Since the beginning of the twentieth century, energy has been at the centre of the international political and economic history of the globe. For nearly a century now, access to oil and natural gas has been at the heart of the geopolitics of energy, but with renewable energies and related technologies set to increasingly dominate energy supply systems, relations between states will change, while economies and societies will undergo profound structural transformations. In this redefinition of the energy scenario, the sources that will probably suffer the greatest impact in the long term will be oil and other fossil fuels, though they will still be at the centre of both our economies and international relations for many years to come.
While still at the centre of the current energy system, the role of oil seems destined to diminish in our future. Current statistics tell us that crude oil continues to be the main source of energy around the world, though its percentage —compared to other energy sources— is decreasing. According to data from the International Energy Agency (IEA), oil has gone from representing 46.2% of the share of global energy supply in 1973 to just 31.6% in 2018. If we consider fossil fuels as a whole (coal, oil and natural gas), the decline is less drastic; having gone from 86.7% in 1973 to 81.3% in 2018. Despite the recent development around renewable energies, global energy supplies continue to be based on fossil fuels, whose combustion produces about 75% of global greenhouse gas emissions, making energy the main cause of climate change.
The energy sector —and the related government policies— are going through a profound change and redefinition because of the need to tackle climate change and carry out the decarbonisation of the economy. The international community has even adopted a universal legal instrument (such as the Paris Agreement) to maintain the rise of global temperatures below 2°C, possibly even 1.5°C above pre-industrial levels. Thus, over the last few years a new issue has become central in the international agenda: how to encourage the environmental and energy transitions in the different parts of the world as to guarantee a green and sustainable future. In order to meet the Paris objective, emissions would need to peak in the next decade and before falling to zero by around 2050. In this race towards climate neutrality, many countries have announced different strategies that involve the profound transformation of the energy, industrial and infrastructure sectors.
As a long-term strategic trend, it seems that most countries —and the international community as a whole— have become convinced of the need to focus on renewable energies and decrease their dependence on fossil fuels. However, some obstacles remain in the transition process. The sources of the energy mix that will prevail in the future will determine a redefinition of energy, trade and geopolitical relations.
The role of hydrogen
Hydrogen has been identified as one of the resources that could facilitate the transition towards decarbonisation and a net zero emissions future. According to the report presented by the International Energy Agency (IEA), hydrogen could become the fuel of the future by helping decarbonize hard-to-abate-sectors, such as the shipping and aviation industries.
The great enthusiasm for this energy vector is due to its ability to store and supply large quantities of energy without creating CO2 emissions during combustion. In reality, this property is typical only of green hydrogen, and not for the other types. Indeed, there are different types of hydrogen: green, blue, and grey. Green hydrogen is produced with zero emissions through water electrolysis, making it the most favourable for decarbonisation. Blue hydrogen, instead, is produced from methane, though it manages to capture the CO2 produced in the process. Finally, grey hydrogen is produced through a similar process to blue hydrogen, but its CO2 does not get captured and is released into the atmosphere.
Although green hydrogen is still at a developmental stage, some states and companies have already launched pilot projects and are already investing in hydrogen technologies. It is not the first time that hydrogen is presented as a possible clean energy solution that can assist countries in their transition towards a cleaner energy system. Already in the 1970s and 1990s hydrogen was presented as a viable solution, though discussions around its potential were still met with inaction.
This time around, however, there are some factors suggesting things might be different. After all, the abatement of costs of renewables represents a great opportunity for the transition towards hydrogen. Although the costs of production have already decreased, the water electrolysis process remain quite expensive. Thus, for hydrogen to become competitive, research and technological innovation have to lower the costs of this process. The plants today are still small, but they will have to reach the production of megawatts in the future.
Although the necessary infrastructure for hydrogen is still absent at the moment, some experts believe this does not represent a big obstacle: governance, regulations and procedures represent the biggest challenge here.
Hydrogen also brings about the opportunity to equalize energy relations among countries by creating a more diffused and thus “democratic” global energy system. But in trying to understand what the impact of hydrogen will be on the energy system of the future two fundamental questions are yet to be answered: How much hydrogen are we going to use in the next decades? How much of it will be traded among countries?
The geopolitical implications of the transition to hydrogen will heavily depend on quantities, as in the share of hydrogen within the energy mix of the future.
The transition towards hydrogen and its geopolitical implications
As in many other situations, a transition creates winners and losers. This is also true for the energy transition, as it will change the dynamics and relations among the actors involved. In this redefinition of relations, some categories will be more advantaged while others will be at a disadvantage. There will be states, industries and companies that will benefit from the transition, while others will suffer adverse consequences, losing the comparative advantage they benefit from in the current scenario.
In analysing whether a country finds itself in a favourable position to become a producer of hydrogen there are three main requirements that should be taken into consideration: having a geographically advantageous position, having renewable energy sources, and having a strong, established industry that has the know-how to manage the emerging hydrogen industry. Norway, Morocco, the United States and Australia are among the countries that are best positioned to become the winners of a future based on hydrogen technologies.
The transition to hydrogen could impact many aspects, such as global and internal socio-economic stability; technological and commodity control, and the security and defence dimensions.
As regards global and internal stability, the transition to hydrogen, if badly managed, could entail the risk of creating a socio-economic divide between and within countries. Current energy-exporting countries may become net energy importers, thus suffering economic losses. Indeed, fossil-fuel rich countries, such as the Gulf states and Russia, which have based most of their revenues on oil and gas exportations, could be disrupted by a sudden transition towards renewable energies (including hydrogen), leading to social and political instability. At the international level, one issue that should be taken into account is how to limit the adverse social and economic effects of energy transition and assure that no one is left behind. In managing this transition, it is fundamental to create the conditions to avoid a sharp division between a “net zero club” of countries that will benefit from the transition while another group will struggle with it.
The energy transition towards hydrogen (and renewables in general) also bring about the potential to re-draw the security and defence alliances maps. Indeed, the energy transition will reduce energy dependence on fossil-fuel rich countries, thereby reshaping old alliances. This could lead to a re-considering of existing security partnerships. For example, the relationship between the US and the Gulf states could be severely impacted by the transition to renewable sources and to hydrogen.
The race towards climate neutrality and the energy transition process also imply a geopolitical and geo-economic game that revolves around technological leadership and commodity control. In the redefinition of the energy scenario, some raw materials are becoming strategic due to their central role as vital components of products necessary for the energy transition, such as wind turbines and photovoltaic panels, which play a key role in the production of green hydrogen.
While the transition to a decarbonised energy system has become fundamental, it is also necessary to prepare for an orderly transition. If fragile countries mismanage the transition towards renewable and sustainable sources of energy, this could lead to instability and even conflict. Meanwhile, the costs of non-action will be severely high, too.
Overall, hydrogen is increasingly becoming an energy vector on which states and companies place great trust. They have started to invest in it and its related technologies, betting on the green molecule (green hydrogen) and its potential to become both a source of income and an ally in the fight against climate change.