Hydrogen will cover up to 12% of global energy use by 2050

Driven by climate urgency and countries' net zero commitments, hydrogen will cover up to 12% of global energy use by 2050. This is the projection of IRENA (International Renewable Energy Agency).

According to the report “Geopolitics of Energy Transformation: The Hydrogen Factor”, the rapid growth of the global hydrogen economy could bring significant geoeconomic and geopolitical changes, giving rise to a wave of new interdependencies.

The study sees this technology changing the geography of energy trade and regionalizing energy relations, suggesting the emergence of new centers of geopolitical influence built on hydrogen production and use as traditional oil and gas trade declines.

“Hydrogen could be the missing link to a climate-safe energy future,” said Francesco La Camera, director general of IRENA. “He is clearly taking advantage of the renewable energy revolution, with H2V (green hydrogen) emerging as a game-changer for achieving climate neutrality without compromising industrial growth and social development.”

“However, hydrogen is not a new oil. And the transition is not a fuel substitution, but a change to a new system with political, technical, environmental and economic disruptions”, he added.

For the expert, H2V will bring new and diverse participants to the market, diversify routes and supplies and transfer power from the few to the many. “With international cooperation, the market for this technology can be more democratic and inclusive, offering opportunities for developed and developing countries.”

IRENA estimates that more than 30% of hydrogen could be traded across borders by 2050, a larger share than natural gas today. Countries that traditionally do not trade electricity are establishing bilateral energy relationships around hydrogen.

“As more players and new classes of net importers and exporters emerge on the world stage, the hydrogen trade is unlikely to become weaponized and cartelized, in contrast to the geopolitical influence of oil and gas,” La Camera reported.

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More data

The Agency also highlighted that hydrogen trade is expected to grow considerably in more than 30 countries and regions. Some who hope to be importers are already implementing diplomacy dedicated to this technology, such as Japan and Germany.

“Fossil fuel exporters increasingly see clean hydrogen as an attractive way to diversify their economies, for example Australia, Oman, Saudi Arabia and the United Arab Emirates. However, broader economic transition strategies are needed as hydrogen will not offset losses in oil and gas revenues,” the report noted.

The technical potential for hydrogen production significantly exceeds estimated global demand. Countries best able to generate cheap renewable electricity will be best placed to produce competitive green hydrogen.

While countries such as Chile, Morocco and Namibia are net energy importers today, they are expected to emerge as H2V exporters, the study said. Realizing the potential of regions such as Africa, the Americas, the Middle East and Oceania can limit the risk of export concentration, but many countries will need technology transfers, infrastructure and investments at scale.

The geopolitics of clean hydrogen will likely develop in different stages. IRENA sees the 2020s as a great race for technology leadership. But demand is only expected to take off in the mid-2030s.

At this point, the green hydrogen will compete on cost with fossil fuel hydrogen globally, about to happen even sooner in countries like China, Brazil and India. H2V was already affordable in Europe during the rise in natural gas prices in 2021.

According to the research, manufacturing equipment such as electrolyzers and fuel cells, in particular, could boost business. China, Japan and Europe have already developed a manufacturing breakthrough, but innovation will further shape the current manufacturing landscape.

Benefits of Green Hydrogen

In IRENA's view, H2V can strengthen energy independence, security and resilience by reducing import dependence and price volatility and increasing the flexibility of the energy system.

But the raw materials needed for hydrogen and renewable technologies may draw attention to material safety. “Shortages and price fluctuations can ripple through hydrogen supply chains and negatively impact costs and revenues.”

“Particularly helping developing countries deploy H2V technologies can prevent the widening of a global decarbonization divide and promote equity and inclusion by creating local value chains, green industries and jobs in renewable energy-rich countries,” concluded the report.