Plug Power Inc. will produce liquid hydrogen this year in Georgia to fuel the transportation sector, making 15 tons per day and upgrading to 30 tons daily. It will source green energy from a local rural electric cooperative to do so.

The company has other facilities across the United States, aiming to make more than 1,200 tons per day of clean hydrogen by 2030 — critical to advancing the technology and reaching 2050 net-zero goals.

Affordable green hydrogen is within reach. That’s because green energy prices continue to fall while there’s meaningful incentives to reduce greenhouse gas levels. Green hydrogen from renewables produces no pollution.

“We are committed to building out hydrogen networks in the United States and Europe,” Andy Marsh, chief executive of Plug Power PLUG told me in an interview. “We can generate green hydrogen out of the electrolyzer at $2 per kilogram — similar to grey hydrogen producing using natural gas. We have developed these products for a decade and are better positioned to know what it costs to build these things.”

The U.S. Department of Energy predicts that costs will drop to $1 per kilogram by 2030 — aided in considerable measure by the Inflation Reduction Act, driving it down even further. Hence, the hydrogen economy could accelerate, reaching up to 500-800 million tonnes used annually by 2050 and comprising between 15% to 20% of global energy demand. It’s now at 115 million tons.

The capital and operating costs are essentially the same for green and grey hydrogen — at least for Plug Power. Today’s grey hydrogen costs hinge on natural gas and steam methane reforming prices. Green hydrogen costs depend on renewable power prices and the capital to build a plant.

The critical component is the electrolyzer, which creates an electric current that splits the hydrogen and oxygen from water. Plug Power says its electrolyzer and steam methane reforming cost roughly the same. But electrolyzer technologies are advancing while prices are dropping, predicted to be $1.50 per gram soon.

“Those skeptical about green hydrogen do not look at the fundamental economics,” says Marsh. “Our existing projects are proof-positive.”

Solar panels produce electricity, which, if not immediately consumed, must be stored in a battery and used in an electrolyzer. That creates a pure hydrogen gas stored in a cylinder or tank. From there, it goes to a fuel cell, which takes hydrogen to generate electricity.

Grey hydrogen is used today in petroleum refining and fertilizer production: It cracks heavier oils to make lighter petroleum and produces ammonia for plant food.

But green hydrogen has great potential in the transportation and electricity markets. Consider that Amazon AMZN and Walmart WMT use hydrogen-powered forklifts. Toyota and Hyundai are betting big on hydrogen-powered cars. In the meantime, FedEx FDX has a delivery truck running on hydrogen in New York State that can go 240 kilometers on a full tank.

Indeed, the Hydrogen Council and McKenzie issued a report concluding that clean hydrogen can cumulatively cut 80 gigatons of CO2 globally by 2050. “This is as much as eight times what China emitted in 2019. It is also equivalent to about 11% of the cumulative abatement required to remain within the carbon budget that would limit global warming to 1.5 to 1.8 degrees Celsius.”

They find hydrogen could meet 18% of the world’s energy demand by 2050. The Energy Department says there are roughly 3.7 gigawatts of planned and existing electrolyzer installations as of May 2023. If they all arrive, this country could produce 12 million metric tons of clean hydrogen supply annually by 2030. Globally, the total announced electrolyzer capacity stands at 230 gigawatts in 2030.

As for Plug, it has an existing green hydrogen project in Tennessee, capable of producing 20 tons per day. Similar projects will open in 2024 in Louisiana, Texas, and New York State, making 15, 45, and 74 tons daily, respectively. California will open a project in 2025, producing 30 tons daily of green liquid hydrogen.

Europe, too, is a destination where it is opening plants in Belgium and Spain. But its most significant plans are in Finland, where it says it will produce 850 tons daily by decades’s end.

“There’s no single answer to climate change,” Marsh says. “Hydrogen fits best in the hard-to-abate sectors: manufacturing green steel and concrete and long-distance trucking.”

If the world is to hit its climate targets, it is imperative to increase green hydrogen production — a function of low-cost renewables, electrolyzer advancement, and financial incentives. Plug Power’s projects illustrate the potential at a more favorable cost than most people think.