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For hydrogen trade to be cost-effective, the cost of producing and trading green hydrogen must be lower than domestic production to offset higher transport costs, the International Renewable Energy Agency (IRENA) said in its new report series.
Hydrogen trade can promote a more diverse and resilient energy system, enabling countries to decarbonize their economies for the benefit of producers and consumers.
“Global Hydrogen Trade to Achieve a 1.5°C Climate Target” finds that future hydrogen trade could be significant. As the project scales up and the technology matures, trade allows access to affordable hydrogen. International trade via pipelines and ships could meet a quarter of global green hydrogen demand, the report said.
Three-quarters of the world’s hydrogen will still be produced and used locally by 2050, as the cost of renewable energy falls and the global hydrogen potential exceeds global energy demand by 20 times.
This is a significant change from today’s oil market commodities traded internationally, but it is similar to natural gas, where a third is traded across borders. Hydrogen markets and trade routes are likely to be more diverse, regional and less profitable than today’s oil and gas markets, Irena said.
“Access to abundant renewable energy is not enough to win the hydrogen race, the development of hydrogen trade is also necessary,” said Francesco La Camera, Irena’s director general.
“Indeed, hydrogen trade can offer countries multiple opportunities from decarbonizing industries to diversifying supplies and improving energy security. Today’s energy importers can also become tomorrow’s exporters,” he noted.
“But the government must make a major effort to turn the trade aspirations into reality,” La Camera added. “A combination of innovation, policy support and scale-up can bring the necessary cost reductions and create a global hydrogen market. Whether the trade potential can be realized will largely depend on countries’ policy and investment priorities, as well as on the decarbonization of their own energy systems. ability,” he added.
Irena’s World Energy Transition Outlook projects that by 2050, hydrogen will meet 12% of global energy demand and reduce carbon dioxide emissions by 10%.
However, hydrogen can only be a viable climate solution if the electricity required to produce hydrogen is required in addition to the electrification of the energy system, placing greater uptake of renewable energy at the heart of the transition. If costs fall, green hydrogen for less than $1 per kilogram (kg) could meet 10 times the world’s energy needs by 2050.
By 2050, half of all hydrogen will be traded through existing, repurposed natural gas pipelines, significantly reducing transportation costs, new report shows. At a cost of about $0.10/kg per 1,000 kilometers (km) by 2050, this would be the most cost-effective option for distances under 3,000 km.
By contrast, shipping through the new pipeline would cost twice as much. This is still lower than transporting over 3 000-5 000 km in the form of green ammonia, the other half of the global hydrogen trade. According to analysis, ammonia transportation will become the main form of intercontinental hydrogen trade.
According to Irena, this future pipeline trade will be concentrated in two regional markets, namely Europe, which accounts for 85% of the hydrogen trade, and Latin America, which accounts for 15%. Europe’s main trading partners are North Africa and the Middle East, while Australia mainly supplies Asia.
The new trade market will bring different roles to energy players. Some of the largest potential exporters of pipeline hydrogen by 2050 are Chile, North Africa and Spain, accounting for nearly three-quarters of the pipeline trade market. Major consumers such as China and the United States are able to produce most of the hydrogen domestically.
Africa, Australia and North America account for three-quarters of global exports. On the import side, Japan, South Korea and the European Union are expected to meet most of their hydrogen needs through imports, it added.-TradeArabia News Service
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