WORLD ENERGY TRANSITIONS OUTLOOK
5.3 SPECIAL FOCUS: INTERNATIONAL TRADE OF HYDROGEN AND DERIVATIVES Green hydrogen production can provide flexibility to the power sector through price-responsive electrolysers and the storage of hydrogen to follow the seasonality of renewable resources. To balance renewables internationally, in addition to cross-border electricity exchange, international trade of hydrogen can provide an opportunity to link low-cost renewable resources with demand centres, increasing the distance renewable energy can be transported compared with electricity. Although such trade is possible, hydrogen markets are expected to be regional to a large extent and much smaller than today’s oil and gas sectors. Hydrogen trade can offer multiple opportunities for some countries: • It can turn countries that have vast good-quality resources and import energy today into future exporters. • It can provide diversification and sustainable alternatives to oil and gas. • It can lead to a technology race in electrolysis and fuel cells. • It can improve the energy security of importers by providing an alternative carrier with access to a more diversified mix of suppliers. These prospects are leading to new hydrogen diplomacy, especially by countries that have limited renewable potential, such as Germany and Japan (IRENA, 2022f). Global hydrogen demand could increase by a factor of almost seven by 2050, to reach 74 EJ in IRENA’s 1.5°C Scenario – a large increase but still just a fraction of global energy consumption (Figure 5.10). Reaching that figure will require an accelerated pace of renewable capacity deployment, although some fossil fuel-based hydrogen could be substituted for renewablesbased hydrogen. Two-thirds of the hydrogen supply is expected to be from renewable hydrogen and one-third from fossil fuel-based carbon capture and storage.
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