The potential for application of hydrogen in light goods vehicles (i.e., freight vehicles with a gross vehicle weight of less than 6 tonnes) for local goods distribution, and the resulting energy and environmental consequences are evaluated. Local distribution of goods by road transport in Denmark is characterized by very poor energy efficiency and by considerable negative environmental impacts compared to the transport demand (tonne-km) covered. Based on an investigation of the Danish stock of LGVs and its application for local freight transportation the paper outlines and assesses different designs for hydrogen operation, all based on hydrogen generated by electrolysis. For each combination of design and weight category hydrogen consumption and emissions are calculated for typical driving patterns, and the potential for emission reduction is assessed. In addition, the longer-term application of hydrogen as energy carrier for renewable energy is evaluated against bio-fuels and electrical propulsion.