Page 26 - Energize February 2022

NEWS

Hydrogen economy hints at new global power dynamics

The International Renewable Energy Agency (IRENA) says green hydrogen could disrupt global trade
and bilateral energy relations, reshaping the positioning of states, with new hydrogen exporters
and users emerging.

apid growth of the global hydrogen economy could bring significant geo-economic importers, such as Japan and Germany,
and geopolitical shifts, giving rise to a wave of new interdependencies, according to are already deploying dedicated
Rnew analysis by the International Renewable Energy Agency (IRENA). “Geopolitics of hydrogen diplomacy. Fossil fuel exporters
the Energy Transformation: The Hydrogen Factor” sees hydrogen changing the geography of increasingly consider clean hydrogen an
energy trade and regionalising energy relations, hinting at the emergence of new centres of attractive way to diversify their economies;
geopolitical influence built on the production and use of hydrogen, as traditional oil and gas for example Australia, Oman, Saudi Arabia
trade declines. and the United Arab Emirates. However,
Driven by the climate urgency and countries’ commitments to net zero, IRENA estimates broader economic transition strategies are
hydrogen to cover up to 12% of global energy use by 2050. Growing trade and targeted required, as hydrogen will not compensate
investments in a market dominated by fossil fuels, and currently valued at US$174-billion, are for losses in oil and gas revenues.
likely to boost economic competitiveness and influence the foreign policy landscape, with The technical potential for hydrogen
bilateral deals diverging significantly from the hydrocarbon relationships of the 20th century. production significantly exceeds estimated
“Hydrogen could prove to be a missing link to a climate-safe energy future”, Francesco La global demand. Countries most able to
Camera, Director-General of IRENA said. “Hydrogen is clearly riding on the renewable energy generate cheap renewable electricity will
revolution with green hydrogen emerging as a game changer for achieving climate neutrality be best placed to produce competitive
without compromising industrial growth and social development. But hydrogen is not a new green hydrogen. While countries such
oil. And the transition is not a fuel replacement but a shift to a new system with political, as Chile, Morocco, and Namibia are net
technical, environmental and economic disruptions.” energy importers today, they are set to
“It is green hydrogen that will bring new and diverse participants to the market, emerge as green hydrogen exporters.
diversify routes and supplies and shift power from the few to the many. With international Realising the potential of regions like
co-operation, the hydrogen market could be more democratic and inclusive, offering Africa, the Americas, the Middle East and
opportunities for developed and developing countries alike.” Oceania could limit the risk of export
IRENA estimates that over 30% of hydrogen could be traded across borders by 2050, a concentration, but many countries will
higher share than natural gas today. Countries which have not traditionally traded energy need technology transfers, infrastructure
are establishing bilateral energy relations around hydrogen. As more players and new classes and investment at scale.
of net importers and exporters emerge on the world stage, hydrogen trade is unlikely to The geopolitics of clean hydrogen
become weaponised and cartelised, in contrast to the geopolitical influence of oil and gas. will likely play out in different stages. The
Cross-border hydrogen trade is set to grow considerably with over 30 countries and report sees the 2020s as a big race for
regions planning for active commerce already today. Some countries that expect to be technology leadership. But demand is

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