![](images/images_01_17_2022/pic1.jpg)
Green hydrogen to reshape global
trade and disrupt bilateral energy relations, Irena says.
Hydrogen to account for 12% of
global energy use by 2050, giving rise to new exporters and users
![](images/images_01_17_2022/pic2.jpg)
Francesco La Camera, director general of the
International Renewable Energy Agency.
Green hydrogen could disrupt global trade and bilateral energy
relations, Irena says. Victor Besa / The National
AUTHOR
![](images/images_01_17_2022/pic3.jpg)
Deena Kamel
Journalist
Dubai
Deena is an aviation and company news reporter, with a keen interest
in gender issues. Previously she was the Gulf transport correspondent
for Bloomberg Dubai. She has a masters degree in journalism from the
University of British Columbia. Deena is a Rosalynn Carter Mental
Health Journalism Fellow.
The
rise in hydrogen as part of the global energy transition is set to
reshape global trade and redefine bilateral energy relations as the
emergence of new hydrogen exporters and users changes the geopolitical
landscape, according to the
International Renewable Energy Agency.
While this decade will mark a “big race” for
technology developments in clean hydrogen, demand is expected to not
take off until the mid-2030s as
costs are likely to fall sharply with the scaling-up of needed
infrastructure, Abu Dhabi-based Irena said on Saturday in its latest
report, Geopolitics of the Energy Transformation: The Hydrogen
Factor.
“The transition is not a fuel replacement
but a shift to a new system with political, technical, environmental,
and economic disruptions,” Francesco La Camera, director general of
the 165-member country organisation that promotes renewable energy,
said.
![](images/images_01_17_2022/pic4.jpg)
“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
co-operation, the hydrogen market could be more democratic and
inclusive, offering opportunities for developed and developing
countries alike.”
Hydrogen is projected to account for 12 per
cent of global energy use and 10 per cent of carbon dioxide emissions
reductions by 2050, driven by climate change urgency and countries’
commitments to net zero, according to Irena estimates.
Current annual hydrogen sales represent a
market value of about $174 billion, which already exceeds the value of
annual trade in liquefied natural gas, and could grow to $600bn by
2050. The current barriers to scaling up hydrogen are the steep costs
of production, transportation, conversion and storage, compared to
high-carbon fuels.
Hydrogen comes in various forms, including
blue, green and grey. Blue and grey hydrogen are produced from natural
gas, while green hydrogen is derived from renewable sources. A cost
reduction in green hydrogen which is created from the electrolysis of
water using renewable energy, can help boost energy transition, Wood
Mackenzie said in a report last month.
Irena’s latest report analyses the
geopolitical drivers and potential consequences of developing clean
hydrogen value chains, noting how hydrogen can disrupt future energy
systems, who benefits or may be disadvantaged by these developments
and offering policy recommendations on preparing for these
disruptions.
![](images/images_01_17_2022/pic5.jpg)
A Hyundai Motor's Nexo hydrogen car
is fuelled at a hydrogen station in Seoul, South Korea. Reuters
Jennifer Gnana
A scale-up in production of green hydrogen,
which refers to gas produced entirely from renewable sources could
lower costs by 40 per cent in the short-term and 80 per cent
long-term, according to the International Renewable Energy Agency.
A number of climate policymakers have been
pushing for countries to develop green hydrogen, as opposed to 'grey'
or 'blue' hydrogen as they increasingly factor in the clean fuel as
part of their energy transition.
Grey hydrogen refers to manufacture of the
gas using fossil fuels and currently accounts for 95 per cent of
production. Blue hydrogen is extracted from natural gas, through a
process called methane reformation, which relies on carbon capture and
storage.
Technology that uses renewables to
split water molecules through electrolysis, is being increasingly
favoured, as countries look to eliminate fossil fuels from future
energy mixes.
"Green hydrogen is already close to being
competitive today in regions where all the favourable conditions
align, but these are usually far from demand centres," the
intergovernmental agency said in its report.
