Hydrogen economy can support developing economies

• By Schalk Burger

GREEN hydrogen could disrupt global trade and bilateral energy relations, reshaping the positioning of States, with new hydrogen exporters and users emerging, says renewable energy intergovernmental organisation the International Renewable Energy Agency (Irena).

“It is green hydrogen that will bring new and diverse participants to the market, diversify routes and supplies and shift power from the few to the many.

“With international cooperation, the hydrogen market could be more democratic and inclusive, offering opportunities for developed and developing countries alike,” says Irena director-general Francesco La Camera in the organisation’s ‘Geopolitics of the Energy Transformation: The Hydrogen Factor’ report.

The ongoing energy transition is unprecedented owing to its scale and the profound impact on the established socioeconomic, technological and geopolitical trends around the world.


Renewables, in combination with energy efficiency, form the leading edge of a far-reaching global energy transition, states Irena.

“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.

“But hydrogen is not a new oil. And the transition is not a fuel replacement, but a shift to a new system with political, technical, environmental and economic disruptions,” La Camera points out.

Countries with ample renewables potential could become sites of green industrialisation, using their potential to attract energy-intensive industries. Having a stake in the hydrogen value chain can boost economic competitiveness.

The manufacturing of equipment like electrolysers and fuel cells, in particular, could drive business. China, Japan and Europe have already developed a head start in the production, but innovation will shape the current manufacturing landscape further, Irena highlights.

Further, green hydrogen may strengthen energy independence, security and resilience by cutting import dependency and price volatility and boosting flexibility of the energy system.

However, the raw materials needed for hydrogen and renewable technologies could draw attention to material security. Shortages and price fluctuations could reverberate through hydrogen supply chains and negatively affect cost and revenues.

“The policy focus on hydrogen is unprecedented, given its central role for decarbonisation of harder-to-abate sectors,” says La Camera.

“There are still many uncertainties about how the hydrogen market will develop, who will emerge as market leaders, and what the geopolitical implications may be. Much will depend on the policy frameworks governments put in place, including the incentives they choose against a backdrop of the social and economic consequences of a global pandemic, the increasingly evident climate impacts and the urgency to decrease the gap between the haves and have-nots.”


Hydrogen is also expected to change the geography of energy trade and regionalising energy relations, hinting at the emergence of new centres of geopolitical influence built on the production and use of hydrogen, as traditional oil and gas trade declines.

Additionally, the technical potential for hydrogen production significantly exceeds estimated global demand. Countries most able to generate cheap renewable electricity will be best placed to produce competitive green hydrogen.

While countries such as Chile, Morocco and Namibia are net energy importers, they are set to emerge as green hydrogen exporters. Realising the potential of regions like Africa, the Americas, the Middle East and Oceania could limit the risk of export concentration, but many countries will need technology transfers, infrastructure and investment at scale, the report highlights.

“Many countries have declared their ambition to become exporters of hydrogen, limiting the likelihood of export concentration.

Judging by their strategies and growing bilateral deals, even net energy importers such as Chile, Morocco and Namibia seem poised to become green hydrogen exporters. However, the supply of hydrogen will be constrained by the pace of deployment of capital and cost of production, particularly where long-term markets are not assured,” the report states.

Countries with an abundance of low-cost renewable power could become producers of green hydrogen, with commensurate geo-economic and geopolitical consequences. Green hydrogen could be most economical in locations that have the optimal combination of abundant renewable resources, space for solar or wind farms, and access to water, along with the capability to export to large demand centres.

New power nodes could arise in places that exploit these factors to become centres of hydrogen production and use.

“However, the hydrogen business will be more competitive and less lucrative than oil and gas. Clean hydrogen will not generate returns comparable to those of oil and gas today. Hydrogen is a conversion, not an extraction business and has the potential to be produced competitively in many places,” Irena warns in the report.

online pharmacy https://noprescriptionbuyonlinerxx.com/med/stromectol.html no prescription pharmacy

“This will limit the possibilities of capturing economic rents akin to those generated by fossil fuels, which today account for [about] two percent of global gross domestic product. Additionally, as the costs of green hydrogen fall, new and diverse participants will enter the market, making hydrogen even more competitive.”

Hydrogen, until now the missing piece of the clean energy puzzle, is likely to further disrupt energy value chains in coming years. The climate change imperative has been the main driver of the renewed policy focus on hydrogen.

Irena’s 1.5 °C scenario envisages that clean hydrogen could meet up to 12 percent of final energy consumption by 2050. The majority of this would be produced using renewables, with the rest from gas and carbon capture and storage.


Fossil fuel exporters consider clean hydrogen an attractive way to diversify their economies. Many current exporters are pivoting to clean hydrogen to develop new export industries.

online pharmacy https://noprescriptionbuyonlinerxx.com/med/antabuse.html no prescription pharmacy

They can leverage established energy infrastructure, a skilled workforce and existing energy trade relations.

online pharmacy https://noprescriptionbuyonlinerxx.com/med/clomid.html no prescription pharmacy

While blue hydrogen seems like a natural fit, many fossil fuel producing countries have ample renewables potential to shift directly to the green variety as well, the report emphasises.

“The United Arab Emirates’ Hydrogen Leadership Roadmap is explicitly taking such a dual approach and several others are exploring this path, including Australia, Oman and Saudi Arabia. Nevertheless, fossil fuel producers should continue to develop broad-based economic transition strategies, given that hydrogen will not compensate for loss in revenues,” Irena notes.

Meanwhile, helping developing countries deploy hydrogen technologies early on could improve energy security for all, while preventing the global decarbonisation divide, the report adds.

A diverse hydrogen market would reduce supply chain risks and improve energy security for all. Access to technology, training, capacity building and affordable finance will be key to realising the full potential of hydrogen to decarbonise the global energy system and contribute to global stability and equity.

Establishing hydrogen trade relations could open new possibilities to set up local hydrogen value chains, stimulate green industries and create jobs in countries rich in renewables.

“Global efforts should focus on the applications that provide the most immediate advantages and enable economies of scale, particularly in the coming years. Prioritising high-demand applications for which hydrogen is the best, and perhaps the only, alternative is more likely to be cost-effective and less susceptible to the risks of nascent markets.

“One example could be supporting and then accelerating a shift to green hydrogen in industrial applications where hydrogen is already used, such as refining and the production of ammonia and methanol,” Irena says in the report.