As a low-carbon fuel, feedstock, and energy source, hydrogen is expected to play a vital role in the decarbonization of high-temperature process heat during the pyroprocessing steps of clinker production in cement manufacturing. However, to accurately assess its potential for reducing CO2 emissions and the associated costs in clinker production applications, a techno-economic analysis and a study of facility-level CO2 emissions are necessary. Assuming that up to 20% hydrogen can be blended in clinker fuel mix without significant changes in equipment configuration, this study evaluates the potential reduction in CO2 emissions (scopes 1 and 2) and cost implications when replacing current carbon-intensive fuels with hydrogen. Using the direct energy substitution method, we developed an Excel-based model of clinker production, considering different hydrogen–blend scenarios. Hydrogen from steam methane reformer (gray) and renewable-based electrolysis (green) are considered as sources of hydrogen fuel for blend scenarios of 5%–20%. Metrics such as the cost of cement production, facility-level CO2 emissions, and cost of CO2 avoided were computed. Results show that for hydrogen blends (gray or green) between 5% and 20%, the cost of cement increases by 0.6% to 16%, with only a 0.4% to 6% reduction in CO2 emissions. When the cost of CO2 avoided was computed, the extra cost required to reduce CO2 emissions is $229 to $358/ metric ton CO2. In summary, although green hydrogen shows promise as a low-carbon fuel, its adoption for decarbonizing clinker production is currently impeded by costs.