"Europe must act now to prevent Russia's plan to control the hydrogen market"
Analysis by Huffington Post

REGION  04 December 2023 - 16:59

Huffington Post has published an article saying that “Moscow wants to hold a fifth of the market by 2030, is increasing tank production. Europe should think today about avoiding higher costs in the future of what could be part of the solution for its energy security. Caliber.Az reprints the article.

Russia's invasion of Ukraine has forever redefined the map for how Europe understands its relationship with energy. Europe's overdependence on Russia, in terms of oil, coal and especially gas, became evident the moment Russian tanks sprinted towards Kyiv.

The international community should have been aware that not everything was going well. The 2022 Russian invasion was, in fact, the second in less than a decade in Ukraine. Increasingly, the war in Ukraine appears to have become a 21st-century version of trench warfare, at least for the moment.

In the post-war period, Russia will certainly try to regain its economic status through raw materials. Russia is banking that its location at the heart of the Eurasian land mass will make it central to the geo-economy of the 21st century. Russia has several options in this regard. For example, Moscow has plans to produce a third of the world's helium supply. Known primarily for use in party balloons, helium is no laughing matter: it's such a strategic material that the United States began stockpiling it as early as the 1920s.

For now, at least, Russia has focused on a completely different raw material. As Platts Global warned last year, "Russia intends to leverage its large natural gas reserves, existing infrastructure and cooperation with foreign partners to gain a major share of the global hydrogen market." Aiming to gain a fifth of the market by 2030, Russia is increasing production of both tanks and hydrogen tanks.

We shouldn't just focus on hydrogen, of course. Green hydrogen, with its unique properties of storing energy and being produced by wind or other sustainable sources, could be part of the solution for Europe's future energy security. In this context, Europe should be concerned that nations have limited capacity to produce it.

A recent EU study has cast doubt on whether green hydrogen production in Germany will ever be feasible. Within the EU, investments in green hydrogen have been slow to attract investment. A study has found that the UK's green hydrogen target would require using half of the Kingdom's offshore wind capacity.

Earlier this week, the European Union launched its first green hydrogen auction. The European Union this year announced half a billion euros to support Italian green hydrogen plans. Many of Italy's green hydrogen needs will likely come from Africa.

However, there are other options that might make more sense. Earlier this year, an Emirati energy company and the National Oil Company of Azerbaijan (SOCAR) signed a major energy agreement. Both states are well-known oil and gas producers, but what was unusual is that the deal focused exclusively on offshore wind and green hydrogen.

When complementary solar and onshore wind projects are included, the project will generate 4 gigawatts of energy. The wind is both clean and sustainable. And it should be prioritized for green hydrogen projects.

Azerbaijan has already proven itself as a reliable partner for Europe in terms of natural gas, so it makes sense as a partner for Europe's energy diversification and also for green hydrogen needs.

An undersea interconnection across the Black Sea will send Azerbaijani electricity to Georgia, Romania and Hungary. For the export of green hydrogen, the extensive gas pipeline network connecting Azerbaijan to Europe already exists.

Instead, the UAE seeks to position itself as a leader among oil-rich Gulf states in the post[1]carbon transition. The country is hosting COP28 and has pledged to invest $300 billion in renewable energy projects with the aim of tripling production. Masdar is expected to produce 1 million tonnes of green hydrogen by 2031, with the remaining 0.4 million tonnes of blue hydrogen, produced using natural gas.

COP28 is also noteworthy because it will put green hydrogen on the global agenda. COP28 President-designate Sultan Al Jaber has unveiled a plan to double green hydrogen production by 2030. Europe should act now to avoid higher costs in the future.

You don't have to be an oil economist to understand that if current trends continue, oil will become less and less important geopolitically. After all, much of the 19th century economy was based on whale oil, a trend that fortunately did not end with the extinction of the last cetacean.

Likewise, the 20th century saw several "oil shocks" which have shaken economies across Europe. It is reasonable to think that Europe should expect something similar in the 21st century and should prepare for it now.

Caliber.Az