Shaping the Future of Green Hydrogen: Balancing Human, Ecological and Economic Goals

Green hydrogen, once a distant dream of energy planners, is now seen as a cornerstone of the global race to decarbonize. A new United Nations Development Programme (UNDP) report, produced in collaboration with the University of Oxford’s TIDE Centre, explores both the promise and pitfalls of this emerging industry. The study stresses that while hydrogen offers transformative potential for climate goals, its success hinges on whether governments embed it in policies that prioritize people, protect ecosystems, and foster inclusive prosperity. Without careful governance, it warns, green hydrogen risks becoming the latest chapter in resource dependency and extractive economics.

Promise of a Clean Fuel

Hydrogen has long been a staple in refining and chemicals, but interest has surged with the declining costs of solar, wind, and electrolysers. Unlike grey hydrogen from fossil fuels or blue hydrogen reliant on carbon capture, green hydrogen is produced with renewable power, emitting virtually no greenhouse gases. Yet costs remain stubbornly high, between $4.5 and $12 per kilogram compared to much cheaper fossil-based alternatives. This creates a classic “chicken-and-egg” trap: demand is weak because supply is expensive, while investors hesitate because markets remain small. Despite this, 58 countries have adopted hydrogen strategies, half of them in the developing world. For nations like Chile, Namibia, Morocco, and India, abundant sun and wind make them prime candidates to produce the fuel competitively. But the report cautions that a narrow focus on exports could replicate enclave models of growth that bypass local populations and reinforce external dependencies.

Human Development at the Core

The most compelling case for hydrogen lies in its potential to advance human development. By requiring projects to add renewable capacity beyond their own needs, hydrogen can expand electricity access in regions still struggling with energy poverty. Namibia, where barely half the population is connected to the grid, is banking on hydrogen investments to electrify the country through its Green Industrialization Blueprint. Large-scale projects like the Hyphen development could bring gigawatts of clean power, potentially decarbonizing the entire grid while exporting surplus hydrogen. Jobs are another driver: Chile anticipates 100,000 new positions in upstream and downstream activities, while Namibia projects 15,000 during construction and 3,000 long-term operations, with most roles targeted for locals. Yet expectations must be tempered. Hydrogen is capital-heavy and not especially labour-intensive, raising the risk of underwhelming employment returns. Unless governments enforce training, education, and local hiring mandates, projects may simply import foreign expertise, sidelining domestic workers.

Environmental and Resource Pressures

Despite its green credentials, hydrogen production carries a heavy environmental footprint. Massive solar and wind farms demand vast tracts of land, often in ecologically sensitive areas. Namibia’s Hyphen project is located within Tsau Khaeb National Park, a biodiversity treasure hosting a quarter of the country’s plant species, sparking fears of irreversible ecological damage. Water use adds another layer of concern. Producing one kilogram of hydrogen requires nine litres of fresh water, a stark challenge in arid regions. Desalination can bridge the gap, but its brine by-products threaten marine and soil ecosystems. Critical minerals are also indispensable. Electrolysers and fuel cells rely on nickel, cobalt, and platinum, intensifying demand in nations such as South Africa, Indonesia, and the Democratic Republic of Congo. Without safeguards, this rush risks deepening the same extractive cycles and geopolitical vulnerabilities seen in past mining booms, especially as mineral processing remains concentrated in China.

Risks, Rewards, and Policy Choices

For developing economies, green hydrogen holds tantalizing prospects: export earnings, carbon-competitive industries, and new industrial bases. Yet fiscal risks loom large. Abatement costs remain steep, between $500 and $1,250 per ton of carbon dioxide, far more expensive than alternatives like renewables or efficiency gains. Heavy borrowing to finance projects could exacerbate debt burdens and crowd out investment in health, education, and social spending. Financing models such as public-private partnerships and blended loans from multilateral banks are being tested, but UNDP stresses that wealthier countries and private investors should shoulder the high costs of early deployment. For many poorer states, a “second-mover” strategy, joining the market once technology matures and costs fall, may be the wiser course. The report underscores that hydrogen cannot be siloed as an energy strategy. It must be integrated into broader industrial, labour, environmental, and fiscal frameworks. Renewable additionality should be non-negotiable, ensuring hydrogen projects expand power access instead of diverting it. Strong appraisal capacity is needed to protect ecosystems, while transparent governance and community participation are critical to preventing elite capture. Policymakers are also urged to keep a close watch on technological shifts that could make certain hydrogen investments obsolete, such as the rapid electrification of steelmaking.

A Future Still Unwritten

The report paints a picture of hydrogen as both an opportunity and a cautionary tale. It could either widen inequalities and replicate old extractive dynamics or it could anchor inclusive growth, decarbonization, and resilience. Which path unfolds depends on governance, how countries steer at the right speed, at the right time, and in the right direction. The stakes are high. Hydrogen is not a silver bullet, but it may yet be one of the most important tools in the fight against climate change. Whether it becomes a force for prosperity or another resource curse will be decided not in laboratories or boardrooms, but in the policy choices made by governments and the collective will to place human development at the core of the green transition.