At a glance
“Shaping sustainable international hydrogen value chains,” by Ann-Kathrin Lipponer, Emanuele Bianco and Arno van den Bos. International Renewable Energy Agency (IRENA), September 2024.
This report explores how sustainable international hydrogen value chains could support the global shift to renewable energy. It highlights that renewable hydrogen production is set to grow fivefold by 2050, meeting 14 per cent of the world’s energy demand, with 25 per cent traded internationally. Developing countries with abundant renewable resources have a key opportunity to become major hydrogen exporters, but must address social and environmental risks. These findings underscore that hydrogen will play a crucial role in decarbonizing industries and transportation worldwide, making it essential for a fair and rapid energy transition that limits global warming to 1.5 degrees Celsius.
Organizations
Topics
Key findings
- Hydrogen demand forecast: Hydrogen is projected to account for 14 per cent of global energy demand by 2050, with 94 per cent produced from renewable sources.
- Production levels: Global hydrogen production must increase over fivefold by 2050 to meet growing energy demand, with electrolyser capacity rising to 5,722 gigawatts.
- Export potential: Developing countries with abundant renewable resources have significant potential to become major hydrogen exporters.
- Global trade: About 25 per cent of global hydrogen production is expected to be traded internationally by 2050, with 55 transported through retrofitted natural gas pipelines and 45 per cent shipped as ammonia.
- Import hubs: The European Union and G7 nations are set to become the largest importers of hydrogen and its derivatives, positioning themselves as future demand hubs.
- Environmental considerations: Producing renewable hydrogen requires robust environmental policies to address land use, water consumption, and social impacts, particularly in exporting regions.
Take a look
Bigger picture
This report highlights the role that hydrogen could play in the global energy transition as a sustainable solution for hard-to-abate industries and long-distance transport. Green hydrogen, produced with renewable electricity, can significantly decrease reliance on fossil fuels while enhancing energy security. Its international trade potential necessitates collaboration between energy-rich Global South regions and high-demand areas like Europe and East Asia.
IRENA’s findings show that hydrogen production will create market opportunities, especially in developing countries with abundant renewable resources. However, careful management of environmental and social impacts is crucial. Incentive schemes and regulations in the EU, United States and Japan could reshape global hydrogen markets, influencing production, transport, and consumption while driving down currently high costs.
The broader implications of the report point to hydrogen as a critical enabler of net-zero targets, with the potential to revolutionize industries across the globe. Next steps include scaling infrastructure, advancing technologies, implementing supportive policies, and ensuring economically viable and environmentally just value chains. The report is relevant for all stakeholders shaping the energy future, though some findings may be optimistic given long-distance transport barriers and high production costs for green hydrogen.
Challenges and opportunities
Key barriers to energy transition progress in international hydrogen value chains:
- Policy: Inconsistent regulations, especially in developing countries, hinder large-scale projects and trade agreements.
- Economics: High financing costs in developing countries impede investment in renewable hydrogen infrastructure.
- Technology: Lack of cost-effective storage, transport, and conversion technologies limits global scalability.
- Infrastructure: Insufficient renewable energy capacity and distribution networks, particularly in high-potential regions with weak infrastructure.
- Environment: Large-scale production risks water scarcity and land-use conflicts in resource-constrained areas.
- Social: Local opposition delays projects where communities are uninvolved or see no direct benefits.
- Employment: Uncertainty in long-term, high-quality job creation, particularly in developing countries.
To address these challenges, the report recommends:
- Partnerships: Collaboration between Global South producers and EU, Japan, and U.S. demand hubs can sustainably scale infrastructure and technology transfer.
- Policy development: Create clear, stable regulations to foster production, trade, and local development, especially in developing countries.
- Innovation in hydrogen carriers: Advancements in ammonia and LOHC technologies can reduce transport energy losses and improve trade efficiency.
- Incentive schemes and financing: Expand government and international incentives to boost cost-competitiveness and attract private investment.
- Environmental safeguards: Stronger regulations are needed to mitigate water and land use risks while promoting renewable energy in exporting regions.
- Skills development: Capacity-building initiatives should train local workforces in hydrogen technologies, benefiting developing countries with renewable resources.
In their own words
The technical global potential for renewable hydrogen is expected to be almost 20 times estimated global primary energy demand by 2050.
Shaping sustainable international hydrogen value chains, International Renewable Energy Agency (IRENA), September 2024.
Final thoughts
IRENA emphasises that international hydrogen value chains are crucial for meeting global climate goals, especially in hard-to-abate industries. It advocates for a just and sustainable approach where developing countries become hydrogen exporters, whilst noting financing, infrastructure, and environmental challenges.
The report comprehensively covers hydrogen’s potential but could further explore other clean energy sectors and how hydrogen can integrate with other renewables and energy systems. A deeper analysis of hydrogen’s barriers — including transportation costs, safety risks, and targeting hard-to-abate sectors — would strengthen the report.
Download the full report originally published by the International Renewable Energy Agency (IRENA) in September 2024.
