The development of hydrogen is accelerating. Governments, economic bodies and companies are betting big on the future of energy including hydrogen as a new, cleaner fuel. By 2050, the International Renewable Energy Agency (IRENA) estimated in a new report that the fuel is likely to cover up to 12 percent of global energy use.
The report, titled Geopolitics of the Energy Transformation: The Hydrogen Factor, envisions a future where the geography of energy trade and energy relations alters as countries fundamentally change their energy mix. IRENA’s research hints as new centres of geopolitical influence growing, built on the production, export, and use of hydrogen while traditional fossil fuel use, such as oil and gas, declines.
“Hydrogen could prove to be a missing link to a climate-safe energy future,” Francesco La Camera, Director-General of IRENA said.
There are several varieties of hydrogen. Chief among its myriad of types are three – green, blue, and grey. Green hydrogen is produced using renewable energy, such as solar power, blue hydrogen is created using hydrocarbons but emissions are stored to prevent climate damage, and grey hydrogen is created in a similar manner to blue, but with greenhouse gases released into the atmosphere. Green hydrogen has been the target of much debate, with experts arguing that it will be a key fuel for the world to reach net zero and prevent catastrophic damage caused by climate change.
“Hydrogen is clearly riding on the renewable energy revolution with green hydrogen emerging as a game changer for achieving climate neutrality without compromising industrial growth and social development. But hydrogen is not a new oil. And the transition is not a fuel replacement but a shift to a new system with political, technical, environmental, and economic disruptions,” La Camera said.
“It is green hydrogen that will bring new and diverse participants to the market, diversify routes and supplies and shift power from the few to the many. With international co-operation, the hydrogen market could be more democratic and inclusive, offering opportunities for developed and developing countries alike.”
Countries in the Middle East are already betting big on hydrogen. Saudi Arabia is currently building the world’s biggest green hydrogen plant at the futuristic city of NEOM with a price tag of $5 billion, while the UAE has announced plans to build the region’s first solar-powered green hydrogen plant.
In October last year, Saudi Energy Minister Prince Abdulaziz said the Kingdom has planned to become the world’s top hydrogen supplier. Similarly, UAE Energy Minister Suhail Al Mazrouei said his country is aiming to capture around 25 percent of the global hydrogen market.
IRENA’s report sees the Middle East and North Africa region as possessing the second highest technical potential for producing green hydrogen at under $1.5 per kilogram by 2050, trailing only Sub Saharan Africa in potential.
The total technical potential for production globally significantly exceeds estimated demand, IRENA said, however, with countries most able to generate cheap renewable electricity placed favourable to help produce green hydrogen in the future. For some countries, such as Morocco, this could flip their energy diplomacy, as the capacity to generate hydrogen means that they could emerge as energy exporters rather than importers.
IRENA also estimates that over 30 percent of hydrogen could be traded over borders by 2050, which would represent a higher share than natural gas today and prompt countries to establish bilateral energy relations on hydrogen in places were relations did not previously exist.
“As more players and new classes of net importers and exporters emerge on the world stage, hydrogen trade is unlikely to become weaponised and cartelised, in contrast to the geopolitical influence of oil and gas,” IRENA said in a statement.
The trade around hydrogen is expected to grow “considerably.” Some countries, such as Japan and Germany, that are expected to be hydrogen importers, are already deploying diplomacy specifically on the new fuel, while hydrocarbon exporters, like countries in the Middle East, are investing in the fuel to diversify their economies.
“Countries with ample renewable potential could become sites of green industrialisation, using their potential to attract energy-intensive industries … Green hydrogen may strengthen energy independence, security, and resilience by cutting import dependency and price volatility and boosting flexibility of the energy system,” IRENA said.
