Geographic hydrogen hotspots

In light of the share of hydrogen consumption between countries, one could expect that trade of hydrogen as a commodity would mirror, more or less, an image corresponding to this distribution.

Interestingly though, according to the United Nations Trade Statistics, China accounted for less than 1% (0.16%) of the total import trade of hydrogen in 2017. This is credited to the fact that China is self-sufficient in supply of hydrogen (with coal being the predominant source).

The same conclusion could be made for the Middle East (from natural gas and oil sources), while the United States and Europe, especially France and the Benelux countries, appear as major importers.

Realizing that there are countries that are self-sufficient in their hydrogen needs, we turn our attention to a view on the supply side drivers to understand the mechanics of how hydrogen hot spots appear.

Worldwide, a range of countries have openly started to declare an intent with respect to their position in a global hydrogen economy with very different motives, based on industrial considerations and strengths in their respective energy mixtures; irrespective of which, several countries envision a shared global hydrogen ecosystem.

Based on analysis by the International Energy Agency, we can see that ability of different countries to develop as hydrogen producers largely depends on their natural resources. As we discussed in an earlier article in this series – The hydrogen trajectory – the source of hydrogen production determines its affordability and degree of carbon footprint. Within the next decade, some countries will likely be able to cost-effectively produce natural gas-based hydrogen (combined with CCS) owing to local natural gas resources (e.g. Russia and Australia), while wind-rich and sun-rich regions would in general hold an advantage to be cost-competitive producing green hydrogen (these include the Middle East, Northern Africa and South America). So, one driver is basically geographically bound.

To some extent, countries that have planned hydrogen futures for themselves – Japan and South Korea as frontrunners – are evolving as technology exporters for fuel cell vehicles and fuel cell technology, while their hydrogen visions are mainly based on imports (from Australia and the Middle East). This complementarity is acknowledged through hydrogen vision documents of both importer and exporter groups.

Innovation and cost reductions in both blue and green hydrogen is driven largely by industry aspirations owing to companies domiciled in countries holding technology export possibilities. Toyota, Airbus, Linde Group, Air Liquide, BMW, Bosch, Cummins, Chevron Corporation all belong to this category – and thus help to promote national interests in advancing the hydrogen agenda.

With this in mind, it is of relevance to relate and map out these underlying (energy based) import needs and (industry based) export potentials to understand where global hydrogen hot spots appear. The map below shows examples of exactly this:

Based on the availability of natural resources and established industry segments, the following observations can be made:

• A range of countries from the southern hemisphere are envisioning, or have already positioned, themselves as hydrogen (and its derivatives) exporters, across South America, North Africa, the Middle East and Australia to utilize strong positions for low-cost hydrogen production, either as blue (from a coal/natural gas source) or green (from solar, hydro and wind).
• Countries that aim to be technology exporters (for example Japan, Korea, France, and the USA) are in many cases not well positioned to be net exporters.
• Only China and Australia are, at this point, expected to become self-sustaining in hydrogen at sufficient scale to meet their ambitious decarbonization objectives.
• A detailed description of a region’s import/export relations is outside the scope of this article, but for now we conclude that main corridors are developing across ALL continents, and this tells us that carbon-neutral hydrogen will be a globally traded commodity.
  
• Commitment to formalized hydrogen infrastructure investments are seen across several regions, while development of trading relationships is most mature in Asia Pacific, where Australia is very progressive in plans to become a “future hydrogen export powerhouse”. This is substantiated by formalized MOUs between Australia and Japan/South Korea, respectively.

How national positions and aspirations, turn into national objectives and hydrogen strategies will be the topic of the next article in this series releasing in the coming weeks (Viewpoint 3), where both blue and green hydrogen is of relevance. Here, we will bring in learnings from the world’s first end-to-end hydrogen supply chain project.

As discussed in Viewpoint 1 – The hydrogen trajectory – to bring down the levelized cost of hydrogen (LCOH), the capital and operational expenditure of energy projects are the predominant factors.

Yet, what is evident from the corridor map above (and while applying an end-to-end perspective on the value chain) is that to connect demand with supply across regions and continents will necessitate trucks, trains and ship carriers, capable of transporting hydrogen safely and cost-effectively over large distances. In other words, low-cost transportation of hydrogen is an important factor for the successful establishment of the hydrogen value chain.