(Abu Dhabi / United Arab Emirates) – The rapid growth of the global hydrogen economy is bringing significant geoeconomic shifts.
Hydrogen is changing energy trade and regional energy relationships. This could indicate the emergence of new centers of geopolitical influence based on the production and use of hydrogen as traditional oil and gas trade declines. These are some of the key findings of the analysis “Geopolitics of the Energy Transformation: The Hydrogen Factor", published by the International Renewable Energy Agency (IRENA).
Hydrogen will cover twelve percent of energy needs in 2050
The organization estimates that hydrogen will cover around twelve percent of global energy needs by 2050. “Growing trade and targeted investment in a market dominated by fossil fuels, currently worth $174 billion, 
are likely to increase economic competitiveness and influence the foreign policy landscape.”
The energy source could “prove to be the missing link on the path to a climate-proof energy future,” said Francesco La Camera, director general of IRENA. “Hydrogen is clearly part of the renewable energy revolution, with green hydrogen proving to be an enabler of climate neutrality without compromising industrial growth and social development.”
New players lead to new transport routes
IRENA estimates that over 2050 percent of hydrogen will be traded across borders by 30, a higher proportion than is currently the case for natural gas. 
More than 30 countries and regions are already planning active trading. Some countries that are expected to be importers are already engaging in “targeted hydrogen diplomacy,” such as Japan and Germany. Countries that export fossil fuels are increasingly seeing clean hydrogen as an attractive way to diversify their economies, such as Australia, Oman, Saudi Arabia and the United Arab Emirates. However, “more comprehensive economic transition strategies are needed as hydrogen cannot offset the loss in oil and gas revenues.”
“Energy supply” as a means of pressure is losing relevance
As more net importers and exporters emerge on the world stage, it is “unlikely that hydrogen trading will become a weapon and a cartel in contrast to the geopolitical influence of oil and gas.” The power of producers will “shift from a few to many actors,” according to the study. This also reduces the possibility of using energy supply as a political means of pressure on the part of the producing countries. 
The technical potential for hydrogen production significantly exceeds the estimated global demand. Countries that can produce cheap electricity from renewable energy sources are most likely to be able to produce competitive green hydrogen. “While Chile, Morocco and Namibia are now net energy importers, they will become exporters of green hydrogen,” say the report’s authors. Exploiting the potential of regions such as Africa, North and South America, the Middle East and Oceania limits the risk of export concentration. But many countries still needed large-scale technology transfers, infrastructure and investments.
Race for technology leadership
The geopolitics of clean hydrogen will likely play out in different phases. The report predicts “a big race for technology leadership” in the 2020s. However, demand is not expected to pick up until the mid-2030s. By then, green hydrogen will be able to compete globally with hydrogen from fossil fuels in terms of cost; in countries like China, Brazil and India even earlier. In Europe, green hydrogen was already affordable during the rise in natural gas prices in 2021. “The renewal of the natural gas pipelines should further stimulate demand and make trading in hydrogen easier.”
Countries with great renewable energy potential could become sites of green industrialization and attract energy-intensive industries. In addition, participation in the hydrogen value chain could increase economic competitiveness. In particular, the production of devices such as electrolysers and fuel cells could stimulate the economy. China, Japan and Europe have already gained a lead in production, "but innovations will continue to shape the current production landscape."
Geopolitical competition strengthens energy supplies
Green hydrogen could strengthen the independence, security and resilience of the energy supply by reducing dependence on imports and price fluctuations and increasing the flexibility of the energy system. However, the raw materials needed for hydrogen and renewable technologies could “draw attention to material safety.” Shortages and price fluctuations impacted hydrogen supply chains, negatively impacting costs and revenues.
The design of the rules and standards as well as political guidelines for hydrogen could “lead to geopolitical competition or usher in a new era of increased international cooperation.” Supporting developing countries in particular to deploy green hydrogen technologies and develop hydrogen industries could prevent the global decarbonization gap from widening and promote equity and inclusion by creating local value chains, green industries and jobs in countries rich in hydrogen renewable energies is another conclusion of the IRENA analysis.
IRENA: “Geopolitics of the Energy Transformation: The Hydrogen Factor“. The study is available free of charge PDF (English, 118 pages).
Short presentation on YouTube (4:30 minutes)
https://www.youtube.com/watch?v=KulBiMqevu4
Photos
Green hydrogen could change global trade, bilateral energy relations and the positions of states. © IRENA
Graphic center
Import and export flows of a new hydrogen economy. © IRENA
Graphic below
Depiction of the potential for producing green hydrogen below $1,5 per kilogram by 2050. The unit is exajoules (EJ). One exajoule is equivalent to 278 terawatt hours (TWh).
Reading: According to IRENA's estimate, the potential for producing green hydrogen in the sub-Saharan region in 2050 is around 2.715 EJ.
To put it into perspective: The primary energy requirement in Germany in the first Corona year 2020 was 11,78 EJ (3.273 TWh). Last year it was 12,19 EJ (3.387 TWh). China was by far the largest consumer of primary energy in 2020 with 145 EJ, followed by the USA with around 88 EJ. Germany is in seventh place. Global primary energy consumption was 2020 EJ in 556. (Data sources: Working Group on Energy Balances, data Germany; Statista GmbH, data worldwide) © Graphic IRENA
