Hydrogen economy indicates new global power changes – IRENA
The rapid expansion of the global hydrogen economy may result in significant geoeconomic and geopolitical developments, resulting in a slew of new interdependencies, a new International Renewable Energy Agency study (IRENA) shows.
As traditional oil and gas trade declines, IRENA’s report titled “Geopolitics of the Energy Transformation: The Hydrogen Factor” sees hydrogen changing the geography of energy trade and regionalising energy relations, implying the emergence of new geopolitical influence centers based on hydrogen production and use.
IRENA predicts that by 2050, hydrogen will account for up to 12 per cent of world energy demand, owing to the urgency of the climate crisis and countries’ promises to net-zero emissions.
Meanwhile, growing trade and targeted investments in a market dominated by fossil fuels and currently valued at $174 billion are likely to boost economic competitiveness and influence the foreign policy landscape, with bilateral deals diverging significantly from 20th-century hydrocarbon relationships.
Francesco La Camera, Director-General of IRENA, said that hydrogen could prove to be a missing link to a climate-safe energy future.
“Hydrogen is clearly riding on the renewable energy revolution with green hydrogen emerging as a game-changer for achieving climate neutrality without compromising industrial growth and social development.
“However, hydrogen is not a brand-new oil and the transition is not a replacement for fossil fuels, but rather a move to a new system that will cause political, technological, environmental, and economic crisis.
“The hydrogen market might become more democratic and inclusive with international cooperation, providing opportunities for both developed and developing countries,” he said.
According to analysis by IRENA, more than 30 per cent of hydrogen could be traded across borders by 2050, a higher share than natural gas today.
However, in contrast to the geopolitical influence of oil and gas, hydrogen trade is unlikely to become weaponised and cartelised as more players and new classes of net importers and exporters emerge on the global stage.
In furtherance, IRENA stated that the technical potential for hydrogen production far outstrips the estimated global demand.
“Countries that can produce cheap renewable electricity will be in the best position to produce competitive green hydrogen. While Chile, Morocco, and Namibia are currently net energy importers, they are on track to become green hydrogen exporters.
“Realising the potential of regions such as Africa, the Americas, the Middle East, and Oceania may help to reduce the risk of export concentration, but many countries will require large-scale technology transfers, infrastructure, and investment.”
According to the report, the geopolitics of clean hydrogen will most likely unfold in stages as the 2020s will be a big race for technological leadership.
However, demand is not expected to take off until the mid-2030s as Green hydrogen will be cost-competitive with fossil-fuel hydrogen globally by that time, and this is expected to happen even sooner in countries such as China, Brazil, and India.
The report also give cognisance to the effect of these changes on the international scene.
“shaping hydrogen’s norms, standards, and governance might result in geopolitical conflict or usher in a new era of improved international cooperation.
“Assisting poor countries, in particular, to deploy green hydrogen technology and advance hydrogen businesses might prevent a global decarbonisation divide from deepening and promote equity and inclusion by building local value chains, green industries, and jobs in renewable-rich nations.”