Anne-Sophie Corbeau is a researcher at the Center on Global Energy Policy within the School of International and Public Affairs at Columbia University New York.
Are we witnessing the beginnings of a globalization of the hydrogen trade as has been the case with liquefied natural gas or fossil fuels?
Honestly, there are few projects that are moving forward concretely. In 2021, a large number of consulting firms and institutions had sold low-carbon hydrogen as the miracle solution, but it is clear that it is more complicated than it seems. Whether you talk to Japanese, Brazilians or Saudis, everyone asks the same question: that of demand, due to the high cost of this energy source.
To carry out their projects, these countries need several billion dollars to invest in electrolyzers on the scale of several gigawatts. However, banks will only finance cases that make sense and provide guarantees. Hence the need to enter into long-term agreements with buyers and find solutions, such as the German H2Global fund or the Hydrogen Bank in Europe, to reduce the gap between the high cost of decarbonized hydrogen and the price buyers are willing to pay.
More than hydrogen, it is ammonia that attracts attention…
Yes, everyone right now is looking to ammonia as an import vector. The Japanese want to put it in coal-fired power plants to reduce greenhouse gas emissions. The ports of Rotterdam and Antwerp are equipping themselves to import them. Because we know how to do it. There is already a market for ammonia for fertilizer production, port terminals, and transport is simpler than for liquid hydrogen. Just as we will be able to rely more on methanol for the maritime sector and e-fuels for aviation, which we also already know how to transport.
Energy-intensive industries, such as the steel industry, face a dilemma: either import hydrogen (expensive) or a semi-finished industrial product such as pre-reduced iron ore, solid and easy to transport. For the European Union, one of the dangers would be that sophisticated products, such as green steel, are manufactured elsewhere. Because they would be in compliance with the European border adjustment mechanism.
Is China positioning itself more as an importer or an exporter?
For the moment, only Europe and, in Asia, Japan, South Korea and Singapore are really considering importing hydrogen. There are fewer potential buyers than there are for liquefied natural gas (45 in 2022). Will China be part of the lot? I don’t think so, unless it is forced to deploy low-carbon hydrogen on the east coast. The Chinese are relatively absent from diplomatic exchanges. So far, the agreements they have entered into with ten countries are through the “new Silk Road” and mainly concern green hydrogen and equipment projects.
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