A quarter of the total global hydrogen demand in 2050—some 150mn t/yr—could be met through international trade under a scenario where global warming is limited to 1.5°C this century, according to the International Renewable Energy Agency (Irena).

The other three quarters of hydrogen demand would be met with local supply under the scenario— which envisages hydrogen meeting 12pc of global energy demand by 2050.

“This is a significant change from today’s oil market, where the bulk—about 74pc—is internationally traded, but it is similar to today’s gas market, of which just 33pc is traded across borders,” says the report, titled Global hydrogen trade to meet the 1.5°C climate goal.

12pc – Global energy demand to be met by hydrogen in 2050

Of the 150mn t/yr hydrogen internationally traded by 2050 in the 1.5°C scenario, around 55pc would travel by pipeline, concentrated in two regional markets: Europe and Latin America. Most of the pipelines would be natural gas pipelines retrofitted to transport pure hydrogen.

The remaining 45pc of the internationally traded hydrogen would be shipped, predominantly as ammonia.

Around 690mn t/yr of ammonia will be needed in a 1.5°C scenario. Most of the ammonia traded would be directly consumed, because of reconversion costs. Converting hydrogen to ammonia uses 7-18pc of the energy in the hydrogen itself, as does reconversion.

The scenario predicts the main net exporters to be Australia, India, North Africa and the United States of America. Brazil, Canada, China and Latin America are largely self-sufficient regions. And the largest net importers will be Germany, Indonesia, Italy, Japan, Southeast Asia and the rest of Asia.

Some parts of the Middle East may also be net importers, mainly driven by a high cost of capital that makes domestic production more expensive than importing from countries with very low green ammonia production costs.

Creating and meeting demand

At the global level, the 2050 hydrogen demand is expected to be 614mn t/yr. Under the scenario China is responsible for about a quarter of this at around 150mn t/yr.  A distant second is India, with almost a third of China’s demand at just under 50mn t/yr, and then the USA with 30mn t/yr.

Creating and meeting this level of demand will require a total investment of $4tn across the entire green hydrogen value chain, the report says.

As a result of this investment the cost of producing green hydrogen from solar PV and solar-onshore wind hybrid configurations will drop below $1/kg for some regions by 2030—such as Australia and parts of Asia—and for most other regions by 2050 under the Irena scenario.

Industrial realignment

In addition to ammonia, other commodities that use green hydrogen—such as green iron, green methanol and green synthetic fuels—might also be traded instead of pure hydrogen, according to the report.

“This is a significant change from today’s oil market, where the bulk… is internationally traded” Irena

Iron especially is relatively cheap to transport, meaning there could be a strong economic case for producing direct-reduced iron in places with good renewable resources and then exporting it to other countries for further treatment.

“This could be the case in Australia, China and India, which have large iron ore reserves and good renewable resources,” says the report.

Methanol and aluminium are also strong candidates for moving production close to sources of hydrogen production—partly because their manufacture also benefits from cheap wholesale electricity prices, which are key for cheap green hydrogen production.

Lack of certification, infrastructure and financing mechanisms are currently the key barriers to development of a hydrogen trade, according to the report.

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Author: Tom Young