ammonia production, methanol production and steel production. Gas importers like Japan, Korea, China and India have to contend with higher gas import prices, and that makes for higher hydrogen production costs. 
Low gas prices in the Middle East, Russia and North America give rise to some of the lowest hydrogen production costs. The production cost of hydrogen from natural gas is influenced by a range of technical and economic factors, with gas prices and capital expenditures being the two most important.įuel costs are the largest cost component, accounting for between 45% and 75% of production costs. Gas is followed by coal, due to its dominant role in China, and a small fraction is produced from from the use of oil and electricity. This accounts for about 6% of global natural gas use.
Natural gas is currently the primary source of hydrogen production, accounting for around three quarters of the annual global dedicated hydrogen production of around 70 million tonnes. Hydrogen can be extracted from fossil fuels and biomass, from water, or from a mix of both.
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