The water electrolyzer industry has pitched itself exclusively as a hydrogen business. Investors, offtake agreements, and government incentive schemes have all been built around the kilogram-of-H2 economics of electrolysis, while the other product of splitting water, i.e. eight kilograms of pure oxygen for every kilogram of hydrogen, is mostly ignored. In most projects today, that oxygen is simply vented to atmosphere. It is a striking piece of waste: electrolyzers spend electricity separating water into two valuable industrial gases, and then quietly discard one of them.
That is a missed opportunity and exploiting it may be one of the more consequential adjustments the electrolyzer industry can make to its value proposition. Pure oxygen has genuine commercial demand wherever combustion or gasification processes need to avoid the nitrogen that makes up 78% of air. Today that demand is met almost entirely by cryogenic air separation units (ASUs), which are capital-intensive, energy-hungry, and typically only economical at large scale. Electrolyzers already produce oxygen of higher purity as a free co-product of making hydrogen. The leading, most readily available candidate is to use the pure oxygen biproduct in oxyfuel combustion with carbon capture. This changes the underlying economics of green hydrogen projects and gives the industry a second, underappreciated use-case for its existence.
Oxyfuel Combustion: A Non-commercial Byproduct is Now a Profit-making Second Product
Oxyfuel combustion means burning a fuel in an atmosphere of pure (or nearly pure) oxygen gas instead of ordinary air. Removing the nitrogen from the combustion has two effects that matter enormously for decarbonization. First, without nitrogen there is very little thermal NOx formation, since NOx is largely a product of nitrogen and oxygen reacting at flame temperatures. Second, and more importantly for the climate case, the flue gas from an oxyfuel process is no longer diluted by the roughly 70% nitrogen that dominates ordinary combustion exhaust. Instead, the flue gas is overwhelmingly carbon dioxide and water vapor. Once the water is condensed out, what remains is a stream of CO2 concentrated enough to compress and transport directly for storage or utilization, without the elaborate and expensive amine-scrubbing or other post-combustion capture equipment that conventional air-fired plants require. Oxyfuel combustion, in other words, is one of the most cost-efficient routes to carbon capture that exists, and its main limiting factor has always been the cost and energy penalty of producing the oxygen supply upstream of combustion.
This is precisely where electrolyzers can insert themselves. An electrolysis plant sized for a hydrogen offtake contract of any real scale produces a proportional, continuous stream of high-purity oxygen essentially for zero marginal cost, since the electricity cost is already being absorbed by the hydrogen side of the business. Supplying that oxygen to a nearby oxyfuel combustion customer displaces the need for a dedicated ASU, removing both its capital cost and its own considerable electricity draw. That is a direct economic subsidy the electrolyzer industry can offer to industrial decarbonization projects, and it strengthens the case for siting electrolyzers near existing heavy industry rather than only near renewable generation.
Three fuel streams illustrate the range of opportunity.
Fossil methane (natural gas) is the larger-volume opportunity in the near term, simply because it still supplies the bulk of industrial process heat: kilns, boilers, furnaces, and steam generation at cement, lime, glass, and chemical plants. These are exactly the "hard to abate" sectors that a straightforward switch to electricity or hydrogen combustion cannot easily reach, because the required temperatures or fuel-handling characteristics don't transfer well. Retrofitting such a facility for oxyfuel firing, using electrolyzer-supplied oxygen, allows the existing gas infrastructure to remain largely intact while converting the plant into a near-continuous, near-pure CO2 source — a much better starting point for carbon capture and storage or utilization than trying to strip CO2 out of a nitrogen-diluted stream after the fact.
Biogas from anaerobic digesters, e.g. wastewater plants, farms, and landfills, is typically 55–65% methane with the balance mostly CO2, and is often either flared, upgraded to biomethane by stripping out that CO2, or burned in air with the resulting flue gas simply released. Oxyfuel combustion of raw (not upgraded) biogas sidesteps the upgrading step entirely: burning the methane fraction in electrolytic oxygen concentrates the exhaust into a CO2 stream that already includes the biogas's native CO2 content, ready for direct capture. In this way, using the biproduct pure oxygen for oxyfuel heat and power can produce carbon removals when raw biogas is the fuel.
Oxyfuel combustion of biomethane is no different than oxyfuel of fossil methane but capturing the biogenic CO2 from biomethane oxyfuel combustion results in the lowest-cost engineered carbon removals from the atmosphere.
Industrial syngas is a hydrogen/carbon-monoxide/carbon dioxide mixture produced by various heavy industries. It is the third and arguably most natural fit, because oxygen-blown gasification is already standard industry practice. Oxyfuel can be adapted to use syngas as a fuel, and together with low-cost biproduct oxygen from electrolyzers, can convert syngas into zero-emissions energy.
Taken together, these markets give the electrolyzer industry a coherent pitch that goes beyond "we make green hydrogen": we make green hydrogen and, as a direct consequence, we can supply capture-ready industrial decarbonization to the combustion and gasification processes that hydrogen alone cannot reach. Every cubic meter of oxygen sold into an oxyfuel combustor or gasification application is a cubic meter that an ASU did not need to produce, and every such displacement improves the overall carbon and energy balance of the electrolyzer project without changing anything about how the electrolyzer itself operates.
The Broader Argument
None of these use-cases change what an electrolyzer fundamentally does. They aim to change how the water electrolyzer industry talks about and prices what it produces. The strongest version of the electrolyzer value proposition is "we produce two industrial gases from the same process, enabling us to build the systems and partnerships to monetize both of them, in markets from industrial carbon capture to future hybrid-electric transport, while also working on ways to extract maximum energy utility from electrolysis." Oxygen sales into oxyfuel energy projects require no new hardware breakthroughs and can in many cases be operational long before new natural gas combined cycle power plants. The key enablers are new commercial relationships and, in some cases, modest oxygen compression and transport infrastructure. Together, they result in an industry that profits from its main biproduct output instead of venting it.
