Abstract
This report studies countries' role in future green hydrogen industrial markets, focusing on three key applications: ammonia, methanol, and steel production. Today, these sectors are among the largest consumers of hydrogen, accounting for about 41% of global demand, and are expected to increase their shares due to global decarbonization efforts. Analyzing a country’s potential positioning in these markets is key to helping policymakers define strategic industrial policies.
To elucidate the impact of the transition to a low-carbon economy on energy value chains, we propose an analytical framework to cluster countries into five groups based on the variables of resource endowment, existing industrial production, and economic relatedness:
Frontrunners. These countries could lead in green hydrogen production and industrial applications at scale globally. Potential frontrunners should focus on industrial policies that foster green hydrogen up-scaling to gain global leadership.
Upgraders. Countries with adequate resources for green hydrogen production and highly related economic activities could potentially upgrade their value chain positioning and attract green hydrogen-based industries. Potential upgraders could benefit from strategic partnerships with frontrunners to foster technological and know-how transfer. Policies should focus on attracting foreign capital, for example, by lowering market risk, developing public-private partnerships, and forming joint ventures.
Green hydrogen exporters. Resource-rich countries with limited upgrading potential should prioritize green hydrogen exports and would benefit from partnerships with green hydrogen importers to deploy enabling infrastructure and reduce market risk. Furthermore, coordination of international standards for green hydrogen production and use would facilitate trade on a global scale.
Green hydrogen importers. Resource-constrained countries with industrial hydrogen-based production will need to develop strategic partnerships to ensure secure and stable green hydrogen supplies. Additionally, stimulating innovation and knowledge creation through targeted policies will be critical to sustaining competitiveness and avoiding industrial relocations to frontrunners or upgraders.
Bystanders. Countries with significant constraints along all three critical variables should assess whether some of these constraints, such as limited infrastructure or freshwater availability, could be overcome to integrate into future green hydrogen value chains. Otherwise, they will continue to be the final importers of industrial products.
Countries in these groups face unique challenges and opportunities, which we exemplify through case studies focusing on the United States, Germany, and Thailand.
References
AQUASTAT. (2020). Conventional Water Resources: Surface Water and Groundwater. https://www.fao.org/aquastat/en/ databases/maindatabase/
ASEAN. (2021). Hydrogen in ASEAN: Economic Prospect, Development & Applications. https://aseanenergy.org/event/ hydrogen-in-asean-economic-prospect-development-and-applications/
Asiedu, E. (2006). Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability. The World Economy, 29(1), 63-77. https://doi.org/10.1111/j.1467-9701.2006.00758.x
Bailey, M. P. (2021). Wison Engineering awarded EPCC contract for new hydrogen plant in Thailand. https://www. chemengonline.com/wison-engineering-awarded-epcc-contract-for-new-hydrogen-plant-in-thailand/?printmode=1
Baker, L., Newell, P., & Phillips, J. (2014). The political economy of energy transitions: the case of South Africa. New Political Economy, 19(6), 791-818.
Bazilian, M., Cuming, V., & Kenyon, T. (2020). Local-content rules for renewables projects don’t always work. Energy Strategy Reviews, 32, 100569.
Binz, C., & Truffer, B. (2017). Global Innovation Systems—A conceptual framework for innovation dynamics in transnational contexts. Research Policy, 46(7), 1284-1298.
