According to a new study by the International Renewable Energy Agency, the rapid expansion of the global hydrogen economy might result in substantial geoeconomic and geopolitical transformations, resulting in a wave of new interdependencies (IRENA).
The Energy Transformation’s Geopolitics: As conventional oil and gas commerce falls, the Hydrogen Factor envisions hydrogen transforming the geography of energy trade and regionalizing energy relations, implying the creation of new geopolitical power centers based on hydrogen production and usage.
IRENA predicts that by 2050, hydrogen will account for up to 12% of world energy demand, owing to the urgency of the climate crisis and governments’ promises to net-zero emissions. Growing trade and targeted investments in a market dominated by fossil fuels and presently valued at USD 174 billion are expected to increase economic competitiveness and affect foreign policy, with bilateral agreements varying dramatically from hydrocarbon connections in the twentieth century.
“Hydrogen might be a missing link in a climate-safe energy future,” stated IRENA Director-General Francesco La Camera. “Green hydrogen is emerging as a game-changer for reaching climate neutrality without compromising industrial progress and social development, and hydrogen is obviously riding on the renewable energy revolution.” However, hydrogen is not a brand-new oil. And the transition is not a substitute for fossil fuels, but rather a move to a new system that will cause political, technological, environmental, and economic problems.”
“Green hydrogen will attract new and varied players to the market, diversify routes and supplies, and move power from the few to the many.” The hydrogen market might become more democratic and inclusive with international cooperation, providing possibilities for both developed and developing nations.”
By 2050, IRENA projects that over 30% of hydrogen will be exchanged across borders, a larger percentage than natural gas currently. Countries that have never exchanged energy before are forming bilateral energy ties centered on hydrogen. In contrast to the geopolitical importance of oil and gas, hydrogen commerce is unlikely to become weaponized and cartelized as additional participants and new classes of net importers and exporters emerge on the global arena.
Cross-border hydrogen trade is expected to develop significantly, with over 30 nations and areas currently proposing active trading. Japan and Germany, for example, are already using specific hydrogen diplomacy in anticipation of being importers. Clean hydrogen is becoming a more appealing method for fossil fuel exporters, such as Australia, Oman, Saudi Arabia, and the United Arab Emirates, to diversify their economies. However, because hydrogen would not compensate for lost oil and gas income, larger economic transformation solutions are necessary.
The technical potential for hydrogen generation much outnumbers worldwide demand estimates. Countries that can create inexpensive renewable power will be in the greatest position to develop competitive green hydrogen. While nations like Chile, Morocco, and Namibia are now net energy importers, they are expected to become green hydrogen exporters in the future. Developing the potential of areas such as Africa, the Americas, the Middle East, and Oceania might help to reduce the danger of export concentration, but many nations will require large-scale technology transfers, infrastructure, and investment.
The geopolitics of clean hydrogen will very certainly unfold in stages. According to the research, the 2020s will be a tremendous competition for technological leadership. However, demand isn’t likely to pick up until the mid-2030s. Green hydrogen will be cost-competitive with fossil-fuel hydrogen by that time, and it is expected to happen much sooner in nations like China, Brazil, and India. During the 2021 natural gas price increase, green hydrogen was already inexpensive in Europe. Refurbishing natural gas pipes is expected to increase demand and make hydrogen exchange easier.
Countries with a lot of renewable energy might become green industrialization hotspots, attracting energy-intensive companies. Having a stake in the hydrogen value chain can also help businesses compete more effectively. Manufacturing of electrolyzers and fuel cells, in particular, might be a major source of revenue. China, Japan, and Europe have a production head start, but innovation will continue to influence the present industrial scene.
Green hydrogen has the potential to improve energy independence, security, and resilience by reducing import dependency and price volatility while also increasing the energy system’s flexibility. The raw resources required for hydrogen and renewable technologies, on the other hand, may raise concerns about material security. Shortages and price changes in the hydrogen supply chain might have a detrimental impact on cost and income.
Shaping hydrogen’s norms, standards, and governance might result in geopolitical conflict or usher in a new age of improved international collaboration. Assisting poor countries, in particular, to deploy green hydrogen technology and advance hydrogen businesses might prevent a global decarbonization divide from deepening and promote equality and inclusion by building local value chains, green industries, and jobs in renewable-rich nations.