It cites Patagonia as an example, where wind
energy could have a capacity factor of almost 50 per cent, with an
electricity cost of $25-30 MWh. That is enough to achieve a green
hydrogen production cost of about $2.5/kg, which is close to the blue
hydrogen cost range, Irena said. But Irena also points out that green
hydrogen is still 2-3 times more expensive than blue hydrogen and
the cost of the former is defined by electricity costs, investment
cost, fixed operating costs and the number of operating hours of the
electrolyser facilities.
Costs for green hydrogen, currently
considered steep, could fall below $2 per kilogram, enough to make it
competitive with other fuels, within a decade, according to the
agency's report.
![](images/images_01_17_2022/pic6.jpg)
"Green hydrogen forms a cornerstone of the
shift away from fossil fuels," said Irena director general Francesco
La Camera. "Its uptake will be essential for sectors like aviation,
international shipping and heavy industry, where energy intensity is
high and emissions are hardest to abate."
Several energy firms, including national oil
companies such as the UAE's Adnoc are factoring in development of a
hydrogen ecosystem as part of their long-term growth plans.
Saudi Arabia, the world's largest oil
exporter, is also putting together a strategy to develop hydrogen
production capabilities as it looks for newer, alternative fuels to be
part of its energy mix.
Hydrogen is being trialled as a promising
alternative to fossil fuels, particularly in transportation. Clean
hydrogen can slash green house gas emissions from the hydrocarbons
sector by 34 per cent, according to BloombergNEF. The growth of
hydrogen can fuel a €120 billion (Dh523.1bn) industry in Europe by
2050, according to Aurora Energy Research.
McKinsey, meanwhile, estimates that the
development of a hydrogen economy could generate $140bn in annual
revenue by 2030 and help support 700,000 jobs in the US.
Irena estimates that industry investors are
planning the deployment of at least 25 Gigawatts of electrolyser
capacity for green hydrogen by 2026.
"Still, far steeper growth is needed – in
renewable power as well as green hydrogen capacity – to fulfil
ambitious climate goals and hold the rise in average global
temperatures at 1.5°C," Irena said in the report.
Falling costs of renewables could
lower cost of developing hydrogen, Irena says
Costs for concentrated solar power
fell by 16% last year, while wind fell by 13%
![](images/images_01_17_2022/pic7.jpg)
Steam rises from the Miller Coal
Power Plant in Alabama. The declining costs for renewables are also
likely to challenge
coal's predominance as a cheap source of fuel, particularly in developing
economies, according to Irena. AFP
Falling costs of renewable energy generation
could drive down the cost of hydrogen production, particularly in the
Middle East, the International Renewable Energy Agency said in a
report on Tuesday.
Record low tariffs for solar power projects
among oil-exporting states of the Middle East could allow for the
development of low-cost green hydrogen, which refers to the clean fuel
produced entirely from renewables.
"The potential levelised cost of hydrogen,
assuming the low solar photovoltaic and onshore wind prices from the
recent auctions in Saudi Arabia, could be as little as $1.62 per
kilogramme of hydrogen (kgH2)," the Abu Dhabi-headquartered agency
said.
"This compares favourably with the
hypothetical cost of natural gas steam methane reforming, with today’s
carbon capture, utilisation and storage (CCUS) costs at between
$1.45/kgH2 and $2.40/kgH2," the report added.
Hydrogen produced from steam methane
reformation, which uses captured carbon dioxide as a source, is known
as blue hydrogen. The variant of the gas produced through electrolysis
of water using renewable energy as a source is known as green
hydrogen. Both can later be stored and exported in the form of
ammonia.
The UAE is building a massive blue ammonia
facility at the country's downstream hub in Ruwais. Abu Dhabi National
Oil Company is advancing plans to develop the 1,000 kilotonne per year
facility within the Ta'ziz industrial complex.
On Tuesday, Fertiglobe, a joint venture
between Adnoc and Dutch firm OCI said it will
join the development of the blue ammonia plant.
