'Green hydrogen is facing resistance in the developing world because almost all of it would be exported to rich countries': UN
Intergovernmental agencies recommend prioritising domestic renewable H2 use in poorer nations
Rich countries’ focus on importing green hydrogen from the developing world has the potential to backfire — and is already causing social unease about renewable H2 in poorer nations, the UN and the International Renewable Energy Agency (Irena) have warned in a new report.
In fact, governments in developing countries should prioritise the use of green hydrogen domestically before they consider exports in order to maximise the benefits of a renewable H2 economy and dampen public opposition, the pair have advised.
The joint report from Irena and the UN’s Industrial Development Organisation (Unido), The GH2 Industry: Reframing the Narrative — which is positioned as renewable H2 policy advice for government officials in developing nations — notes that almost all discussion on green hydrogen industry development takes place from the perspective of the Global North.
In practice, this means that the discourse is dominated by rich countries preoccupied with how they can use green hydrogen (GH2) production potential in developing nations to satisfy their own decarbonisation demands, the report suggests, with little focus on how it might benefit the host country.
“The exclusive focus on GH2 as a developing country export has raised concerns about the fair distribution of GH2’s benefits, sparking increasing resistance within local communities in these countries,” it said.
To counteract these problems and to make the transition to green hydrogen more equitable, the duo recommend that governments in host nations adopt a so-called “clover approach”, a four-pronged, two-phase strategy that first envisages prioritising domestic green hydrogen requirements before switching to exports.
This is because although exports might give a superficial boost to the economy, especially if components or staff are sourced locally, prioritising domestic use has the additional benefit of creating a whole hydrogen value chain, especially downstream, which increases local skills and know-how and also provides more permanent employment.
At the same time, Irena and Unido recommend a gradual scale-up of green hydrogen production facilities, starting with small- and medium-sized projects, and at first eschewing giant mega-projects and avoiding over-reliance on foreign investment.
In the next phase, when hydrogen projects can be scaled up and exports can take a more prominent role, governments should prioritise green hydrogen investments that also align with national goals and sustainable development targets.
“Investing in renewable energy and grid infrastructure is a “no-regret” option, benefitting local industries and communities while also creating favourable conditions for the hydrogen industry’s growth,” the report added.
Scale-up should be carried out in phases, with decarbonisation of existing domestic industries and “green industrialisation” prioritised, Unido and Irena said, as well as capitalising on emerging market opportunities that correspond to a country’s incumbent infrastructure.
For example, countries with large container ports or airports should consider targeting green hydrogen production towards the creation of shipping or aviation fuel hubs.
It also been suggested elsewhere that countries with rich wind and solar resources could produce their own cheap green hydrogen for use in domestic direct-iron-reduction plants, then export that green iron to steel plants in other countries, rather than shipping renewable H2 or ammonia.
This is not the first time concern has been raised about the green hydrogen sector’s out-sized focus on exports. Last year, Rystad analyst Minh Le pointed out that the vast majority of green hydrogen projects in Asia Pacific (including Australia) are not getting built due to the lack of international H2 transport infrastructure and firm offtakers.
Many major economies have courted countries in the developing world to set up green hydrogen export projects, most typically for green ammonia, including Germany, the UK, the EU, Japan and South Korea. Germany has even set up its own subsidy scheme, H2Global, to help pay for the overseas production of green hydrogen that it would then import, with that programme being rolled out to the Netherlands and, potentially, the rest of the EU.
German developers have already invested cash into green H2 export schemes in Namibia and the German state has pledged €4bn for export projects in other African countries, French investors are discussing potential in Morocco, while developers such as Australia’s Fortescue are putting together export projects in Brazil, Kenya and Argentina.
And Germany’s economics and climate action minister Robert Habeck will today (Thursday) travel to Algeria to discuss renewable H2 development.