Page 10 - Energize August 2022

NEWS

A quarter of global hydrogen set for

trading by 2050

Green hydrogen trade can provide a low-cost alternative to diversify energy imports and improve
energy security; but competitive production and infrastructure are critical to win the ‘hydrogen race’,
according to a new report from the International Renewable Energy Agency (IRENA).

Information from IRENA The new reports see half of the hydrogen in 2050 being traded
through largely existing, repurposed gas pipelines, drastically
o make the trade of hydrogen cost-effective, the costs of reducing the costs of transport. With costs of around US$0,10/kg
producing and trading green hydrogen must be lower than per 1000 km in 2050, it would be the most cost-effective option for
Tdomestic production to offset higher transport cost, the IRENA travel of less than 3000 km.
report says. By contrast, transportation through new pipelines would cost
Hydrogen trade can contribute to a more diversified and resilient twice as much. This is still less than shipping it in the form of green
energy system, allowing countries to decarbonise their economies to ammonia over 3000 to 5000 km, the other half of global hydrogen
the benefit of producers and consumers. trade. Ammonia shipping will become the dominant form of
The report, ‘Global hydrogen trade to meet the 1,5°C climate intercontinental hydrogen trade, according to the analysis.
goal’ finds that future hydrogen trade can be significant. Trade allows This future pipeline-enabled trade would be concentrated in
tapping into affordable hydrogen as the scale of projects progresses two regional markets, namely Europe with the vast majority of 85%
and technology matures. One-quarter of the global green hydrogen of the hydrogen trade and Latin America with 15%. Europe’s main
demand could be satisfied with international trade through pipelines trading partners would be North Africa and the Middle East while
and ships, according to the reports. Australia could mainly supply Asia.
With the costs of renewables falling and the global hydrogen New trade markets would lead to different roles for energy
potential exceeding global energy demand 20-fold, three-quarters players. Some of the largest potential exporters of hydrogen by
of the global hydrogen would still be produced and used locally in pipeline in 2050 are Chile, North Africa and Spain, representing
2050. This is a significant change from today’s oil market where the almost three-quarters of the pipeline trade market. Major
bulk is internationally traded, but it is similar to gas where one third consumers like China and USA are able to produce most of their
is traded across borders. Hydrogen markets and trade routes are hydrogen domestically. Africa, Australia and North America, account
likely to be more diverse, regional and less lucrative than today’s oil for three-quarters of the global exports. On the importing side,
and gas markets. Japan, South Korea and the European Union are expected to satisfy a
“Having access to abundant renewables will not be enough large share of their hydrogen demand through imports.
to win the hydrogen race, it’s also necessary to develop hydrogen As hydrogen becomes an increasingly internationally traded
trade”, IRENA’s Director-General Francesco La Camera says. “It is true commodity, the hydrogen sector will attract growing sums of
that hydrogen trade can offer multiple opportunities for countries, international investment. Satisfying the global hydrogen demand
from decarbonising industry to diversifying supplies and improving requires an investment of almost US$4-trillion by 2050.
energy security. Today’s energy importers can also become the However, it will be critical to ensure that large hydrogen projects
exporters of the future.” can be financed affordably. Net zero-aligned finance instruments
“But governments must make significant efforts to turn trade must leverage the investment needed by the energy transition,
aspirations into reality”, La Camera added. “A mix of innovation, including ramping up green hydrogen in regions with good
policy support and scaling up can bring the necessary cost reduction renewable potential but a traditionally high cost of capital, fostering
and create a global hydrogen market. Whether trade potentials hydrogen trade further.
can be realised will strongly depend on countries’ policies and
investment priorities and the ability to decarbonise their own energy Read the ‘Global hydrogen trade to meet the 1,5°C
systems.” climate goal’ report series (I-III).
IRENA’s World Energy Transitions Outlook sees hydrogen
covering 12% of global energy demand and cutting 10% of CO 2 IRENA has been pioneering the work on hydrogen within the wider
emissions by 2050. Yet, hydrogen can only be a viable climate energy transition in line with a climate-safe 1,5°C pathway.
solution if the power needed to produce it comes in addition to the Find ‘Green hydrogen: A guide to policy making‘ and ‘Geopolitics
electrification of the energy system, placing an even greater uptake of the energy transformation: The hydrogen factor‘ and many other
of renewable power at the heart of the transition. If costs come publications on the IRENA website.
down, green hydrogen below US$1/kg would be available to meet
ten times the world’s energy demand in 2050. Contact Damian Brandy, IRENA, dbrandy@irena.org, www.irena.org

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