IRENA Releases Reports On Global Hydrogen Trading Trends In 2050

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A new report by International Renewable Energy Agency (IRENA) has said that to make the trade of hydrogen cost-effective, the costs of producing and trading green hydrogen must be lower than domestic production to offset higher transport cost. Hydrogen trade can contribute to a more diversified and resilient energy system, allowing countries to decarbonise their economies to the benefit of producers and consumers.

The Dynamics Of Hydrogen Demand

‘Global hydrogen trade to meet the 1.5°C climate goal’ finds that future hydrogen trade can be significant. Trade makes it possible to harness affordable hydrogen as the scale of projects and technology advances. One-quarter of the global green hydrogen demand could be met with the help of international trade through pipelines and ships, states the reports.

With the costs of renewables witnessing a plunge and the potential of global hydrogen overtaking the demand for global energy by twenty times, three-quarters of global hydrogen would still be produced and used locally in 2050.  Hydrogen markets and trade routes may see more diversity and be more regional and less lucrative in nature when compared to the current oil and gas markets.

“Having access to abundant renewables will not be enough to win the hydrogen race, it’s also necessary to develop hydrogen trade”, IRENA’s Director-General Francesco La Camera said. “It is true that hydrogen trade can offer multiple opportunities for countries from decarbonising industry to diversifying supplies and improving energy security. Today’s energy importers can also become the exporters of the future.”

“But governments must make significant efforts to turn trade aspirations into reality”, La Camera added. “A mix of innovation, policy support and scaling up can bring the necessary cost reduction and create a global hydrogen market. Whether trade potentials can be realised will strongly depend on countries’ policies and investment priorities and the ability to decarbonise their own energy systems.”

IRENA’s World Energy Transitions Outlook forecasts hydrogen covering 12 per cent of global energy demand and cutting 10 per cent of CO2 emissions by 2050. Hydrogen can be a lucrative alternative only if the power needed for its production is in addition to electrification of the energy system. If the costs see a drop, green hydrogen below USD 1 per kilogram (kg) would be accessible and make meeting ten times the world’s energy demand in 2050 a reality.

Components Of Hydrogen Trading

The report deduces that half of the hydrogen in 2050 could be traded through largely existing, repurposed gas pipelines, which in turn would drastically bring down the transport costs. Boasting of a cost of approximately USD 0.10/kg per 1 000 kilometres (km) in 2050, this could prove to be the most viable option for distances under 3000 km distances. In a contrast to this, transportation through new pipelines would cause the costs to double up. This, however, is still less than shipping it green ammonia for more than 3,000–5,000 km, which makes up the rest of global hydrogen trade. The analysis says that ammonia shipping dominate intercontinental hydrogen trade.

This trade enabled through pipelines would be dominated in two regional markets- Europe (85 per cent) and Latin America with 15 per cent. North Africa and the Middle East could become the former’s primary trading partners. Australia, on the other hand, could become the supplier to Asia.

Energy Players In Emerging Markets

The coming up of new trade markets would for the basis of different roles for energy players. Chile, North Africa and Spain hold the potential to be the largest exporters of hydrogen via pipeline in 2050. This makes up almost three-quarters of the pipeline trade market. Three-quarters of the global exports are made up by Africa, Australia and North America. On the importing side, Japan, South Korea and the European Union are expected to satisfy a large share of their hydrogen demand through imports.

Investing In Green Hydrogen

The hydrogen sector will be a lucrative one likely to attract huge international investment. Meeting the global hydrogen demand calls for an investment of a sum of close to USD 4 trillion by 2050.

It will be essential that large hydrogen projects are financed in an affordable manner. Net zero-aligned finance instruments must leverage the investment needed by the energy transition including ramping up green hydrogen in regions with good renewable potential but traditionally high cost of capital, fostering hydrogen trade further.