Countries are increasingly betting on hydrogen as a viable and green replacement of fossil fuels. 12 countries and the EU already have national hydrogen strategies. 19 other countries are currently drafting their strategies with many aiming to publish in 2021. In order for hydrogen to replace fossil fuels, hydrogen must be ‘green’-- meaning that it needs to be produced through renewables. 

There is a huge potential for green hydrogen in countries where the production of solar, hydro, or wind-energy is relatively cheap. To be “export champions”, however, countries also require large freshwater resource endowments as well as high infrastructure potential. Fossil fuel exporting countries in the Middle East, for example, benefit from existing infrastructure, such as harbours and networks fit for transporting fuel. However, they are limited by their freshwater resource endowments. On the other hand, countries such as Morocco, Mexico, the US, Indonesia and Australia satisfy all the right conditions to be an “export champion”: renewable energy, freshwater resources, and infrastructure. It is likely that international political relevance could shift from the Middle East, with high fossil fuel reserves, to hubs of green hydrogen. New geopolitical dynamics could emerge also given that green hydrogen could allow for a diversification in import locations. Most countries are dependent on a tiny number of countries with abundant oil and gas reserves. Green hydrogen has the opportunity to increase the number of countries that export energy resources, diversify the group of suppliers, and decrease dependence.

Green hydrogen as a novel technology has captured the attention of countries worldwide. Many are vying to establish themselves as the global leader. Europe, for example, viewing China’s dominant position in solar panels, is gearing to develop technological leadership in green hydrogen. At this stage, however, green hydrogen is not ready to be applied on a large, let alone global scale. Firstly, it is expensive. Moreover, at current technological levels, the transition of green energy to hydrogen leads to a high loss of energy, making direct electrification through renewables seem like the more efficient and cheaper option. 

Countries with abundant renewable energy resources may not only benefit from being potential leaders in green hydrogen. They can also potentially benefit from investing in higher margin, energy-intensive industries, such as the production of green steel or aluminum.