IRENA calls for making new global hydrogen value chains sustainable

Although affordable low-carbon hydrogen is key to achieving net-zero emissions by 2050, the technological and economic potential for its production is not evenly distributed around the world, as the regions capable of producing it may not be the same as those with projected high demand in the future. The imbalance may give rise to a new international market for low-carbon hydrogen and its derivatives, reshaping global energy trade and opening up opportunities for developing countries, while at the same time raising sustainability concerns, according to a report by the International Renewable Energy Agency (IRENA).

Besides introducing new players, this new global hydrogen market could also bring about highly complex international value chains, which will require a comprehensive sustainability approach, especially when it comes to developing countries, IRENA notes in the report, titled Shaping Sustainable International Hydrogen Value Chains.

By 2050, a quarter of global hydrogen demand could be traded internationally

As production will not always be located near the anticipated demand centers, the agency projects that by 2050, about 25% of global hydrogen demand will be traded internationally. Out of this, around 55% is expected to be transported as pure hydrogen through retrofitted natural gas pipelines, while the remaining 45% is expected to be shipped, mainly using ammonia as a carrier.

Source: IRENA

In the report, which focuses on developing countries as hydrogen suppliers and wealthy economies as future demand hubs, IRENA pointed out that developed nations have incentives in place to support the production of renewable hydrogen and that many of these schemes extend to production in foreign markets.

The agency also insists that emerging renewable hydrogen value chains should be truly sustainable and equitable. This requires a comprehensive approach that considers more than just emissions intensity – it should consider the economic, environmental, social and governance aspects too, according to IRENA.

Sustainable hydrogen trade calls for considering environmental and social aspects

To make renewable hydrogen a part of a just and equitable energy transition, it is important to make sure that developing countries that produce it and export some of it benefit from doing so, both economically and socially, the report noted. This can be achieved by promoting local industrial development, which could enable developing countries to create more sustainable jobs, add long-term value, and improve their international competitiveness, IRENA underscored.

Hydrogen development in exporting countries should also drive a wider green transition

In terms of environmental impact, it is crucial to address the potential for any environmental burdens being transferred to developing countries when producing green hydrogen for export, according to the report. In this sense, IRENA recommends ensuring that hydrogen economy development in exporting regions also drives the wider energy transition, including by supporting renewable energy deployments beyond those required to power hydrogen production facilities.