Green Hydrogen: Which Country Will Dominate the Global Clean Energy Race?

What is green hydrogen?

Green hydrogen, the fuel of the future, is produced from the electrolysis of water using renewable energy. With the ability to create clean and efficient energy, green hydrogen promises to be an alternative to traditional fossil fuels, contributing to environmental protection and ensuring energy security.

In the face of increasingly severe climate change, the need for clean, sustainable energy sources has never been more urgent. And green hydrogen is the answer we are looking for. With its diverse applications and limitless development potential, green hydrogen is not only a clean energy source but also the key to building a sustainable future for our planet.

Hydrogen, the most abundant element in the universe, is an invisible, odorless, and highly flammable gas. Today, the element plays a vital role in many industries, from oil refining, where it helps remove sulfur impurities from fuel, to the production of fertilizers, which are essential to feeding billions of people on Earth.

While hydrogen is now considered one of the clean energy sources of the future, the reality is very different. According to statistics from the International Renewable Energy Agency, by 2022, almost all of the world's hydrogen (98%) will be produced from fossil fuels, mainly natural gas. This means that the current hydrogen production process is emitting a large amount of carbon, which is completely contrary to the goal of sustainable development.

According to the International Energy Agency (IEA), without modern technology to capture and store emissions, each ton of hydrogen produced from natural gas would emit the same amount of CO2 as driving an average car for about 30,000 km. This means we are adding fuel to the fire, making the situation of climate change even more serious.

While the majority of the world’s hydrogen is produced from polluting fossil fuels, only 2% is produced from clean, renewable sources. It is the electrolysis of water using wind, solar and hydropower that produces green hydrogen – a promising solution for the future.

How are countries around the world promoting the development of green hydrogen?

The race to develop green hydrogen is heating up. While the European Union (EU) and the United States remain the “big guys,” China and Middle Eastern countries are rapidly rising. With abundant renewable energy resources and strong financial resources, Middle Eastern countries are investing heavily in this field. In addition, China, with its leading position in the production of electrolyzers, the core equipment of the green hydrogen industry, is increasingly asserting its position on the global energy map.

This global shift to renewable energy is paving the way for increased cross-border trade and international collaboration. Industry experts predict that the race to dominate the green hydrogen economy will not only transform economic relations between nations, but also influence geopolitical dominance.

The “green race” is profoundly changing international relations. According to Nicola De Blasio, a leading energy expert at Harvard University (USA), each country is seeking leadership in the field of clean energy. This competition, besides the challenges, also creates new opportunities for cooperation, promotes technological innovation and shortens the transition time to a low-carbon economy.

The race for the top spot in the green hydrogen industry could lead to fierce competition and even trade conflicts between countries, according to expert Nicola De Blasio. Countries rich in renewable energy resources and modern technology will have a big advantage in producing green hydrogen. However, the difference in green hydrogen production and consumption capacity could cause tension in the global market.

Hydrogen, like an energy tank, can store and transport energy from renewable sources such as wind and solar to where it is needed. In particular, green hydrogen, produced from these clean energy sources, is expected to be the perfect alternative to fossil fuels in heavy industries such as transportation and manufacturing, which consume a large amount of global energy.

A recent study by the world's leading auditing group Deloitte has painted a promising picture of the future of green hydrogen. Accordingly, the green hydrogen market is expected to surpass liquefied natural gas by 2030 and reach an impressive figure of 1.4 trillion USD by 2050. The report shows that to fully exploit the potential of this market, building a modern and efficient transportation system is extremely important.

Meanwhile, a new study by PwC Audit Group shows that demand for green hydrogen is expected to skyrocket in the coming years, capable of replacing up to 10.4 billion barrels of crude oil by 2050. This figure is equivalent to nearly 37% of current global oil production. This shows that green hydrogen is emerging as a potential clean energy source, capable of completely changing the energy market landscape.

According to Mr. De Blasio, China, Canada and the United States are holding the advantages to become leaders in the green industrial revolution.

Having industrial facilities close to cheap sources of green hydrogen would give these countries a significant competitive advantage. By tightly controlling the supply chain and minimizing transportation costs, they could optimize production efficiency and become leading players in the green industrialization race.

Mr. De Blasio commented that India can become an important "bridge", connecting the Northern and Southern hemispheres in the green hydrogen value chain, thereby actively contributing to the development of this industry globally.

The war in Ukraine has become an important catalyst for the EU to accelerate the development of the hydrogen industry. According to analyst Stephen Tsui of the US financial group JPMorgan, to reduce its dependence on gas supplies from Russia, the EU has set an ambitious target of producing 20 million tons of renewable hydrogen by 2030. At the same time, the region also aims to quadruple the consumption of this green fuel. These targets show the EU's determination to transition to a green economy and ensure energy security.

Meanwhile, the race for the throne in the field of green hydrogen is extremely exciting, with the active participation of Australia and Asian powerhouses such as Japan and South Korea. These countries have quickly positioned themselves as pioneers, constantly investing and developing green hydrogen production technologies.

