Hydrogen will need another 15-20 years to become a commodity that is traded worldwide in the same way that coal, oil and gas are today, with regional patches of trading likely to emerge first, delegates heard at an industry conference in Singapore this week.

The first steps towards making hydrogen a tradeable energy commodity globally will likely be regionalised markets, where the zero-carbon fuel can be produced and consumed locally, according to Philip Haydn Jones, chief commercial officer at Hong Kong-based green hydrogen developer InterContinental Energy (ICE).

This will be complemented by long-term offtake contracts that will see volumes flow between Europe, the Middle East, Asia and Australia, Jones said at the Asia LNG and Hydrogen Gas Markets Conference in Singapore on Wednesday.

15 years – Potential timescale until traded market in green hydrogen

“In terms of how we look at a commoditised commodity, I think we need to think about that towards the end of the 2030s, if not later, when we get to that real scale,” says Jones. “We have got to really take our time and not get too excited that this is going to be a traded market, that everyone’s going to go and put cargoes left and right, and start optimising. That is not going to happen in the near term.”

The panel discussion took place on the same day Saudi Aramco announced it had signed a memorandum of understanding with ICE to develop a green hydrogen and ammonia project in Saudi Arabia. ICE is already developing two huge hydrogen and ammonia plants in Australia and one in Oman.

The Asian Renewable Energy Hub and Western Green Energy Hub projects in Australia will have 26GW and 50GW of renewable energy capacity, respectively, once all phases are completed, while the Green Energy Oman development is planned to eventually have 25GW.

The large size of each project will enable economies of scale and the supply chain to coalesce within the area, according to Jones.

“If you take 20 years to build out one of these big projects, by the time you have built the last GW, you have to start again by repairing and working on the first GW you put in,” he says. “This becomes a sustainable, evergreen model that then allows electrolyser, solar and wind manufacturers, and connected industries, to locate around these energy hubs.”

Green hydrogen focus

While he called the colours of hydrogen something of a distraction, Jones says ICE is firmly in the green hydrogen camp given the long-term drive towards zero-carbon products. Green hydrogen is also the long-term focus in Poland, as Europe’s top coal consumer builds out its renewables capacity, according to Tomoho Umeda, a member of the board at industry association Hydrogen Poland.

“We are focused on green here in Poland, frankly speaking, because we still have a big capacity of renewables to develop in the future, which is unusual because Europe is quite well-developed already,” says Umeda.

Poland is already the world’s fourth-largest supplier of grey hydrogen, with output reaching 1mn t/yr. Renewable energy is under-developed in Poland, making up only 12.2pc of final energy consumption in 2019 compared with 19.7pc overall for the EU, meaning the Polish industry is betting on green hydrogen.

Recent supply tightness in European gas markets that sent prices soaring has underlined the risks with blue hydrogen, which uses gas as a feedstock.

“It seems that blue hydrogen could be paradoxically more costly right now than green hydrogen, so we are absolutely focused on green hydrogen here,” says Umeda.

Hydrogen offers Poland an opportunity to wean itself off coal, and the country has a potentially large internal market as it is home to the world’s second-largest district heating system, which is mostly coal-fired. There may also be opportunities to export green varieties of hydrogen, ammonia or methanol to Germany, where there may not be much possibility of building new renewable capacity dedicated to producing green hydrogen.

---

Author: Shi Weijun