Hydrogen may be the ‘fuel of the future’ – but geopolitics could be a lot like gas

US Secretary of Energy Jennifer granholmJennifer GranholmOvernight Energy: Senate climate advocates begin to address infrastructure targets | judge rejects Noem’s offer for July 4th fireworks at Mount Rushmore | Climate Advocate Wins Third Exxon Board Seat The Hill’s Morning Report – Brought to you by Uber – Committee vote on January 6 postponed; Debate Over Infrastructure Lasts Until June Overnight Energy: Biden Administrator Backs Trump Approval of Large Alaskan Drilling Project | Senate Republicans launch $ 8 billion for infrastructure | EPA to revise Trump rule limiting state authority to block PLUS pipelines just returned from her first trip to Houston, where she go around a hydrogen installation in the La Porte Industrial Complex. For the government, hydrogen will help Houston remain the “Energy Capital of the World” by producing (and possibly exporting) the fuel of the future.

Globally, policymakers are touting the nascent hydrogen economy as the best hope to lead an orderly energy transition, achieve ambitious carbon neutrality objectives, create the jobs of tomorrow and develop the economy. But there is little thought to what the hydrogen business will look like. After all, it might not be that different from today’s trade flows.

A geopolitical map of hydrogen is emerging that is not so different from that of the global gas markets. Some importing countries will replace one dependency with another, while some exporting countries will replace one product with another. However, there will be new entrants, especially those with record renewable energy prices, which may change certain power relations.

Many countries announced a hydrogen strategy over the past four years, which has accelerated the emergence of future trade routes such as Japan-Australia and Germany-Chile. Countries are positioning themselves to produce hydrogen domestically, but also to import or export it depending on their national strengths. Nations and companies sign agreements and launch demonstration projects to be part of the “hydrogen” business game. Pioneers will set industry standards to their benefits. For example, the European Union is trying to make the euro the benchmark motto for the hydrogen trades.

At first, hydrogen will remain a localized industry, at best regional. The hydrogen trade is in its infancy and the achievement of an organized market remains a long way to go for technical and economic reasons. Indeed, the transport of hydrogen is complicated and expensive.

There is no better way to transport hydrogen yet, but several technologies and vectors are being explored. Beyond 2030, we could see the coexistence of different ways of transporting hydrogen, including pipeline and sea transport. Hydrogen can be mixed with other gases or converted to carriers such as ammonia, liquid organic hydrogen (LOHC) or methanol. Like natural gas, hydrogen can be transported in its gaseous or liquid form.

Countries limited by renewable energies will become importers of hydrogen. The European Union expects a hydrogen deficit in the industrial centers of Europe. Importing low-cost hydrogen from sunny or windy regions will be an attractive proposition for these countries. Germany has already signed agreements to secure its purchases, including one agreement with Morocco to make use of its “ideal»Conditions for producing renewable hydrogen.

Security of hydrogen supply will become a priority, like the current quest for security of gas supply. Resource-hungry and dependent on imports Japan, which was the first country to deploy a hydrogen power plant strategy in 2017, is keen to secure its long-term hydrogen supply, like what Tokyo has done for its LNG strategy. Australia and Japan have strengthened their ties, anticipating strong bilateral hydrogen Trade. Japan and Brunei recently demonstrated the feasibility of “the first in the worldexpedition of LOHC over more than 4,000 km.

Some countries will manage to become less dependent on imports by developing their own hydrogen production. China, which is already a world leader in producing hydrogen from fossil fuels, could reduce its dependence on imports if it manages to produce enough renewable, low-carbon hydrogen on its own soil.

The profile of exporting countries will be a mix of old and new, but some commercial relationships will remain unchanged. Established natural gas producers will continue to be relevant in the hydrogen economy by exporting pure hydrogen through their reassigned gas infrastructure (ex. Russia and Norway).

Incumbent exporters could convert their resources to fossil fuels by producing hydrogen from natural gas and investing in new technologies such as carbon capture and sequestration (CCS) to make it low carbon. Saudi Arabia wants to keep its exports leadership using its low-cost gas production to export ammonia and hydrogen, while working on a renewable hydrogen strategy. Russian Novatek is also rethinking its LNG export production and shipping strategy ammonia.

The United States and Canada could also capitalize on their natural gas production and their vast geological potential to develop their own national hydrogen markets with heavy investments in CCS, while at the same time developing a value chain of l renewable hydrogen. Their ports, like the one in Texas corpus Christi, could over time become poles of renewable energy and clean fuel facilitating hydrogen exports.

The new winners will be those with record renewable energy prices (e.g. solar power from Saudi Arabia, Chile and Portuguese). A stable Morocco could replace Algeria in political difficulty as a key exporter to Europe, replacing natural gas with hydrogen produced from renewable energies.

The longevity of the natural gas-based hydrogen business will depend on the market value and acceptability of new technologies such as CCS and direct air capture. At the same time, renewable hydrogen will be based on a tremendous quantity of renewable energies which will also be used for “the electrification of everything” and will require significant investments and R&D (for example large electrolysers).

It is an exciting time to predict the trade flows of various gases as they will be multifaceted and will coexist for some time.

Leslie Palti-Guzman is president and co-founder of Vista gas, a market intelligence and AI technology provider focused on energy trade flows and forecasts. Palti-Guzman is also the producer and host of the Vista Energy podcast and senior member of the NYU SPS Center for Global Affairs.


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