Hydrogen could Shift World Energy Order

A group of engineering students in Delft, Netherlands, speculate on the potential future of energy systems in a small room. Students studying international relations in Stavanger, Norway, ponder how the global order may change if everyone had access to renewable energy.

The IR students and engineers both have limited knowledge of energy technology.

They are engaged in a green policy simulation, outlining how they would implement the energy transition while balancing the needs of their own inhabitants with those of the rest of the globe. While some of the imaginary nations rely on fossil fuels, others are fortunate to have a plentiful supply of renewable energy.

The complexity of trade-offs in energy transitions and emission reductions can be taught using this practical tool. If nations not recognized for their export or production of renewable energy end up ruling it, how could the global order change?

Hydrogen, the current darling of the energy transition, has made the transfer from engineering to politics. More than US$70 billion has already been pledged by governments worldwide to support the hydrogen industry.

Green hydrogen is created by electrolysis using renewable electricity, whereas blue hydrogen is produced with carbon capture. Grey hydrogen is produced using natural gas. Green hydrogen is currently not commercially viable.

We wouldn’t be talking about hydrogen as much if it weren’t for the fact that the world is running out of time to halt catastrophic global warming. Additionally, at least in Europe, electricity used for power generation must compete with electricity used to produce hydrogen through electrolysis.

Has hydrogen the potential to replace oil? Oil demand could peak soon after 2025, according to energy specialists, and by 2050, hydrogen could supply up to 24% of the world’s energy requirements. With oil accounting for 31.9% of all energy, coal for 26.8%, and gas for 23.2%, a 24% share is significant enough to influence global politics.

It is worthwhile posing three questions in order to predict how geopolitics might develop. Three questions need to be answered: how much hydrogen will be used, how much will be traded, and how quickly will things change? After that, you may decide where hydrogen might fit into the world’s energy mix.

A large industry that is trying to reduce its carbon footprint, industrial shipping, and heavy vehicles are the apparent early adopters. Large electric utilities are interested in using it for storage. These participants are significantly involved with the current oil and gas sector. The International Energy Agency has warned that economies dependent on oil and gas could lose US$7 trillion by 2040 if countries switch to sustainable energy. They can receive a lifeline from hydrogen to expand their company strategy.

However, in a green society, electricity is anticipated to power the majority of other uses as the energy carrier of the future.

The ability of a country to produce goods on its own, the cost differential between nations, and strategic factors all affect trade. Consider developing nations who don’t want to depend on their closest neighbors for their electricity: hydrogen imports could provide the strategic diversification they need. Simply put, hydrogen enables more flexible, long-distance trade.

It is possible to create a hydrogen market in East Asia that stretches from Australia to Japan to India. In the Americas or between the Middle East and Europe, comparable marketplaces might emerge.

As sustainable energy technology develops, four possible outcomes for nations are plausible. Technology creates the potential for the export of materials, knowledge, and energy.

Exporters of fossil fuels transition to exporters of sustainable energy; they gain some and lose some.

Exporters of fossil fuels who also import sources of clean energy are losing out.

A country that imports fossil fuels transitions from a posture of dependence to one of exporting sustainable energy. A win-win situation.

And last, a fossil fuel importer misses the chance to switch to being an importer of sustainable energy, which is the situation most nations currently find themselves in.

Governments betting on green hydrogen before it is commercially viable are taking a high-risk, high-reward position. However, if they invest too little too late, they run the risk of losing money and falling behind.

The only thing that is definite is that not all countries will benefit from the change equally, and those that lose may not be the typical suspects.

Source: Thomas Sattich associate professor at the University of Stavanger and Head of the Master in Energy, Environment and Society program.