Green hydrogen is changing the geopolitical map of the world


Energy resources have always been of great importance in global politics. We are seeing this again right now in the Ukraine conflict. As the energy transformation progresses, dependencies on fossil fuel supply chains will decrease in the future, which could make the world more peaceful.

New countries with an abundance of low-cost renewable energy, such as Chile, Uruguay, Morocco, South Africa and Namibia, are coming to the fore and becoming producers of green hydrogen. The most economical countries are those that also have space for solar or wind farms, access to water and infrastructure potential for exporting to major demand centers.

Australia and New Zealand also have hydrogen strategies and are considering developing trade routes. In its report “Geopolitics of the Energy Transformation: The Hydrogen Factor”, the International Renewable Energy Agency (IRENA) points out the associated geopolitical changes. There will be a greater regionalization of energy relations, as the costs for renewable energies will fall, while the transport costs for hydrogen are likely to remain high.

The green hydrogen business will be more competitive and at the same time less lucrative than oil and gas. Although fossil fuel exporters such as Oman, Saudi Arabia and the United Arab Emirates also see hydrogen as an opportunity to diversify their economies, according to IRENA, these countries need more comprehensive economic transition strategies, as hydrogen will not compensate for the loss of oil and gas revenues.

Russia also has a roadmap for hydrogen development, but here they want to use their own natural gas. Overall, existing dependencies will dwindle, while new technologies will come to the fore. The 2020s could be the era of a race for technological leadership, as costs will fall sharply with increasing know-how and the expansion of the necessary infrastructure.

The actual demand for green hydrogen is not expected to pick up until the mid-2030s. IRENA estimates that green hydrogen could cover up to 12 percent of global energy consumption by 2050, with almost a third being traded across borders. This would be a higher share than for natural gas today. By the middle of the century, the market potential for electrolyzers is estimated at USD 50-60 billion and for fuel cells at USD 21-25 billion. China, Europe and Japan currently have a head start in development, but the market is still emerging and relatively small.

In this context, however, China’s dominance as a producer of several critical materials used in electrolysers, including nickel, gadolinium, zirconium, lanthanum, cerium and yttrium, can also be seen. Nevertheless, the energy transformation will lead to new energy spaces and clusters where technology-driven processes will become more relevant. The energy policy map of the world could become more diverse and less conflict-laden.

Doris Höflich, Market Intelligence Senior Expert