Green hydrogen to reshape global trade and disrupt bilateral energy relations, Irena says
The rise in hydrogen as part of the global energy transition is set to reshape global trade and redefine bilateral energy relations as the emergence of new hydrogen exporters and users changes the geopolitical landscape, according to the International Renewable Energy Agency.
While this decade will mark a “big race” for technology developments in clean hydrogen, demand is expected to not take off until the mid-2030s as costs are likely to fall sharply with the scaling-up of needed infrastructure, Abu Dhabi-based Irena said on Saturday in its latest report, Geopolitics of the Energy Transformation: The Hydrogen Factor.
“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.”
Hydrogen is projected to account for 12 per cent of global energy use and 10 per cent of carbon dioxide emissions reductions by 2050, driven by climate change urgency and countries’ commitments to net zero, according to Irena estimates.
Current annual hydrogen sales represent a market value of about $174 billion, which already exceeds the value of annual trade in liquefied natural gas, and could grow to $600bn by 2050. The current barriers to scaling up hydrogen are the steep costs of production, transportation, conversion and storage, compared to high-carbon fuels.
Hydrogen comes in various forms, including blue, green and grey. Blue and grey hydrogen are produced from natural gas, while green hydrogen is derived from renewable sources. A cost reduction in green hydrogen which is created from the electrolysis of water using renewable energy, can help boost energy transition, Wood Mackenzie said in a report last month.
Irena’s latest report analyses the geopolitical drivers and potential consequences of developing clean hydrogen value chains, noting how hydrogen can disrupt future energy systems, who benefits or may be disadvantaged by these developments and offering policy recommendations on preparing for these disruptions.
“Shaping the rules, standards and governance of hydrogen could lead to geopolitical competition or open a new era of enhanced international co-operation,” the report said.
“Assisting particularly developing countries to deploy green hydrogen technologies and advance hydrogen industries could prevent the widening of a global decarbonisation divide and promote equity and inclusion, creating local value chains, green industries and jobs in renewable-rich countries.”
Access to technology, training, capacity-building and affordable finance will be key to realising the full potential of hydrogen to decarbonise the global energy system and contribute to global stability and equity, it said. Establishing hydrogen trade relations could open new possibilities to set up local hydrogen value chains, stimulate green industries and create jobs in countries rich in renewables.
Africa, the Americas, the Middle East and Oceania have the highest technical potential for green hydrogen production, according to the agency. Europe, North-East Asia and South-East Asia have fewer resources for producing green hydrogen.
While countries such as Chile, Morocco and Namibia are net energy importers today, they are set to emerge as green hydrogen exporters.
The UAE and other countries around the region have formulated plans to introduce hydrogen into the energy mix and tap into the clean fuel’s potential.
State entities Adnoc, Mubadala and ADQ formed an alliance last year to develop a hydrogen economy in the UAE. The alliance plans to develop a roadmap to accelerate the adoption and use of the lighter, cleaner gas in the UAE across major sectors such as utilities, mobility and industry.
Hydrogen has an estimated $11 trillion market potential, according to Bank of America, and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases sixfold.
“Realising the potential of regions like Africa, the Americas, the Middle East and Oceania could limit the risk of export concentration, but many countries will need technology transfers, infrastructure and investment at scale,” the report said.
Cross-border trading of hydrogen will increase in the 2030s, with demand starting to take off from 2035. Irena estimates that two-thirds of green hydrogen production in 2050 would be used locally and one-third traded across borders. Pipelines, including adapted natural gas pipelines, are likely to facilitate half of this trade. The other half would be loaded on ships in the form of hydrogen derivatives, mainly ammonia.
Hydrogen trade flows are “unlikely to become weaponised or cartelised” because hydrogen can be produced from many primary energy sources and in a wide variety of places worldwide, Irena said.
“Green energy trade flows are unlikely to lend themselves as easily to geopolitical influence as oil and gas,” the agency said. “That said, supply shortages could arise, particularly in the early years of hydrogen trade, when the number of suppliers is limited and most trade is still governed by bilateral arrangements.”
In its 12th assembly under the theme Energy Transition: From Commitments to Action on Saturday, Irena’s chief said energy systems of the future must be cleaner and ensure “more equity or at least less injustice” in the world than the current system.
Governments must speed up the energy transition by “investing massively” in renewables, which will lower energy prices for consumers and bring development in energy-poor regions, Frans Timmermans, executive vice-president of the European Commission’s work on the European Green Deal and its first European Climate Law, said.
Developed nations must take responsibility for their role in contributing to air pollution and pay for the damage done to small-island states that have suffered years of droughts, floods and hurricanes, Molwyn Joseph, Antigua’s minister of health and environment, said.
Source: www.thenationalnews.com
