Analysis of Green Hydrogen for the Developing World: Evaluating Post-Hype Reality
In a bold declaration, Colombian President Gustavo Petro has envisioned green hydrogen as the oil of the future, citing Germany as a shining example. However, the road to harnessing this clean energy source is fraught with challenges for developing countries.
Investments in green hydrogen remain scarce in nations with unstable governance, and the focus on green industrial partnerships instead of hydrogen partnerships could be more beneficial. Yet, Germany's political willingness to bid farewell to some of its basic industries is still uncertain.
Meanwhile, investment decisions for large hydrogen projects in countries like Namibia, South Africa, and Chile are being delayed or suspended. The key challenges for these nations include infrastructure development complexity, securing consistent renewable energy supply, and water availability constraints due to the large volumes needed for electrolysis. Infrastructure investment requires long-term coordination and significant capital, often difficult in less developed regions. Water scarcity poses a critical issue, especially in arid areas, leading some countries to consider costly seawater desalination or alternative water sources like wastewater treatment.
Despite these obstacles, the potential for green hydrogen and its derivatives to drive sustainable industrialization, economic diversification, energy security, and participation in global net-zero emissions efforts is undeniable. Developing countries in the Global South can leverage their geographic advantages—such as abundant solar and wind resources—to become key suppliers in emerging international markets.
Strategic regional development through industrial parks or clusters can attract investment and facilitate technology collaboration, as seen in India’s Gopalpur Industrial Park. This fosters public-private partnerships and enables large-scale clean energy deployment with supportive infrastructure and water management solutions.
Civil society organizations have been advocating for binding guardrails for a responsible hydrogen economy since 2021, echoing similar demands in the USA, where "clean" hydrogen has become a pillar of the Inflation Reduction Act. Germany is actively promoting the use of green hydrogen, with over 20 bilateral hydrogen partnerships with countries like Namibia, South Africa, Brazil, and Morocco.
However, the foreseeable demand for green hydrogen in Europe is well below the targets set by the EU and its member states. To overcome this, a long-term, reliable partnership between Germany and producing countries based on strict environmental and social standards and a significant increase in value creation could lead to substantial positive developmental effects, particularly job creation.
As the "Hydrogen Ladder" prioritizes steel, aviation, and shipping at the top, while passenger cars, heating, and off-grid power supply are at the bottom, it is crucial for developing countries to strategically plan and invest in green hydrogen to reap its benefits while addressing the challenges it presents.
[1] International Renewable Energy Agency (IRENA) [2] World Economic Forum [3] International Energy Agency (IEA) [5] Hydrogen Council
Additional points:
- China is investing heavily in electrolysis to aim for dominance in the hydrogen market.
- BloombergNEF predicted in 2020 that hydrogen could cover around a quarter of global energy demand by 2050.
- Chancellor Scholz announced investments of over four billion euros in the hydrogen market in November 2022.
- The attempt by civil society organizations to anchor sustainability principles in the 2024 German import strategy failed due to resistance from the Chancellor's Office.
- International actors have developed standards for a sustainable hydrogen economy, such as the Hydrogen Council's ESG criteria and the IPHE network's common principles in the "Joint Agreement on the Responsible Deployment of Renewables Based Hydrogen".
- The potential for green hydrogen to drive sustainable industrialization and energy security in developing countries is undeniable, as evidenced by the vision of Colombian President Gustavo Petro.
- Investments in green hydrogen remain scarce in nations with unstable governance, and the focus on green industrial partnerships could be more beneficial for addressing these challenges.
- Strategic regional development through industrial parks or clusters can attract investment, facilitate technology collaboration, and enable large-scale clean energy deployment in developing countries, as seen in India’s Gopalpur Industrial Park.
- International actors such as the IRENA, World Economic Forum, IEA, Hydrogen Council, and BloombergNEF have predicted that green hydrogen could cover around a quarter of global energy demand by 2050.
- Just as civil society organizations in the USA have advocated for binding guardrails for a responsible hydrogen economy, there is a need for similar demands in European countries, particularly to address concerns about water scarcity and the long-term sustainability of green hydrogen projects.