Irena noted that falling costs of solar with
record-low bids such as $0.0157 per kilowatt-hour in Qatar,
$0.0135/kWh in the UAE and $0.0104/kWh in Saudi Arabia over the last
18 months are accelerating the deployment of green energy – and
eventually green hydrogen.
Globally, renewable energy costs were lower
than fossil fuels in 2020, according to the agency's Renewable
Power Generation Costs in 2020 report.
Costs for concentrated solar power fell by
16 per cent last year, while wind fell by 13 per cent. Offshore wind
and solar PV also saw costs decline 9 per cent and 7 per cent,
respectively.
The declining costs for renewables are also
likely to challenge coal's predominance as a cheap source of fuel,
particularly in developing economies.
“Today, renewables are the cheapest source
of power,” said Francesco La Camera, Irena's director general.
"Following the latest commitment by G7 to
net-zero and stop global coal funding abroad, it is now for G20 and
emerging economies to match these measures. We cannot allow having a
dual track for energy transition where some countries rapidly turn
green and others remain trapped in the fossil-based system of the
past," he added.
“Shaping the rules, standards and governance
of hydrogen could lead to geopolitical competition or open a new era
of enhanced international co-operation,” the report said.
“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.”
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, it said. 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.
Africa, the Americas, the Middle East and
Oceania have the highest technical potential for green hydrogen
production, according to the agency. Europe, North-East Asia and
South-East Asia have fewer resources for producing green hydrogen.
While countries such as Chile, Morocco and
Namibia are net energy importers today, they are set to emerge as
green hydrogen exporters.
The UAE and other countries around the
region have formulated plans to introduce hydrogen into the energy mix
and tap into the clean fuel’s potential.
State entities Adnoc, Mubadala and ADQ
formed an
alliance last year to develop a hydrogen economy in the UAE. The
alliance plans to develop a roadmap to accelerate the adoption and use
of the lighter, cleaner gas in the UAE across major sectors such as
utilities, mobility and industry.
The transition is not a fuel
replacement but
a shift to a new system with political,
technical, environmental, and economic
disruptions Francesco La Camera,
director general of Irena
Hydrogen has an estimated $11 trillion
market potential, according to Bank of America, and is expected to
generate $2.5tn in direct revenues and $11tn of indirect
infrastructure by 2050 as its production increases sixfold.
“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 said.
Cross-border trading of hydrogen will
increase in the 2030s, with demand starting to take off from 2035.
Irena estimates that two-thirds of green hydrogen production in 2050
would be used locally and one-third traded across borders. Pipelines,
including adapted natural gas pipelines, are likely to facilitate half
of this trade. The other half would be loaded on ships in the form of
hydrogen derivatives, mainly ammonia.
Hydrogen trade flows are “unlikely to become
weaponised or cartelised” because hydrogen can be produced from many
primary energy sources and in a wide variety of places worldwide,
Irena said.
“Green energy trade flows are unlikely to
lend themselves as easily to geopolitical influence as oil and gas,”
the agency said. “That said, supply shortages could arise,
particularly in the early years of hydrogen trade, when the number of
suppliers is limited and most trade is still governed by bilateral
arrangements.”
In its 12th assembly under the theme Energy
Transition: From Commitments to Action on Saturday, Irena’s chief said
energy systems of the future must be cleaner and ensure “more equity
or at least less injustice” in the world than the current system.
Governments must speed up the energy
transition by “investing massively” in renewables, which will lower
energy prices for consumers and bring development in energy-poor
regions, Frans Timmermans, executive vice-president of the European
Commission’s work on the European Green Deal and its first European
Climate Law, said.
Developed nations must take responsibility
for their role in contributing to air pollution and pay for the damage
done to small-island states that have suffered years of droughts,
floods and hurricanes, Molwyn Joseph, Antigua’s minister of health and
environment, said.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
Nathan1@greenplayammonia.com
exactrix@exactrix.com
|