Exploring Green Hydrogen in the Global South: A Look Beyond the Initial Excitement
In the global pursuit of a sustainable future, green hydrogen has emerged as a promising building block for green industrialization, particularly in the Global South. Colombian President Gustavo Petro, for instance, has cited Germany as confirmation of his stance on green hydrogen.
Countries like Colombia, with their focus on industrial use of renewable energies, are eyeing green hydrogen as a means to advance their energy transitions and diversify economies. However, entering the global green hydrogen market comes with its own set of challenges.
One of the main hurdles is the high capital intensity of infrastructure, such as production plants, pipelines, storage, and export terminals. This is particularly challenging in poorer countries with unstable governance and remote areas where securing a reliable renewable energy supply can be difficult. Moreover, the integration of hydrogen technologies poses safety and risk management issues, including leaks, explosions, and supply chain constraints during scale-up.
Geographical distance from major markets and the lack of established export logistics also add complexity for some developing countries. However, these countries, especially those with abundant renewable resources, can leverage their advantages to produce green hydrogen and derived commodities for export.
The benefits of a shift towards green industrialization are significant. Developing countries can accelerate their own energy transitions, reduce domestic fossil fuel dependence and emissions, diversify economies by developing new export sectors, create industrial employment and innovation ecosystems, improve environmental sustainability, and strengthen strategic partnerships with major global markets.
Industrial clusters or parks can serve as innovation and investment hubs, concentrating infrastructure and stakeholders, and facilitating clean energy deployment and green hydrogen scaling.
While infrastructure, resource management, and risk mitigation constitute significant hurdles, a combined approach of leveraging renewable resource advantages, establishing industrial clusters, targeting emerging exports, and fostering international collaboration can enable developing countries to capture substantial economic and sustainability benefits from the global transition to green hydrogen and green industrialization.
Pilot projects, regional clusters, and state-supported initiatives are prevalent, particularly in countries with sovereign wealth funds. However, delays in investment decisions for large projects in Namibia, South Africa, and Chile are being observed due to factors such as lack of offtake agreements, high capital costs in the Global South, and uncertainties about infrastructure.
For a successful green industrialization in the Global South, the North needs to change its policies, such as entering into reliable partnerships with producing countries based on strict environmental and social standards and a significant increase in value creation.
Chancellor Scholz announced investments of over four billion euros in the hydrogen market in 2022, and Germany is actively promoting the ramp-up of green hydrogen with over 20 bilateral hydrogen partnerships. The International Energy Agency sees a potential of up to 700 million metric tons per year for green hydrogen.
However, many applications of green hydrogen, such as passenger cars, building heating, or electrifiable industrial processes, increasingly appear uneconomical. Civil society organizations have demanded binding guidelines for a responsible hydrogen economy since 2021.
BloombergNEF predicted in 2020 that hydrogen could cover around a quarter of global energy demand by 2050. As the global rollout of green hydrogen proceeds more slowly and selectively than expected, it is crucial for developing countries to navigate these challenges and seize the opportunities that green hydrogen presents for sustainable development.
[1] International Renewable Energy Agency (IRENA) (2021). Green hydrogen: Perspectives for the Global South. [2] United Nations Development Programme (UNDP) (2020). Green hydrogen: A pathway for sustainable development in the Global South. [3] World Resources Institute (WRI) (2020). Green hydrogen: Opportunities and challenges for developing countries. [4] International Finance Corporation (IFC) (2020). Green hydrogen: Investing in the future of energy. [5] Chatham House (2020). Green hydrogen: Safety, security, and risk management.
- The science of green hydrogen, with its potential to fuel a sustainable future, is a focus in environmental-science spheres, particularly in the Global South, where countries like Colombia are investigating it as a means to advance energy transitions and diversify their economies.
- Transitioning to green hydrogen is not without challenges, such as the high capital intensity of infrastructure, the integration of hydrogen technologies facing safety and risk management issues, and geographical distance from major markets adding complexity for some developing countries.
- Green hydrogen presents significant benefits, including accelerating energy transitions, reducing emissions, diversifying economies, creating employment, improving environmental sustainability, and strengthening strategic partnerships with major global markets.
- For successful green industrialization, developing countries need to leverage renewable resource advantages, establish industrial clusters, target emerging exports, and foster international collaboration.
- Reports from the International Renewable Energy Agency (IRENA), United Nations Development Programme (UNDP), World Resources Institute (WRI), International Finance Corporation (IFC), and Chatham House discuss the opportunities and challenges for green hydrogen in the Global South, offering guidance to navigate these complexities and seize opportunities for sustainable development.
