Today's Edition
MUSTAFA ABDEL AZIM (DUBAI)
Hydrogen is expected to account for 14% of global energy consumption by 2050, with projections indicating a more than fivefold increase in hydrogen production by 2050. The International Renewable Energy Agency (IRENA), in a joint report with the World Trade Organisation (WTO), anticipates that hydrogen production and its derivatives will meet 14% of global energy consumption by 2050.
The report emphasised that transitioning to low-emission energy requires a rapid increase in the production of green hydrogen. Presented during the COP28 conference in the United Arab Emirates, the joint report highlights the crucial role of global trade in developing green hydrogen markets, policies aimed at expanding production, and its role also in balancing the supply and demand for green hydrogen, where local production in some economies may not be sufficient to meet local demand.
The report stressed that expanding green hydrogen production requires developing new supply chains, which will have implications for international trade in hydrogen and its derivatives, as well as trade in necessary equipment and services along the value chain.
The report reviewed the importance of reducing tariffs on key products, establishing reliable infrastructure, restructuring national support programmes, and developing green government operations, which will enhance the development of supply chains for green hydrogen and transition to a low-emission economy.
According to the report, green hydrogen, produced exclusively from renewable energy, is recognised as a key pillar in accelerating the energy transition, specifically in decarbonising high-emission sectors and industries that cannot fully rely on renewable energy sources easily, such as certain industrial processes, and the shipping and aviation sectors.
The report emphasised the urgent need to transform the hydrogen landscape, with current usage transitioning to clean hydrogen supply and production expanding more than fivefold by 2050, noting that these expansions will require an unprecedented increase in production capacity, led by green hydrogen produced through water electrolysis using renewable energy sources, such as wind and solar power.
Roland Roesch, Director of the Innovation and Technology Centre at IRENA, said: “To achieve an emission-free world, the current landscape of hydrogen production and consumption must change radically”, anticipating that global trade in green hydrogen and its derivatives will play a crucial role in linking low production costs and high-demand locations.
The report noted that between 2009 and 2021, 37 policies and measures were discussed during the trade policy reviews of the WTO member states, aimed at developing hydrogen projects, among which the most prominent was the UAE’s hydrogen roadmap, a comprehensive national plan to support low-carbon local industries, contribute to achieving climate neutrality, and enhance the country’s status as a hydrogen exporter.
This included Argentina’s temporary reduction of import duties on a quota of 6,000 hybrid, electric, and hydrogen fuel cell vehicles, and New Zealand’s vision for hydrogen, as well as support programmes for various members. Ike Ho Lim, Director of the Trade and Environment Division at the WTO, said during the launch of the report at the Trade Day events at COP28, that open, predictable, and consistent trade will be key to enhancing the value chains of green hydrogen.
“Regarding the importance of standards and verification procedures for building a sustainable hydrogen market, Lim explained.
“The principles of the World Trade Organisation can provide useful guidelines on how to develop real international standards, and organise national legislation in line with these standards.”
The report also discussed the challenges and opportunities available to developing economies in relation to green hydrogen and its derivatives, such as green methanol and green ammonia, emphasising the importance of international cooperation and the need to coordinate regulatory frameworks to encourage technology development and enhance market transparency and growth.
The report reviewed the costs of hydrogen trade, which is an important factor in determining the feasibility of supplying green hydrogen across borders for end-use, such as in industry and transportation.
It pointed out that the average customs duty rate applied to hydrogen is about 5.3% among 153 members of the WTO, which is higher than for ammonia (4.4%) and methanol (5%). Some members of the organisation impose between 5 and 10% on hydrogen imports, while seven members impose rates exceeding 10%.
The report also noted that in addition to customs duties, hydrogen and goods produced with it, such as ammonia or direct reduced iron, may be subject to taxes based on their carbon content.
