Push for hydrogen in transport will involve new set of supply risks: IRENA

John McGarrity outlines the key takeaways from the latest International Renewable Energy Agency (IRENA) report relating to international energy trade

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The adoption of green hydrogen for use in transport and other carbon-intensive sectors will bring new geopolitical risks related to international energy trade, a report from the International Renewable Energy Agency (IRENA) has warned.

The document, published on January 15, comes against a backdrop of the European Union’s likely reliance on imported hydrogen-based fuels to meet climate targets.

In the report, IRENA urges policymakers to take several key steps to avoid future supply or price shocks in hydrogen-based fuels, which at times in the past few decades have been the hallmark of fossil fuels, particularly oil and gas.

“Clean hydrogen can be an important part of the deep decarbonization puzzle and, in turn, may contribute to geopolitical stability by expanding positive economic and political opportunities for countries and regions and minimizing climate risks and losses,” IRENA said.

“But there are risks of carbon lock-in if hydrogen strategies prolong fossil fuel demand and supply and hinder energy efficiency and electrification,” the report added.

Meanwhile, IRENA also highlighted the risk of developing countries potentially diverting renewable energy resources to making hydrogen fuels for export.

This risk could see those countries subsequently relying on fossil fuels for their own energy consumption - an outcome that would ultimately be a net drawback in terms of cutting carbon.

IRENA also warned that key materials used in electrolyzers, such as rare earths, metals and minerals, were concentrated in the hands of just 10 countries, and that technological know-how in the sector was also the preserve of a small number of nations.

Open and fair trade in these commodities and technologies would be essential to enable all countries to develop projects that can transform wind, solar and hydropower into hydrogen-based fuels, the report said.

In December, the EU released an update to its hydrogen strategy, in which it detailed that the bloc is likely to import around half – equivalent to 40GW of electricity – it needs of green electricity or hydrogen-based fuels by 2030.

The update acknowledged however that no trade in hydrogen currently exists.

IRENA said that for such trade to happen, international cooperation will be necessary to devise a transparent hydrogen market with coherent standards and norms that would bring a meaningful contribution to climate targets.

Sufficient support for renewable energy and green hydrogen in developing countries will be crucial, IRENA said, adding that geopolitical risks can be mitigated by reducing unnecessary energy consumption across many final uses.

“Prioritising high-demand applications for which hydrogen is clearly the best alternative is more likely to be cost-effective and less susceptible to the risks associated with nascent markets,” the report said.

“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 added.

Transforming renewable energy through catalyzers into liquid hydrogen and ammonia and exporting it by ships is already the basis of Australia’s planned trade, with Perth-based FFI undertaking to supply hydrogen equivalent to half of the current energy needs of the UK’s truck fleet.

Risks

While OECD member Australia would usually be regarded as low risk in terms of geopolitical disruption, the failure of some large green energy projects to get recent regulatory approval is evidence that even in rich nations, supply risks can also abound.

North Africa and particularly Sub-Saharan African countries are regarded as carrying high levels of risk on multiple fronts, such as the demands that a fast-growing population will place on domestic energy supply, the impact that the thirsty process for making green hydrogen has on an already water-stressed region, and the potential for conflict or civil unrest to disrupt supply.

However, if these risks can be mitigated, these countries could be large suppliers to Europe and other developed country markets.

Potential

A graphic in the IRENA report underlined the huge potential that Africa and the Middle East have to supply lower-cost hydrogen compared with Europe’s resources.

To produce green hydrogen under $1.5/kg by 2050, the Middle East and North Africa has potential of over 2,000 exajoules (EJ), Sub-Sarahan Africa around 2,700 EJ, and Oceania almost 1,300 EJ, with North and South America’s potential seen at around 2,500 EJ and rest of Asia at just under 1,000 EJ.

In Europe, the production potential for green hydrogen under $1.5kg is seen at just 88 EJ.

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