As the world oil and gas scene is getting more complicated and hotter than ever, experts refer to a new game-changer that may alter the current energy geopolitics altogether.
‘Hydrogen’ sounds to be the catchword of the foreseeable change. Hydrogen, so the recent report International Renewable Energy Agency (IRENA) estimates in a recent report, would be not only an answer to the global net zero emission quest but also a new cartography of energy geopolitics.
The Irena report forecasts that the geopolitics of oil and gas, in which producer countries have the power to influence prices, would wane as new fuels including hydrogen become more dominant.
The report predicts a revamped “hydrogen diplomacy” would emerge as production ramps up around the world. Irena estimates that hydrogen could provide 12 per cent of the world’s energy needs by 2050 if global emissions were cut significantly to limit warming to 1.5C.
Irena’s predictions are becoming more credible with the recent surge in gas prices that made the economics of green hydrogen look relatively attractive compared with blue hydrogen, which requires natural gas to produce.
The Irena report expects green hydrogen will reach price parity with blue hydrogen in many countries by 2030. At present, the price of electrolyzers, the machines needed to generate green hydrogen, makes it more expensive to produce.
However, the development of green hydrogen has become a policy priority for many countries as they prepare to cut emissions to “net zero” by 2050. So, there is no wonder to see big energy consumers, such as the US, China, EU, Japan, India, and South Korea, already making hydrogen a major component of their energy plans.
“Shaping the rules, standards, and governance of hydrogen could lead to geopolitical competition or open a new era of enhanced international co-operation,” the report said.
In either case, the energy geopolitical scene will be totally different from now. Assisting developing countries to deploy green hydrogen technologies and advance hydrogen industries could prevent the widening of a global decarbonisation divide and promote equity and inclusion, and create local value chains, green industries, and jobs in renewable-energy-rich countries.
Tapping the potential of regions like Africa, the Americas, the Middle East and Oceania could limit the risk of export concentration.
“It is green hydrogen,” Irena elabourates, “that will bring new and diverse participants to the market, diversify routes and supplies and shift power from the few to the many. With international co-operation, the hydrogen market could be more democratic and inclusive, offering opportunities for developed and developing countries alike.”
The report indicates however that many countries still need technology transfers, infrastructure and investment at scale.
According to the report, cross-border hydrogen trade is set to grow considerably with over 30 countries and regions already planning for active commerce. Some countries that expect to be importers are already deploying dedicated hydrogen diplomacy. Fossil fuel exporters increasingly consider clean hydrogen an attractive way to diversify their economies for example Australia, Oman, Saudi Arabia and the United Arab Emirates. However, broader economic transition strategies are required as hydrogen will not compensate for losses in oil and gas revenues.
This background explains the great interest that the Egyptian government is showing in green Hydrogen, given the basic potentials the country has to localise the green hydrogen industries and has also immense potentials to produce renewable energy at competitive prices. Getting ready for hydrogen today would define the country’s role in future energy geopolitics.
