This week, the Ministry of Energy proudly announced: “The Hydrogen Valley in the Negev is underway.” A new government call for proposals will allocate NIS 10 million ($3.3 million) toward establishing a hydrogen refueling station in the eastern Negev and purchasing hydrogen-powered trucks. The ministry described hydrogen as “the fuel of the future” and presented the initiative as a major step toward turning a long-standing vision into reality.
But while Israel is moving ahead with its hydrogen plans, the global enthusiasm surrounding the technology is fading. Hydrogen is increasingly viewed as a potential solution for only specific sectors rather than a universal replacement for fossil fuels. Critics argue that its current production costs remain high, efficiency is low, and storage and transportation challenges require expensive new infrastructure.
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Hydrogen-powered trucks
(Idan Sabach)
The debate comes as Israel faces difficult choices over how to allocate limited clean-energy resources. While investments in renewable energy projects and direct electrification can already deliver measurable results, including in electric trucks, budgets for energy innovation and clean technologies have been declining in recent years.
Hydrogen’s appeal comes from its potential as an alternative to fossil fuels. When hydrogen is burned with oxygen, the only direct byproduct is water, rather than carbon dioxide and other air pollutants.
However, not all hydrogen is created equal. The industry distinguishes between several types based on how the fuel is produced.
Gray hydrogen, the most common type today, is produced from natural gas and releases significant carbon emissions during production. Blue hydrogen is also produced from natural gas but uses carbon capture technologies to reduce some emissions. Green hydrogen is produced through electrolysis, using electricity from renewable sources to split water molecules, and is considered the cleanest form.
Today, however, most hydrogen production worldwide remains gray hydrogen. Green hydrogen remains significantly more expensive and has yet to reach widespread commercial deployment.
Because of these limitations, there are currently questions over whether green hydrogen can realistically be used to power trucks in Israel. Although the Ministry of Energy’s call for proposals did not specify which type of hydrogen would be used, the ministry acknowledged in response to a Calcalist inquiry that green hydrogen remains economically challenging.
“Today, the production of green hydrogen is still significantly more expensive, and the infrastructure required for commercial-scale production has not yet been established in Israel,” the ministry said. “As the hydrogen economy develops and broad infrastructure for green hydrogen production is established, it will be possible in the future to examine requirements that promote the use of hydrogen produced from renewable sources.”
A growing number of studies have questioned whether hydrogen produced from fossil fuels can meaningfully contribute to climate goals.
According to the International Energy Agency (IEA), global hydrogen production, most of which currently comes from gray hydrogen, generates approximately 920 million tons of carbon dioxide emissions annually, before accounting for methane leaks during natural gas production and transportation.
Blue hydrogen, despite being considered cleaner than gray hydrogen, also faces criticism. A May 2024 study by Solutions for Our Climate examining South Korea’s Boryeong hydrogen project found that methane leakage over the project’s lifetime could result in emissions equivalent to those of 1.28 million cars.
“Green hydrogen is not economically viable today,” a government source told Calcalist. “The road is still very long. It is extremely expensive. In theory, it makes sense to develop the technology, but the focus should be on improving the technology itself.”
“If the hydrogen being used is gray hydrogen, the logic is unclear. It would be better if the limited government funding available for energy innovation was directed toward areas that are already proving effective.”
One of the main concerns surrounding hydrogen transportation is efficiency.
When measured across the entire energy chain, from production to vehicle movement, gray hydrogen-powered trucks can emit similar or even higher levels of carbon than diesel trucks.
Energy efficiency is also significantly lower. Along the full hydrogen value chain, only about a quarter of the original energy input ultimately reaches the wheels, compared with electric battery-powered vehicles, which can utilize roughly 70%-80% of the energy supplied.
Critics argue that hydrogen trucks risk becoming fossil-fuel vehicles with a “green” marketing layer rather than a genuine emissions solution.
The infrastructure challenge is also significant. Hydrogen refueling stations and fuel-cell trucks require substantial investment in a technology whose long-term role remains uncertain.
Meanwhile, major truck manufacturers, including Volvo, Daimler and Tesla, are increasingly focusing on battery-electric vehicles. Critics warn that investing heavily in hydrogen infrastructure could lock Israel into a technology that may soon become obsolete.
Cost remains one of hydrogen’s biggest obstacles.
Gray hydrogen currently costs approximately $1.50-$2.50 per kilogram, while green hydrogen can cost $5-$7 per kilogram before subsidies.
Gray hydrogen is already produced at massive scale, primarily for industries such as oil refining, ammonia production and fertilizers. Critics argue that this existing industry should not be confused with the clean-energy technology often presented as “the fuel of the future.”
The global hydrogen sector has also experienced setbacks. Shell, for example, shut down all 48 of its hydrogen refueling stations in California, despite receiving approximately $40 million in government grants for the projects.
Many researchers now argue that green hydrogen should be reserved for sectors where electrification is difficult, such as steel production, fertilizers, shipping and aviation.
For many other uses, including transportation, direct electrification is viewed as more efficient and economical.
The case for hydrogen in transportation is becoming weaker as battery technology improves.
Battery ranges are increasing, electric vehicle and truck prices are declining, and charging infrastructure is expanding. As a result, critics question why Israel is investing in hydrogen transportation instead of accelerating electrification.
Hydrogen also presents unique logistical challenges. Because it is an extremely light gas, it requires either high-pressure storage, extreme refrigeration, or specialized materials, all of which increase costs.
“As a sunny country with enormous potential for renewable energy, Israel’s decision to base transportation on fossil fuels moves us away from the future,” said Prof. Adi Wolfson, a sustainability expert at the Sami Shamoon Academic Center.
“The state should direct public resources toward innovation, research and development that can leverage Israel’s advantages to create a clean, independent and sustainable energy economy.”
The Ministry of Energy disputes the criticism, arguing that hydrogen has a role alongside electrification.
“The ministry is promoting a variety of solutions to reduce emissions,” it said. “Alongside electric transportation, there are sectors, particularly heavy transportation, long-distance transportation and industrial applications, where hydrogen may provide significant advantages. The goal of the program is to demonstrate the feasibility of hydrogen use in areas where full electrification currently faces significant challenges.”
