A new UC Irvine study quantifies the social value of green hydrogen, showing the strongest benefits in steelmaking, maritime shipping and heavy-duty transport.
Green hydrogen social value gains attention beyond decarbonization
Green hydrogen, alongside electricity, is one of the main energy carriers driving the energy transition. While its economic role in decarbonization pathways has been widely studied, less attention has been paid to its broader social value. In other words, the collective benefits generated by scaling up electrolytic hydrogen across the economy.
A new study from the University of California, Irvine, titled “The social value of electrolytic hydrogen,” aims to close that gap. Researchers argue that although clean hydrogen offers strong climate and energy potential, large-scale deployment still faces higher costs than fossil-based alternatives. Those costs, however, fail to account for wider social benefits, including improved public health, environmental protection and the preservation of natural resources.
Monetized LCA used to quantify environmental and health benefits
Jeff Reed, senior researcher at the UC Irvine Clean Energy Institute, together with his colleagues, assessed these impacts through a monetized Life Cycle Assessment (LCA). The methodology converts environmental and health externalities generated throughout a product’s lifecycle into equivalent monetary values, allowing different technologies to be compared on a common economic basis.
To calculate social costs, the research team included indicators such as greenhouse gas emissions, particulate matter formation, human toxicity and acidification. These parameters were then multiplied by “damage cost factors” assigning an economic value to each unit of environmental impact.
The sectors where green hydrogen delivers the highest social value
Using this analytical framework, 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,
- steelmaking,
- ocean shipping,
- heavy-duty trucking,
- rail transport,
- aviation.
According to the study, the sectors with the highest green hydrogen social value are steel production, transoceanic shipping and heavy trucks.
The steel industry recorded the highest overall social value, reaching nearly $8/kg of H2 when hydrogen is used in DRI-EAF configurations, Direct Reduced Iron and Electric Arc Furnace systems. In heavy-duty road transport and maritime shipping, values ranged between $5 and $8/kg of H2.
The findings suggest that, in some applications, the social benefits generated by switching from fossil fuels to hydrogen could offset the additional costs of the transition.
Researchers also highlighted that benefits are especially significant when hydrogen replaces dense and highly polluting fossil fuels such as diesel or heavy fuel oil in inefficient legacy systems. Social gains become even greater when hydrogen adoption is combined with major improvements in energy efficiency.
Hydrogen leakage can sharply reduce green hydrogen social value
The study also examined the impact of hydrogen leakage on social value outcomes. According to the researchers, the severity of this effect depends largely on the electricity mix used for hydrogen production and on hydrogen’s global warming potential, since the gas acts as an indirect greenhouse gas in the atmosphere.
When hydrogen is produced using fossil-heavy electricity grids, the impact of leakage becomes far more severe. The researchers estimated that for every 100 grams of H2 lost, the social value would decline by around $1/kg.
Under those conditions, a leakage rate of 30% would be enough to eliminate the technology’s entire social benefit.
“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 in their balance sheets, policy intervention is essential to direct investment toward applications where hydrogen provides a real advantage for society.”
