Hydrogen to cover 12% of global energy use by 2050: Irena report

Irena estimates more than 30 per cent of hydrogen could be traded across borders by 2050, a higher share than natural gas today



AP file
AP file
by

Ashwani Kumar

Published: Sat 15 Jan 2022, 7:50 PM

The International Renewable Energy Agency (Irena) estimated that hydrogen will cover up to 12 per cent of global energy use by 2050.

“Hydrogen could prove to be a missing link to a climate-safe energy future,” Francesco La Camera, Director-General of Irena, said while presenting the key findings of new report: ‘Geopolitics of the Energy Transformation: The Hydrogen Factor’ in Abu Dhabi.

According to the agency’s analysis, rapid growth of the global hydrogen economy can bring significant geoeconomic and geopolitical shifts giving rise to a wave of new interdependencies. The report noted that hydrogen is changing 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.

Irena estimated that driven by the climate urgency and countries’ commitments to net zero emission, hydrogen could account for up to 12 per cent of global energy use by 2050.

“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 said.

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Growing trade and targeted investments in a market dominated by fossil fuels that is currently valued at $174 billion is likely to boost economic competitiveness and influence the foreign policy landscape with bilateral deals diverging significantly from the hydrocarbon relationships of the 20th century.

“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,” La Camera noted.

Irena estimated that more than 30 per cent of hydrogen could be traded across borders by 2050, a higher share than natural gas today. Countries that have not traditionally traded energy are establishing bilateral energy relations around hydrogen.

Cross-border hydrogen trade is set to grow considerably with over 30 countries and regions already planning for active commerce.

“Some countries that expect to be importers, such as Japan and Germany, are already deploying dedicated hydrogen diplomacy. Fossil fuel exporters increasingly consider clean hydrogen an attractive way to diversify their economies, for example Australia, Oman, Saudi Arabia and the UAE. However, broader economic transition strategies are required as hydrogen will not compensate for losses in oil and gas revenues,” the report mentioned.

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 today, 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,” the report said.

The geopolitics of clean hydrogen will likely play out in different stages. The report noted the 2020s as a big race for technology leadership. But demand is expected to only take off in the mid-2030s. By that time, green hydrogen will cost-compete with fossil-fuel hydrogen globally, poised to happen even earlier in countries like China, Brazil and India.

Countries with ample renewable potential could become sites of green industrialisation, using their potential to attract energy-intensive industries.

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

“Shaping the rules, standards and governance of hydrogen could lead to geopolitical competition or open a new era of enhanced international cooperation. Assisting particularly developing countries to deploy green hydrogen technologies and advance hydrogen industries could prevent the widening of a global decarbonisation divide and promote equity and inclusion, creating local value chains, green industries, and jobs in renewable-rich countries,” the report added.


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