Green hydrogen is now popular. During the UN Climate Change Conference in November (COP27) in Egypt, German Chancellor Olaf Scholz announced that Germany will invest more than €4 billion to develop the market.
In the United States, President Joe Biden’s administration made “clean” hydrogen the centerpiece of the Inflation Reduction Act, which subsidizes renewable energy. China is also investing in electrolysis, so some observers have feared that it will take over the market in the same way as photovoltaic panels. Even companies such as Australian mining giant Fortescue are betting on becoming a multibillion-dollar industry.
When the technology is hyped to such an extent, many environmental activists tend to be nervous. Is “clean hydrogen” just a way to wash away “blue” and “pink” hydrogen, produced from natural gas and nuclear energy?
What is the attempt to produce a magic techno-fix that justifies absurd excesses such as space tourism and hypersonic flights, while the middle and upper classes of the world must reduce their consumption of energy and resources? Or is this the next stage of extractivism, appropriating low-income population land and water under the guise of fighting climate change?
The short answer to all these questions is yes. But that is inevitable or the whole story. Well, the green hydrogen dream can turn into a nightmare if not done right.
However, it is an important building block for the global economic transition from climate-destroying fossil fuels to a sustainable model based on 100% renewable energy. It may be difficult to accept this ambiguity, but the urgent need to prevent climate catastrophe requires no less.
Due to the many potential applications of hydrogen, some leading experts estimate that hydrogen could power 20-30% of global energy consumption by mid-century. But this does not necessarily make it the most efficient choice.
Electric batteries, for example, require fewer renewable kilowatt hours per kilometer to drive cars and trucks than hydrogen fuel cells or electronic fuels. In addition, using a heat pump is more efficient than converting a gas boiler to hydrogen. Organic alternatives to nitrogen fertilizers should also be given more consideration.
But there are some critical sectors with some economically viable zero-carbon alternatives for green hydrogen and its derivatives, including long-distance shipping and aviation, chemistry, and steelmaking. Despite the hype, many industries will clearly need large amounts of clean hydrogen to achieve net-zero emissions by 2050.
To illustrate the scale of the challenge, Bloomberg New Energy Finance founder Michael Liebreich recently estimated that just replacing today’s “dirty” hydrogen – produced from fossil fuels – would require 143% of the world’s current wind and solar energy.
Several countries in the Global South are already blessed with world-class solar and wind potential, enabling them to produce green hydrogen at low cost. Some, like Namibia, have built industrial development strategies around this competitive advantage.
But how can the international trade of green hydrogen and its derivatives pave the way for prosperity? And how can developing countries avoid the pitfalls of green extractivism and ensure that trade is fair and sustainable?
A series of consultations and studies in Chile, Argentina, Brazil, Colombia, South Africa, Morocco, and Tunisia have examined these questions at length. A new report from the Heinrich Böll Foundation and Bread for the World synthesizes these findings and highlights the need to do no harm.
To prevent the dream of green hydrogen from becoming a nightmare, we must develop the sector with regional planning, and clear standards and policies, as well as upholding the right of local communities to prior consent.
To achieve the promise of post-fossil development and promote a sustainable economy, the government must design an ambitious and realistic industrial strategy. And these strategies must be included in a systemic approach to sustainable development and energy transition. In addition, we need to consider how hydrogen is used – not just who can afford it.
Nothing will happen by itself. Achieving a sustainable future is a political choice that requires leadership and cooperation. Several countries can help make fair and sustainable green hydrogen trade a reality.
Namibia, Chile, Colombia and now (under President Luiz Inácio Lula da Silva) Brazil, for example, have the right political conditions to balance green hydrogen production with strong environmental and social standards. Over time, Argentina and South Africa could join this list and become producing countries.
As a potential major importer and consumer of green hydrogen, Germany must establish partnerships with producing countries, based on strong environmental and social standards. And given a progressive government, it can be expected to have discussions with long-term partners not only as resource providers, but as fellow travelers on the journey to sustainable and inclusive prosperity.
To that end, Germany and other energy importers should also support exporting countries in their efforts to localize value. In this way, the growing international trade in green hydrogen could be a harbinger of a new fair trading relationship between the Global North and South. This is the future to fight for, and renewable energy is the key. — © Project Syndicate
Jörg Haas is head of international politics at the Heinrich Böll Foundation.