Not only developed countries, but also developing countries such as India, Brazil, Chile, Egypt and many other African countries are actively participating in the race for a position in the green hydrogen value chain. With the advantage of abundant renewable energy resources, these countries promise to become formidable competitors in the global market.

According to global consultancy Alvarez & Marsal, four core factors will shape each country’s competitive position in the green hydrogen race: renewable energy, manufacturing capacity, electricity ecosystem and capital costs. It is the harmonious combination of these factors that will determine who will be the ultimate winner.

“Countries rich in renewable resources such as Australia, India and the Middle East will become the world’s leading producers of green hydrogen. The advantage of abundant renewable energy resources will help these countries maximize their potential, contributing to ensuring global energy security,” said Aaron Fleming, head of Asia-Pacific industry for energy and natural resources at Natixis, a French multinational financial group.

According to the Gulf Research Center, Middle Eastern countries, notably the United Arab Emirates (UAE), are actively transforming their economies from oil dependence to clean energy sources. With the ambition to become one of the world's leading green hydrogen powers, the UAE has set a target of producing 1.4 million tons of green hydrogen per year and increasing this number to 15 million tons by 2050.

With ambitions to become a leading renewable hydrogen powerhouse, Oman has set a target of producing 1 million tonnes of hydrogen per year by 2030, rising to 3.75 million tonnes by 2040 and reaching 8.5 million tonnes by 2050, according to the International Energy Agency (IEA). This is a bold step to diversify the economy and reduce its dependence on oil.

Not only Oman, other Gulf countries such as Saudi Arabia and Kuwait are also actively participating in the race to develop hydrogen energy, with ambitious and large-scale plans.

“The Middle East is a very lucky region,” said Cliff Zhang, co-founder of Hong Kong-based investment fund Templewater. “In the fossil era, they had huge oil and gas deposits. Now, as the world transitions to clean energy, the Middle East has unlimited solar and wind resources, opening up new opportunities for development.”

According to Mr. Wang Kai, CEO of hydrogen specialist Jiangsu Guofu Hydrogen (Hong Kong), although the Middle East has advantages in raw materials for green hydrogen production, building a complete supply chain and recovering investment capital are still challenges.

“The US and China are engaged in a dramatic race to develop hydrogen technology. While the US still holds the lead, China is making constant efforts to narrow the gap,” said Wang Kai.

Although the proportion of green hydrogen in China is currently very modest, accounting for less than 0.1% of China's hydrogen. However, with ambitious long-term plans, China has clearly defined the goal of promoting the development of green hydrogen, in order to diversify energy sources and reduce greenhouse gas emissions.

Although there are many challenges ahead, with preferential policies and strong investment from the Chinese government, the goal of making green hydrogen an important energy source by 2035 is completely achievable.

Mr. De Blasio said that China could gain an advantage in the green energy race thanks to its abundant resources and superior production capacity. However, he also predicted that this competition will be much fiercer than previous energy races. The reason is that many Western countries are looking to reduce their dependence on China while promoting clean energy development to ensure national energy security.

The US Inflation Retrenchment Act (IRA) has been a breath of fresh air for the strong growth of green energy in North America. Thanks to preferential policies and generous subsidies, clean energy capacity in this region is expected to skyrocket in the coming time.

The law focuses on promoting clean energy technologies, with green hydrogen seen as a core element in achieving the net-zero emissions target.

According to the forecast of Japanese investment bank Nomura, thanks to the promotion of the IRA Act, the production price of green hydrogen in the US will drop sharply from the current level of 4.5-12 USD/kg to about 2-3 USD/kg in 2050, opening a new era for the clean energy industry.

Meanwhile, the US research company Sanford Bernstein has made an extremely optimistic forecast about the future of green hydrogen. Accordingly, the company believes that the production cost of green hydrogen will decrease sharply, reaching 2.40 USD/kg in 2030 and only 1.60 USD/kg in 2050.

According to Jenhao Han, Asia CEO of Hy24, a leading investment firm in the clean hydrogen sector, the government needs to take a leading role in promoting the hydrogen industry. By issuing supportive policies and providing attractive incentives, the government will create a favorable environment for the hydrogen industry to thrive.

Despite ambitious plans, there are still doubts about the hydrogen industry’s ability to get off the ground on schedule. Grant Hauber, strategic energy finance advisor for Asia at the Institute for Energy Economics and Financial Analysis (USA), said that normally, when a new technology like hydrogen emerges, people will prioritize its technical research and application capabilities.

However, it is worth noting that many countries are bucking this trend, rushing to build supportive policies for the hydrogen industry before there is sufficient evidence of the technology's feasibility.

Despite the progress, the race to develop hydrogen is still a long way off. As Natixis’ Fleming puts it, it’s a marathon, not a sprint. Every country is scrambling to get ahead in the green energy game.