A global market for hydrogen is likely to develop eventually but should be built out in phases, according to speakers at the FT Energy Transition Summit.

Opinion in the sector is divided over whether a global trade is likely to develop, due to the difficulties of shipping hydrogen molecules.

A recent report from research agency DNV—which tends to be more bearish on hydrogen rollout than other institutions—foresaw little international trade of the fuel, with no pipelines between continents and only 2pc of global volumes travelling on ships by 2050.

Some form of trade is likely to happen eventually, but the focus for now should be on local development, according to Ana Quelhas, managing director for hydrogen at renewables firm EDP Renewables.

“There are so many opportunities to learn and kickstart the hydrogen economy by decarbonising locally and producing locally. We need to walk before we can run,” she says.

“We need to walk before we can run” Quelhas, EDP Renewables

At the same time as the local development of supply and distribution via clusters in demand centres such as the EU and Far East, an international ammonia trade could start to develop, she adds.

“The low-hanging fruit for the green ammonia market is to replace today’s consumption of ammonia,” she says.

Such a trade is already financially viable, even factoring in the difficulties and costs of shipping, according to Julian Rolland, head of renewables at commodity trading house Trafigura.

“We look at some of those [green ammonia] projects and they seem economic bringing ammonia into Europe at €3–4/kg ($2.9–3.9/kg),” he says.

This ammonia will initially be used to displace current grey ammonia demand, and subsequently to fuel ships and co-fire with coal in thermal power stations, Rolland adds.

Importers should ensure local production as well as a diversity of supply to avoid some of the geopolitical dependences that have been associated with the fossil fuel industry, according to Mark Page, co-founder of project developer HH2E.

“There is a certainly going to be a market to ship hydrogen derivatives, but we cannot allow certain parts of the world to dominate future energy supplies as they dominate them today,” he says.

One way to avoid locking in supply from particular regions is to form supply-chain partnerships with countries that are favoured through foreign policy, according to Patrick Gibbons, partner at consultancy Orizontas.

“We need to not lock ourselves into supplies from certain regions. Something like critical minerals partnerships should be considered for hydrogen,” he says.

It is also vital that regions develop harmonised certification and infrastructure policies so that a trade can then develop as smoothly as possible, according to Marco Alvarez, CEO of gas distributor Snam.

“We need to have a system to control the certificates of origin,” he says. “The best way is to use blockchain to trace [molecules].”

---

Author: Tom Young