The automotive industry has struggled to use hydrogen at scale, but industrial users and data centers may fare better.
Vema Hydrogen It signed a deal in December to provide a California data center, and has now completed a pilot project in Quebec for the power industry with hydrogen produced underground.
The startup drills wells in areas with a certain type of iron-like rock that releases hydrogen gas when treated with water, heat, pressure, and some catalysts. Vema then pulls the hydrogen to the surface and sells it to industrial users.
“To supply the local market of Quebec, about 100,000 tons per year, you need 3 square kilometers, which is nothing,” said Pierre Levin, CEO of Vema, TechCrunch.
Vema’s first pilot well will produce several tons of hydrogen per day, and next year, it plans to drill its first commercial well, which will reach 800 meters into the Earth. Vema expects to produce hydrogen from the first well for less than $1 per kilogram, a commonly used benchmark for clean hydrogen.
Most hydrogen is now made by a process known as steam methane reforming (SMR), where steam is used to remove hydrogen molecules from methane from natural gas. It is energy intensive, and both the process of making steam and the chemical reaction itself release carbon dioxide.
Less polluting sources of hydrogen exist, but are more expensive. Hydrogen from SMR costs between 70 cents and $1.60 per kilogram, according to to the IEA. Carbon capture from SMR can add about 50% to the price, while the cleanest process, which uses zero carbon electricity to power the electrolyzer, the cost increases several times.
Techcrunch event
Boston, MA
|
June 23, 2026
Stimulated geological hydrogen, or “engineered mineral hydrogen,” as Vema calls it, promises to be one of the cleanest sources of hydrogen, according to to the Oxford Institute for Energy Studies.
Once Vema has refined its technique, Levin expects to produce hydrogen for less than 50 cents per kilogram. At that price, Vema’s hydrogen will be cheaper than any other source on the market.
Because the rocks Vema is targeting are so widely distributed, Levin said the company will drill wells near companies that need power, including data centers. California, for example, has some of the largest formations of ophiolites, a type of iron-rich rock that is pushed up from the ocean floor by plate tectonics.
If Vema can deliver hydrogen at the price it predicts, then the geological oddity could make California a mecca for data centers. “You have tons of data centers that are trying to get some basic, decarbonized electricity,” Levin said. “We have a very strong attraction to him.”