Within the energy transition, international trade in green hydrogen and its derivatives will play an important role. But what opportunities and risks does this entail for exporting countries in the global South? What framework is needed to ensure that investments and trade develop from the start with sustainability in mind? The Heinrich Böll Foundation and Bread for the World are exploring these questions in a joint project: Green hydrogen.
Green energy is not yet traded widely, but it is poised to become a multibillion dollar business trading green energy globally. The more the 1.5°C limit comes into view, the need to decarbonize also “hard-to-abate” sectors like steel, chemicals, air and maritime transport raises the potential demand for tradable forms of green energy significantly.
In addition, other trends make significant international investment in green energy very likely:
- Various developed economies have pledged to reach net zero emissions by 2050 (EU, Japan, South Korea, US) or 2060 (China). Although most countries have enough renewable energy resources to meet their needs many times over, this may be difficult for some densely populated, highly industrialised countries.
- Renewable energies have become the cheapest source of energy in many geographies. But the demand for energy and natural conditions for producing energy from wind and sun are distributed unevenly on the globe. Under certain conditions, producing green energy in one sparsely populated place with good wind and sun, and transporting it to another one with high densities of industry and population, might become attractive.
- Technologies for producing, transporting and using green energy are rapidly developing, bringing down costs. Nevertheless, the required investments for this are going to be significant (many billions or trillions).
Green hydrogen as climate-friendly technology
Only green hydrogen can be considered for the path to a climate-neutral future, because fossil-based hydrogens disqualify themselves. Non-green hydrogens perpetuate the demand for fossil raw materials. They thus prop up industry, which is the largest contributor to climate change. For instance, black, brown or grey hydrogen is based on coal, lignite or natural gas and carbon dioxide is usually produced during the production process. The greenhouse gas emissions from fossil-based hydrogen are considerable. Blue is grey hydrogen with the addition that CO2 emissions are stored in the ground by the use of carbon capture and storage (CCS) technology, but the long-term consequences of CO2 storage are not known, leakage can lead to emissions, and the use of natural gas should generally be avoided. Therefore, the focus of this project is on renewable, green hydrogen as the only climate-friendly technology.
The need to shape the green hydrogen economy
Without appropriate policy frameworks, the expansion of international investment and trade in green hydrogen and its derivatives could happen in an unsustainable and exploitative manner. Opportunities to develop domestic industries and associated jobs could be missed. Cut-throat international competition for least cost production could lead to damaging practices. This could not only end up harming precious natural environments and local communities, but the associated environmental, social and governance (ESG) risks could ultimately also undermine the long term healthy development of the sector. Therefore, it should be in the enlightened self interest of investors, host countries, and affected communities alike, to shape a “sustainable” level playing field defined by rules that ideally all players abide to. At least some large importers of green energy as the EU or certain large companies could adopt such sustainability requirements, or integrate it in partnership agreements with suppliers.
The opportunity to engage now
In the early stage of an industry, there is a window of opportunity to set standards and shape policies, which is even more critical when development funds are used to build green energy capacities for export. The associated discourses should not only be led by big industrial players pursuing their business interests but include a strong civil society that represents the voices of those who otherwise may be left out or be negatively affected by green hydrogen development.
The project idea
The Heinrich Böll Foundation and Bread for the World consider this engagement of civil society as critical. Since the discussion around hydrogen is still at its infancy among CSOs in the Global South, one main goal of the joint project is to kickstart this involvement.
In a process of decentralised multi-stakeholder dialogues, communication and research, the standards, legal instruments, and political processes leading to sustainable investments and fair trade in green hydrogen will be explored. Four main steps can be singled out:
Background documents will present an overview of the promises and the risks of green hydrogen and lay out options for potential policy instruments to ensure sustainable international investment and fair trade in green energy. They will inform Country-level Consultation Processes that are led by Heinrich-Böll-Stiftung offices in South Africa, Tunisia, Morocco, Brasil, Chile, Argentina and Columbia with stakeholders in the production, investment, trade and consumption of green energy. The results of these consultations will be recorded in Country Outcomes Documents on whose basis a Global Synthesis will be generated.
All results will be shared and widely disseminated, hoping that the derived standards and policy instruments for the sustainable, just and fair production and trade of green hydrogen will inform policymaking.
This website is updated constantly. Some of the publications will be available here shortly.
Further reading related to hydrogen:
- Green hydrogen from Morocco – no magic bullet for Europe’s climate neutrality
- Beyond the hype: How to shape the green hydrogen economy