The transition to a hydrogen economy is often framed as a critical pathway toward decarbonization. However, near-term decisions in hydrogen production, particularly fossil-based methods coupled with carbon capture and storage (CCS), may inadvertently create long-term carbon lock-in effects. These effects stem from infrastructure inertia, policy dependencies, and the risk of stranded assets, complicating the eventual shift to renewable hydrogen. Understanding these dynamics is essential to avoid unintended consequences in the energy transition.

Infrastructure inertia is a significant factor in carbon lock-in. Fossil-based hydrogen production, such as steam methane reforming (SMR) with CCS, requires substantial capital investments in pipelines, storage facilities, and carbon capture infrastructure. Once built, these systems have long operational lifespans, often spanning decades. The sunk costs and economic incentives to maximize utilization create a disincentive to transition to alternative methods, even if renewable hydrogen becomes more cost-competitive. For example, retrofitting or replacing existing SMR-CCS plants with electrolysis facilities powered by renewables may face resistance due to the high upfront costs of new infrastructure and the perceived reliability of established systems.

Policy dependencies further entrench fossil-based hydrogen production. Governments and industries often rely on policy frameworks that incentivize CCS as a bridge technology, with subsidies, tax credits, or carbon pricing mechanisms designed to reduce emissions in the short term. While these policies may accelerate initial adoption, they can also create path dependency. If policies favor fossil-based hydrogen with CCS over renewable alternatives, market signals may skew investment toward entrenched technologies rather than fostering innovation in green hydrogen. Additionally, industries that develop around CCS-enabled hydrogen production may lobby to maintain favorable regulations, delaying the phase-out of fossil dependencies.

Stranded asset risks emerge when infrastructure or investments become obsolete before the end of their useful life. Fossil-based hydrogen production assets, including CCS networks, could face this risk if renewable hydrogen achieves cost parity sooner than expected or if stricter emissions regulations render CCS insufficient. For instance, if electrolysis costs continue to decline due to advancements in renewable energy and electrolyzer technology, the economic viability of SMR-CCS could erode rapidly. Assets tied to fossil hydrogen may lose value, leaving investors and operators with unrecoverable costs. This risk is exacerbated if global carbon policies become more stringent, forcing abrupt transitions away from fossil-based systems.

The interplay between these factors creates a self-reinforcing cycle of carbon lock-in. Infrastructure investments justify continued policy support, which in turn drives further investment in fossil-based systems, delaying the scaling of renewable alternatives. Breaking this cycle requires deliberate strategies to mitigate lock-in effects. One approach is to design policies with sunset clauses that gradually phase out support for fossil-based hydrogen as renewable technologies mature. Another is to prioritize flexible infrastructure that can adapt to multiple hydrogen production methods, reducing the risk of stranded assets.

Quantitative evidence highlights the scale of the challenge. Current projections estimate that fossil-based hydrogen with CCS could account for a significant share of production in the near term, particularly in regions with access to low-cost natural gas and established CCS capabilities. However, the levelized cost of hydrogen from renewables is expected to decline steadily, with electrolysis becoming competitive in many markets by 2030. This narrowing cost gap underscores the importance of avoiding overinvestment in assets that may soon become obsolete.

The transition to renewable hydrogen must also consider systemic dependencies. Industries such as refining, ammonia production, and steel manufacturing are major consumers of hydrogen and may resist switching suppliers if fossil-based systems are deeply integrated into their operations. Retrofitting these industries for green hydrogen requires not only new production infrastructure but also adjustments in supply chains and operational practices. Without coordinated planning, these sectors may remain tethered to fossil-based hydrogen longer than necessary.

To minimize carbon lock-in, policymakers and industry leaders must balance short-term emissions reductions with long-term sustainability goals. This involves accelerating renewable hydrogen deployment through targeted R&D funding, infrastructure planning, and market mechanisms that internalize the environmental costs of fossil-based production. It also requires transparency in assessing the full lifecycle emissions of hydrogen production methods, ensuring that CCS-enabled systems do not receive undue preference if their net emissions remain problematic.

The risk of carbon lock-in is not inevitable but demands proactive management. By recognizing the inertia of infrastructure, the influence of policy frameworks, and the financial risks of stranded assets, stakeholders can make informed decisions that align near-term actions with long-term decarbonization objectives. The hydrogen economy holds immense promise, but its success depends on avoiding pitfalls that could delay or derail the transition to a truly sustainable energy future.