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How green hydrogen is shifting the balance of power on the global energy markets

2023-02-16T17:47:30.245Z


Future industrial production with less coal, oil and gas will also change the balance of power in the energy markets. According to a study, the investments will cost ten trillion dollars.


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Liquid gas terminal in Wilhelmshaven

Photo: POOL / REUTERS

It means a revolution for the economy: by the middle of the century, production should be as climate-neutral as possible.

The great transformation requires not only the use of electricity from wind and solar power.

Many industrial processes need hydrogen, for example in the production of steel and chemicals.

Heavy transport and aircraft are said to be dependent on the volatile molecules, which are said to be obtained electrolytically from renewable energies.

The implications for the world's energy markets will be dramatic, as will the investments that need to be made.

Establishing green hydrogen production and transportation will require $10 trillion in global spending by mid-century.

This is the conclusion of a study by the consulting firm Deloitte Sustainability & Climate.

The resulting market could generate annual revenue of up to $285 billion, the consultants predict.

However, green hydrogen will "dramatically change the global balance of power in the energy sector," says Deloitte partner Bernhard Lorentz, lead author of the study "A Security Policy for the Global Hydrogen Economy."

The US remained the most powerful nation in the world.

North America should not only supply itself with green hydrogen, but could even become the second largest export region for the coveted substance.

But the United States is being challenged by China.

According to the Deloitte consultants, the Middle Kingdom will become the largest producer of green hydrogen, at least if the country succeeds in mobilizing the 1.8 trillion dollars in investment costs that are probably required.

However, China will have such a great need for green hydrogen that it will also have to import it.

The country will therefore depend on trade with the Middle East, Australia and the USA.

The Middle East and Russia are becoming less important

At the same time, the importance of Russia and the Middle East will decrease - both regions have so far been major suppliers of fossil fuels such as oil and gas.

Russia has the potential to produce large quantities of green hydrogen, not only to be independent from imports, but also to export large quantities.

"However, as a so-called rogue state, they are unlikely to benefit from these advantages, especially since Western states will have sufficient alternatives to Russian hydrogen," write the Deloitte experts.

»China, the USA and Japan are already in the process of defining the future structure of a global supply chain for green hydrogen and associated raw materials.«

Deloitte study "A Security Policy for the Global Hydrogen Economy"

The geopolitical implications of this development are huge.

In addition to wind and sun, the production of green hydrogen requires large areas.

Therefore, the USA, Latin America, North Africa, Namibia or South Africa are suitable as production sites, according to the analysis.

Germany and Europe would also produce green hydrogen themselves.

However, they are likely to import at least half of the energy source, but remain primarily importers.

"The global competition among the main importing nations will pose a major challenge for Europe," warn the authors of the study.

Great potential for North and South Africa

The authors therefore recommend building energy partnerships with the largest producing countries as quickly as possible.

The countries of North Africa are actually ideal because they are close to the continent and have enormous hydrogen production potential.

The gas could even come directly to Europe via pipeline and would therefore not first have to be laboriously converted into derivatives such as ammonia and transported by ship.

However, Deloitte sees political problems and instability in the majority of states, which in turn limits the potential for Europe.

In this respect, in addition to Latin America, Namibia and South Africa are particularly suitable as suppliers.

The relationship, the advisers recommend, should be different in the future than it is currently with the oil and gas exporting countries.

However, time is of the essence.

"China, the United States and Japan are already in the process of defining the future structure of a global supply chain of green hydrogen and associated raw materials," write the Deloitte people.

Europe must therefore also develop its market regime as quickly as possible in order to achieve its goals in the global race.

The Deloitte managers have one piece of advice for Germany: Develop a strategy for commodities as soon as possible.

Source: spiegel

All business articles on 2023-02-16

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