Blondeel, M., Bradshaw, M. J., Bridge, G., & Kuzemko, C. (2021). The geopolitics of energy system transformation: A review. Geography Compass, 15(7). https://doi.org/10.1111/gec3.12580
BmBF. (2021). Potenzialatlas Wasserstoff: Afrika könnte Energieversorger der Welt werden. https://www.bmbf.de/bmbf/de/home/_documents/potenzialatlas-wasserstoff-afr-ergieversorger-der-welt-werden.html
BmWi. (2021a). Altmaier unterzeichnet gemeinsame Absichtserklärung zur Deutsch-Saudischen Wasserstoffzusammenarbeit https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2021/03/20210311-altmaierunterzeichnet-gemeinsame-absichtserkl%C3%A4rung-zur-deutsch-saudischen-wasserstoffzusammenarbeit.html
BmWi. (2021b). Deutschland und die Vereinigten Arabischen Emirate verstärken Energiepartnerschaft mit neuer Wasserstoff-Taskforce https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2021/11/20211102-deutschland-und-dievereinigten-arabischen-emirate-verstarken-energiepartnerschaft-mit-neuer-wasserstoff-taskforce.html
BmWi. (2021c). Stahl und Metall. https://www.bmwi.de/Redaktion/DE/Textsammlungen/Branchenfokus/Industrie/ branchenfokus-stahl-und-metall.html
BmWi. (2021d). Unterzeichnung einer Absichtserklärung zur Gründung eines deutsch-australischen Wasserstoffakkords https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2021/06/20210613-unterzeichnung-einer-absichtserklaerung-zurgruendung-einer-deutsch-australischen-wasserstoffallianz.html
BmWi. (2021e). “Wir wollen bei Wasserstofftechnologien Nummer 1 in der Welt werden”:BMWi und BMVI bringen 62 Wasserstoff-Großprojekte auf den Weg https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2021/05/20210528- bmwi-und-bmvi-bringen-wasserstoff-grossprojekte-auf-den-weg.html
BP. (2019). Statistical Review of World Energy. https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/ pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf
Bradshaw, M. J. (2009). The geopolitics of global energy security. Geography Compass, 3(5), 1920-1937.
Bürer, M. J., & Wüstenhagen, R. (2009). Which renewable energy policy is a venture capitalist’s best friend? Empirical evidence from a survey of international cleantech investors. Energy Policy, 37(12), 4997-5006. https://doi.org/https://doi. org/10.1016/j.enpol.2009.06.071
Busse, M., & Hefeker, C. (2007). Political risk, institutions and foreign direct investment. European Journal of Political Economy, 23(2), 397-415. https://doi.org/10.1016/j.ejpoleco.2006.02.003
Chen, G. C., & Lees, C. (2016). Growing China’s renewables sector: a developmental state approach. New Political Economy, 21(6), 574-586.
Chen, S., Kumar, A., Wong, W. C., Chiu, M.-S., & Wang, X. (2019). Hydrogen value chain and fuel cells within hybrid renewable energy systems: Advanced operation and control strategies. Applied Energy, 233, 321-337.
Coleman, D., Kopp, M., Wagner, T., & Scheppat, B. (2020). The value chain of green hydrogen for fuel cell buses–a case study for the Rhine-Main area in Germany. International Journal of Hydrogen Energy, 45(8), 5122-5133.
Dai, Y., & Xue, L. (2014). China’s policy initiatives for the development of wind energy technology. Climate Policy, 15(1), 30- 57. https://doi.org/10.1080/14693062.2014.863549
EC. (2020). A hydrogen strategy for a climate-neutral Europe. https://ec.europa.eu/energy/sites/ener/files/hydrogen_ strategy.pdf
EC. (2022). Supporting clean hydrogen. https://ec.europa.eu/growth/industry/strategy/hydrogen_en
EGAT. (2019). EGAT to Advance Hydrogen Production in Thailand https://www.enapter.com/newsroom/egat-signsagreement-with-enapter-to-advance-hydrogen-production-in-thailand
EIA. (2019). Total Primary Energy Consumption. https://www.eia.gov/totalenergy/data/annual/index.php
Eicke, L., & Goldthau, A. (2021). Are we at risk of an uneven low-carbon transition? Assessing evidence from a mixed-method elite study. Environmental Science & Policy, 124, 370-379.
Fankhauser, S., Bowen, A., Calel, R., Dechezleprêtre, A., Grover, D., Rydge, J., & Sato, M. (2013). Who will win the green race? In search of environmental competitiveness and innovation. Global Environmental Change, 23(5), 902-913.
Gandenberger, C., Unger, D., Strauch, M., & Bodenheimer, M. (2015). The international transfer of wind power technology to Brazil and China (Working Paper Sustainability and Innovation, S7).
Gereffi, G. (2005). The global economy: organization, governance and development. In N. J. S. a. R. Swedberg (Ed.), The Handbook of Economic Sociology (Vol. 2nd edition). Princeton University Press and Russell Sage Foundation.
Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78-104. https://doi.org/10.1080/09692290500049805
Gereffi, G., & Lee, J. (2012). Why the world suddenly cares about global supply chains. Journal of Supply Chain Management, 48(3), 24-32.
Ghorfa. (2020). Bundesregierung unterzeichnet Wasserstoff-Abkommen mit Marokko. https://ghorfa.de/de/ bundesregierung-unterzeichnet-wasserstoff-abkommen-mit-marokko/
Giuliani, E., Pietrobelli, C., & Rabellotti, R. (2005). Upgrading in global value chains: lessons from Latin American clusters. World Development, 33(4), 549-573.
Glachant, M., & Dechezleprêtre, A. (2016). What role for climate negotiations on technology transfer? Climate Policy, 17(8), 962-981. https://doi.org/10.1080/14693062.2016.1222257
Goldthau, A., Bazilian, M., Bradshaw, M., & Westphal, K. (2019). Model and manage the changing geopolitics of energy. Nature, 569(7754), 29-31. https://doi.org/10.1038/d41586-019-01312-5
Goldthau, A., Eicke, L., & Weko, S. (2020). The Global Energy Transition and the Global South. In The Geopolitics of the Global Energy Transition (pp. 319-339). Springer. https://doi.org/10.1007/978-3-030-39066-2_14
Haakonsson, S. J., & Slepniov, D. (2018). Technology transmission across national innovation systems: The role of Danish suppliers in upgrading the wind energy industry in China. The European Journal of Development Research, 30(3), 462-480.
Hausmann, R., & Hidalgo, C. A. (2011). The network structure of economic output. Journal of Economic Growth, 16(4), 309- 342.
Hausmann, R., Hidalgo, C. A., Bustos, S., Coscia, M., & Simoes, A. (2014). The atlas of economic complexity: Mapping paths to prosperity. MIT Press.
Helgenberger, S., Gürtler, K., Borbonus, S., Okunlola, A., & Jänicke, M. (2017). Mobilizing the co-benefits of climate change mitigation: Building New Alliances – Seizing Opportunities – Raising Climate Ambitions in the new energy world of renewables. COBENEFITS IMPULSE (Policy Paper). https://doi.org/10.2312/iass.2017.021
Hidalgo, C. A., Balland, P.-A., Boschma, R., Delgado, M., Feldman, M., Frenken, K., Glaeser, E., He, C., Kogler, D. F., & Morrison, A. (2018). The principle of relatedness. International Conference on Complex Systems.
Hidalgo, C. A., Klinger, B., Barabási, A.-L., & Hausmann, R. (2007). The product space conditions the development of nations. Science, 317(5837), 482-487.
Hipp, A., & Binz, C. (2020). Firm survival in complex value chains and global innovation systems: Evidence from solar photovoltaics. Research Policy, 49(1), 103876.
Hoekman, B. M., Maskus, K. E., & Saggi, K. (2005). Transfer of technology to developing countries: Unilateral and multilateral policy options. World Development, 33(10), 1587-1602.
Hong, C.-S. (2019). Thailand’s Renewable Energy Transitions: A Pathway to Realize Thailand 4.0. The Diplomat. https://thediplomat.com/2019/03/thailands-renewable-energy-transitions-a-pathway-to-realize-thailand-4-0/
IEA. (2019). The Future of Hydrogen. International Energy Agency.
IEA. (2021a). Hydrogen. https://www.iea.org/reports/hydrogen
IEA. (2021b). Thailand. https://www.iea.org/countries/thailand
IRENA. (2019). Hydrogen: A renewable energy perspective. International Renewable Energy Agency.
IRENA. (2020). Green Hydrogen Cost Reduction: Scaling up Electrolysers to Meet the 1.5°C Climate Goal. International Renewable Energy Agency.. https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Dec/IRENA_Green_ hydrogen_cost_2020.pdf
IRENA. (2021). IRENA-European Union Workshop. A Dialogue Between EU and North African States on a Regulatory Framework to Develop Green Hydrogen Supply, Demand and Trade. https://www.irena.org/-/media/Files/IRENA/Agency/ Events/2021/Oct/IRENA-Event-North-Africa_-20211011_V2.pdf