The hydrogen industry faces a fundamental tension between energy security and international trade. While countries want domestic security, the economics often require global co-operation and trade
Different regions are taking varied approaches – from the US focusing on incentives and domestic production, to Europe’s mix of blue and green hydrogen, to resource-rich nations looking to become exporters
Success requires solving multiple challenges simultaneously – from technical hurdles like intermittency and infrastructure, to economic barriers around costs and pricing, to geopolitical complexities around trade and supply chains

Amid trade tensions and executive posturing, the world is becoming more fragmented. Hydrogen has a chance to emerge as a solution, albeit a complex – and expensive – one.

Energy security is a popular point for politicians. In a September More in Common poll, people said “making the UK less reliant on foreign imports of things like energy and steel” was the second most important item for the Minister for Energy Security and Net Zero to focus on.

Top priority was reducing energy bills. The UK government has backpedalled on claims that the move to cleaner energy would cut bills. It remains a concern, given worries around the cost of living.

Insecurity

Hydrogen can offer countries energy independence through domestic production and energy storage. The challenge of producing hydrogen – for instance, securing the electrolyser components – is more pronounced.

Russia’s invasion of Ukraine has highlighted energy security in Europe, forcing European states to address their natural gas dependencies.

Countries are being forced to rethink their energy strategies due to growing trade tensions between major powers, from Brexit to a US-China rivalry.

An initial response would be to lean more on hydrocarbons. This was seen in Germany’s decision to build LNG terminals in 2022-23.

But renewable energy is appealing, especially where domestic hydrocarbons are scarce. Hydrogen has an in, considering the twin challenge of energy security and sustainability.

The path forward varies by country. Some have sufficient market depth to create their own hydrogen industries, from supplier to consumer, at scale. These create additional economic benefits through local content and reduced imports.

Trade will continue to play a role, and the benefits of globalisation cannot be ignored.

Path to energy security

The challenges are significant, but hydrogen offers a path forward. As president and CEO at Mitsubishi Power EMEA Javier Cavada explained, the technology can “democratise” energy and underpin independence.

“If you have renewables, you can have zero carbon or low carbon molecules. This can give you firm power, baseload power, as backup for wind and solar.”

Hydrogen’s strongest advantage is the process of transforming intermittent renewables into firm baseload.

Statera Energy’s plan at Kintore aims to exploit times when supply exceeds demand, capturing excess power and transforming it into hydrogen. This opportunity isn’t just in Scotland.

In California and Arizona, the “duck curve” leads to zero or negative pricing.

“Solar is almost free in some places – and sometimes they even pay you to take the power. You can then produce hydrogen and blend it with natural gas in a CCGT or store it underground,” Cavada continued. “It’s a question of doing it smartly. There are projects that already make sense. And when I say make sense, they make money.”

Intermittent power for an electrolyser can undercut project economics, but research is underway. Recently, Glasgow-based Clyde Hydrogen has been raising money in this area.

Two-speed hydrogen

Japan has singled out hydrogen as a vector to tackle its emissions and security problem, Cavada noted.

Different countries have varying perspectives on hydrogen developments. Johnson Matthey’s CEO of catalyst technologies Maurits van Tol said that while Europe faces challenges, this is not the global perspective.

“In Saudi, there’s no slowing down of green or blue. Australia as well. India has these mandates, now they’re importing oil and gas with rupees going abroad. But they have renewables domestically, so they can build out their own domestic hydrogen facilities,” he said.

Spain has focused on green hydrogen over blue, aiming to exploit solar power availability.

Kind of blue

Meanwhile, van Tol said that the UK “is where some of the most advanced blue hydrogen projects are”.

Europe faces challenges in hydrogen technology development. In 2024, some blue projects fell through due to carbon emissions concerns.

“But blue hydrogen is available today. You can order those plants from us … and we warrant that they work at very large scale. If you have the right geography and you can store the CO2, that’s a really good start,” he said.

“That helps build out the hydrogen economy, use cases, pipelines, other infrastructure. That makes it much easier for green to be deployed. If we’re going to wait, wait, wait until green is ready, it will be 2030 and we will not have done anything.”

