IRENA: Green hydrogen trade to improve energy security

Renewable Energy Agency (IRENA), an intergovernmental organisation aiming to promote renewable energy,  sees the green hydrogen trade as significantly contributing to a more diversified and resilient energy system.

New IRENA reports say the green hydrogen trade can provide a low-cost alternative that diversifies energy imports and improves energy security. To make hydrogen trade cost-effective, the costs of producing and trading green hydrogen must be lower than domestic production to offset higher transport costs. 

The ‘Global hydrogen trade to meet the 1.5°C climate goal’ report shows the importance of the future hydrogen trade. Trade allows countries to tap into affordable hydrogen as the scale of projects progresses and technology matures. One-quarter of the global hydrogen demand could be satisfied by international trade through pipelines and ships.

With falling costs of renewables and the hydrogen potential exceeding global energy demand by 20-fold, three-quarters of global hydrogen would still be produced and used locally in 2050.

“Having access to abundant renewables will not be enough to win the hydrogen race, it’s also necessary to develop hydrogen trade,” IRENA’s director-general Francesco La Camera said. “It is true that hydrogen trade offers multiple opportunities from decarbonising industry to diversifying supplies and improving energy security. Energy importers can become the exporters of the future.”

“However, governments must make significant efforts to turn trade aspirations into reality,” he added. “A mix of innovation, policy support and scale can bring the necessary cost reduction and create a global hydrogen market. Whether trade potentials can be realised will strongly depend on countries’ policies and investment priorities and the ability to decarbonise their own energy systems.”

IRENA’s World Energy Transitions Outlook sees hydrogen covering 12 per cent of global energy demand and cutting 10 per cent of CO2 emissions by 2050. Yet, hydrogen can only be a viable climate solution if the power needed to produce it comes in addition to the electrification of the energy system.

The new reports see half of the hydrogen being traded through largely existing, repurposed gas pipelines drastically reducing the costs of transport. Shipping of green ammonia would account for most of the other half, largely intercontinental hydrogen trade.

Satisfying the global demand requires an investment of almost $4 trillion by 2050, according to IRENA.

This report completes a series of two earlier reports on green hydrogen supply cost and potential and technology review of hydrogen carriers.