Hydrogen may be the 'fuel of the future' — but geopolitics could look a lot like gas

Hydrogen may be the 'fuel of the future' — but geopolitics could look a lot like gas
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U.S. Secretary of Energy Jennifer GranholmJennifer GranholmOvernight Energy: Biden seeks to reassert US climate leadership | President to 'repeal or replace' Trump decision removing protections for Tongass | Administration proposes its first offshore wind lease sale US solar company to open 0M plant in Ohio OVERNIGHT ENERGY: Biden ends infrastructure talks with key Republican | Colonial Pipeline CEO grilled over ransomware attack | Texas gov signs bills to improve power grid after winter storm MORE is just back from her first trip to Houston, where she toured a hydrogen facility in La Porte Industrial Complex. For the government, hydrogen will help Houston remain the “Energy Capital of the World” by producing (and maybe one day exporting) the fuel of the future.

Globally, policymakers are touting the nascent hydrogen economy as the best hope to conduct an orderly energy transition, reach ambitious carbon neutrality goals, provide tomorrow’s jobs and grow the economy. But there is little reflection on what hydrogen trade will look like. After all it may not be so different from current trade flows.

A geopolitical map of hydrogen is emerging that is not so different from the one of global gas markets. Some importing countries will replace one dependence with another, while some exporting nations will substitute one commodity with another. There will be some new entrants though, notably the ones with record-low renewables prices, which will be able to alter some balance of power.


Several countries have announced a hydrogen strategy over the past four years, which has accelerated the emergence of future trade routes such as Japan-Australia and Germany-Chile. Countries are positioning themselves to produce hydrogen domestically, but also to import or export it depending on their national assets. Nations and companies are signing agreements and kickstarting demonstration projects to be part of the “hydrogen” trade game. The pioneers will set up the industry’s standards to their advantages. For instance, the European Union is trying to establish the Euro as the reference currency for hydrogen trades.

At first, hydrogen will remain a localized industry, at best regional. Hydrogen trade is at its infancy and achieving an organized market remains a long shot for technical and economic reasons. Indeed, hydrogen transportation is complicated and expensive.

There is not a best way to transport hydrogen yet, but several technologies and carriers are being explored. Beyond 2030, we could see the co-existence of various ways to transport hydrogen, including pipeline and seaborne transport. Hydrogen can be blended with other gases or converted into carriers such as ammonia, liquid organic hydrogen (LOHC) or methanol. Similar to natural gas, hydrogen can be transported in its gaseous or liquid forms.

Renewables-constrained countries will become hydrogen importers. The European Union expects a hydrogen deficit in Europe’s industrial heartlands. Importing low-cost hydrogen from sunny or windy regions will be an attractive proposition for these countries. Germany has already signed agreements to secure its procurements, including a deal with Morocco to make use of its “ideal” conditions for renewable hydrogen production.

Security of hydrogen supply will become a priority, similar to today’s quest for gas supply security. Resource-hungry and import-dependent Japan, which was the first country to roll out a hydrogen strategy in 2017, is eager to secure its hydrogen supply in the long-term, similar to how Tokyo did for its LNG strategy. Australia and Japan have been consolidating their ties, anticipating strong bilateral hydrogen trade. Japan and Brunei have recently demonstrated the feasibility of the “world’s first” shipment of LOHC over more than 4,000 km.


Some countries will manage to become less import-dependent by developing their own hydrogen production. China, which is already leading the world in fossil fuel-reliant hydrogen production, could lower its import dependence if it manages to produce enough renewable and low-carbon hydrogen on its own soil.

The profile of exporting countries will be a mix of old and new, but some trade relationships will remain unchanged. Established producers of natural gas will continue to be relevant in the hydrogen economy by exporting pure hydrogen through their repurposed gas infrastructures (e.g. pipelines from Russia and Norway).

Historical exporters could convert their fossil fuel resources by producing hydrogen from natural gas and investing in new technologies such as carbon capture and sequestration (CCS) to make it low-carbon. Saudi Arabia wants to keep its export leadership by using its production of low-cost gas to export ammonia and hydrogen, while working on a renewable hydrogen strategy. Russia’s Novatek is also rethinking its LNG export strategy to produce and ship ammonia.

The U.S. and Canada could also capitalize on their natural gas production and large geological potential to develop their own domestic hydrogen markets with heavy investments in CCS, while developing in parallel a renewable hydrogen value chain. Their ports, such as Texas’s Corpus Christi, could over time become renewable energy and clean fuel hubs facilitating hydrogen exports.

The new winners will be the ones with record low renewables prices (e.g. solar power from Saudi Arabia, Chile and Portugal). Stable Morocco could displace politically troubled Algeria as go-to exporter to Europe, replacing natural gas with hydrogen produced from renewables.

The longevity of the trade in natural gas-based hydrogen will depend on the commerciality and acceptability of new technologies such as CCS and direct air capture. Meanwhile, renewable hydrogen will rely on a formidable amount of renewable energies which will also be used for the “electrification of everything” and will require sizable investments and R&D (e.g. large electrolyzers).

This is an exciting time to predict trade flows of various gases because they will be multiform and coexist for a while.

Leslie Palti-Guzman is the president and co-founder of Gas Vista, a market intelligence and AI technology provider focused on energy trade flows and predictions. Palti-Guzman is also the producer and host of the Energy Vista podcast and a NYU SPS Center for Global Affairs senior fellow.