The UK has taken notable steps to support the domestic hydrogen industry. In addition to H2Teesside, Chancellor Rachel Reeves expressed support for novel green hydrogen plans in the October budget.

Not all countries have been so fortunate. For instance, Norway has struggled with its hydrogen plans. TECO 2030 recently declared bankruptcy, blaming the government for backsliding on hydrogen fuel cell plans.

Rockwell Automation sales director Rupesh Parikh highlighted the need for high-level support. “If you’re talking about energy security, through mass sustainability, the government essentially needs to step up.”

Trade talks

Hydrogen is an energy security vector, but being too restrictive over its demand uses will slow progress. Maurits noted the importance of energy as a tradable commodity.

“For hydrogen to grow, we will need to accept global technical norms, let’s not make the same mistake of every country having different railways. Let’s agree to those standardisations as soon as possible,” he said. Common standards will help trade and reduce costs.

“Friendshoring is important, and local content, but it makes it a lot harder.” A failure to agree standards will slow hydrogen development.

Some countries, like the US, can offer a single market large enough to command the entire value chain, from natural resources to demand. Not all are this fortunate.

The EU has a similar population as the US, but is more complicated. The recently announced H2MED Southwestern Hydrogen Corridor project outlines ways to tackle these problems.

Five European companies launched an alliance to back H2MED in December. The aim is to support domestic markets and decarbonisation “by creating incentives to scale up capacities for production and offtake as well as integrating supply and demand for energy in Europe”.

Making use

Van Tol highlighted hydrogen’s potential for trade. “It’s the chemical building block that society thrives on, you can make plastics from methanol, fertilisers from ammonia, there are so many use cases.”

Converting to ammonia or methanol makes hydrogen transportable, with existing infrastructure to facilitate these trades.

“You need to make sure you can convert hydrogen into a multitude of products, hedge your bets a little bit and not be dependent on just one molecule for one application,” he said.

Ammonia or methanol can transport hydrogen, but they bring new efficiency loss problems. Countries with green hydrogen production should consider exporting the feedstock and, at least temporarily, exporting green products.

Steel is emissions intense. Offshoring a steel plant to a country with renewable energy and hydrogen will help avoid these challenges. For instance, Iceland is a major producer and exporter of aluminium, fuelled by its substantial domestic renewables.

Tariff times

Amid energy security concerns, policymakers are considering new tariffs, threatening hydrogen developments. US President-elect Donald Trump has talked favourably of such a move, which will see some countries respond. While he launched tariffs on China in his first presidency, President Joe Biden has continued and extended these.

China has imposed new restrictions on exports of some rare earth metals.

Choosing how to build supply chains is becoming increasingly complex. Rockwell’s Parikh noted his company faced increasing client questions about tackling these hurdles.

“At Rockwell, we try and make sure we are manufacturing in the countries and locations that enable us to make sure we can bring the right products to the right customers at the right time,” he said.

The Rockwell official noted the company’s offering of an OEM main automation controller (MAC). This allows it to work on the client’s behalf to “standardise projects it and help them pre-buy it, pre-engineer it, make sure the underlying technologies they select are the ones that are going to match up with the locations.”

Mitigation

Rockwell’s clients have questioned avoiding dependency on specific trade routes, Parikh said. The company is responding. For instance, it has “three logistic providers, where we had one before”.

“We have just opened a factory in India. It’s not India to export to the rest of the world, it’s India for India. That shows how we really look at every potential dependency – and how we can try to mitigate them.”

Hydrogen isn’t cheap yet, but that will change as technology improves and industry moves to larger facilities.

The ideal solution is matching local capacity to local needs, but it is not achievable for every country. Hydrogen can capture renewable energy production, but building the initial plant requires engaging with international markets.

The hydrogen path faces challenges. There are technical hurdles, trade tensions and cost concerns. As countries seek energy security and sustainability, hydrogen must play a role.

The key will be to make the economics work while navigating a complex geopolitical landscape. Location considerations will be top for planning, while considering potential new trade problems.

Success in hydrogen requires balancing domestic capability and international co-operation – a tough call in today’s fractured world.

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