According to a new IRENA report, green hydrogen trading can provide a cost-effective alternative that diversifies energy imports and improves energy security.
For hydrogen trading to be profitable, the cost of producing and trading green hydrogen must be lower than domestic production to offset higher transportation costs. A new report published by the International Renewable Energy Agency (IRENAfor its English acronym) believes that hydrogen trading contributes significantly to a more diversified and resilient energy system.
The report “Global hydrogen trade to meet the 1.5°C climate target” shows the importance of future hydrogen trade. Trade gives countries access to affordable hydrogen as projects scale up and the technology matures. A quarter of the world’s hydrogen demand could be covered by international trade via pipelines and ships.
With renewable energy costs falling and hydrogen potential 20 times global energy demand, Three quarters of the world’s hydrogen would still be produced and used locally in 2050. This is a significant change from the current oil market where most of it is traded internationally.
“Access to renewable energy in abundance will not be enough to win the hydrogen race, it is also necessary to develop hydrogen trading,” said IRENA Director General Francesco La Camera.
“It is true that hydrogen trading offers numerous opportunities, from decarbonizing industry to diversifying supply and improving energy security. Energy importers can become the exporters of the future.”
“However, governments need to make significant efforts to turn commercial aspirations into reality,” added La Camera.
“A combination of innovation, political support and scale can deliver the necessary cost reductions and create a global hydrogen market. Realizing the commercial potential depends largely on countries’ investment policies and priorities and the ability to decarbonize their own energy systems.” .
IRENA perspective on hydrogen
This is what IRENA’s World Energy Transitions Outlook predicts Hydrogen meets 12% of global energy needs and reduces 10% of CO2 emissions by 2050. However, hydrogen can only be a viable climate solution if the energy needed to produce it is coupled with the electrification of the energy system, which puts greater uptake of renewable energy at the heart of the energy transition.
The new reports predict half of the hydrogen will be traded through existing reused pipelines, dramatically reducing transportation costs. Green ammonia transport would account for most of the other half, much of it intercontinental hydrogen trade.
As hydrogen becomes an increasingly internationally traded commodity, the hydrogen sector will attract more and more investment. Meeting global demand will require investments of nearly $4 trillion by 2050. Zero funding instruments must mobilize the necessary investments.
The new modeling framework released today can be used to assess critical parameters that will impact future trade flows. This report completes a series of two previous reports on the costs and potential of green hydrogen supply and the technology review of hydrogen carriers.
Read the current report “Global hydrogen trade to achieve the 1.5°C climate target” here.
You can find the digital report “Global hydrogen trade in a 1.5°C scenario” here.
IRENA has pioneered research into hydrogen within the broader energy transition, in line with a 1.5°C climate-proof pathway. On the IRENA website you will find Green Hydrogen: A Guide to Policy Making and Geopolitics of the Energy Transformation: The Hydrogen Factor along with many other publications.
The largest hydrogen plant in Europe
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