A new UC Irvine study quantifies the social value of green hydrogen across key industries, revealing where electrolytic H2 can generate the greatest environmental and public health benefits during the energy transition.
Where green hydrogen creates the greatest social benefits
Green hydrogen, alongside electricity, is one of the primary energy carriers of the global energy transition. While its economic role in decarbonization pathways has been widely analyzed, far less attention has been paid to its broader social value, meaning the collective benefits generated through the deployment of electrolytic hydrogen.
A new study from the University of California Irvine, titled “The social value of electrolytic hydrogen”, aims to close that gap. The researchers started from a simple premise: clean hydrogen holds major climate and energy potential, but large-scale adoption is still constrained by costs that remain less competitive than fossil fuels. Those costs, however, often fail to account for the broader social benefits tied to public health, environmental protection and natural resource preservation.
Monetized life cycle analysis reveals environmental and health gains
Jeff Reed, senior researcher at the UC Irvine Clean Energy Institute, together with his colleagues, examined this issue using a monetized Life Cycle Analysis (LCA). The methodology converts externalities, including environmental and health impacts generated throughout the full lifecycle of a product, into equivalent monetary values. This allows different technologies to be compared on a common economic basis.
To identify social costs, the research team incorporated factors such as greenhouse gas emissions, particulate matter formation, human toxicity and acidification. These indicators were then multiplied by “damage cost factors” assigning an economic value to each unit of impact.
The sectors with the highest green hydrogen social value
Once the analytical framework was established, the scientists compared four pathways, renewable hydrogen, fossil fuels, direct electrification and battery energy storage systems, across eight economic sectors:
- chemical production
- industrial heat
- electricity generation
- steel production
- ocean shipping
- heavy-duty trucking
- rail transport
- aviation
According to the study, the sectors with the highest green hydrogen social value are steel manufacturing, transoceanic shipping and heavy-duty trucks.
The steel sector showed the strongest overall result, reaching nearly $8/kg of H2 when hydrogen is used in DRI-EAF configurations (Direct Reduced Iron – Electric Arc Furnace). Heavy road transport and maritime shipping generated values ranging between $5 and $8/kg of H2.
This suggests that, in some cases, the societal benefits generated by switching from fossil fuels to hydrogen may offset the additional costs of the transition.
Reed and his colleagues emphasized that the benefits become particularly significant when hydrogen replaces carbon-intensive fuels such as diesel or heavy fuel oil in inefficient legacy systems. The gains increase even further when deployment is paired with substantial energy efficiency improvements.
Hydrogen leakage can sharply reduce social benefits
The study also examined the impact of hydrogen leakage. According to the researchers, the scale of this effect largely depends on the electricity mix used for hydrogen production and on hydrogen’s global warming potential as an indirect greenhouse gas.
When hydrogen is produced using fossil-heavy electricity grids, leakage becomes considerably more problematic. For every 100 grams of H2 lost, the social value could decline by approximately $1/kg. Under these conditions, a leakage rate of 30% would be enough to completely erase the technology’s social benefits.
“The social outcomes we quantify, lower climate damages, cleaner air and improved human health, are externalities that market prices simply do not reflect,” said senior co-author Jack Brouwer, professor of mechanical and aerospace engineering and director of the Clean Energy Institute. “Because companies cannot account for these benefits on their balance sheets, policy intervention is essential to steer investments toward the applications where hydrogen delivers a real societal advantage.”
