The gas crisis in Europe could accelerate the transition to clean energy and the adoption of green hydrogen as a viable alternative to oil and gas, according to the International Renewable Energy Agency (Irena).

“Price volatility is a feature of the oil and gas system,” Francesco La Camera, general manager of Irena, told the Financial Times. “Switching to the new energy system, in which hydrogen plays a significant role, brings us less volatility.”

The development of green hydrogen, made from water and powered by renewable electricity, has become a political priority for many countries as they prepare to reach “net-zero” emissions by 2050.

An Irena report released on Saturday predicted that oil and gas geopolitics, in which producing countries have the power to influence prices, would ease as new fuels, including hydrogen, become more dominant.

It concluded that a “new cartography of energy geopolitics” and a revised “hydrogen diplomacy” would emerge as production ramped up globally.

“Hopefully, energy geopolitics will be less important in 2050 than they are today because people will become less dependent on small markets that can affect global energy markets in unpredictable ways than we do today,” said Elizabeth Press, director of Irena planning.

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La Camera said the green hydrogen market is already “growing a little faster than we anticipated a few months ago,” citing recent deals in Germany, Uruguay and Brazil.

Irena estimates that hydrogen could meet 12 percent of the world’s energy needs by 2050 if global emissions were significantly reduced to limit warming to 1.5°C.

But the market will evolve in a “regional rather than global” direction, La Camera predicted, noting that many countries would be able to produce the gas being manufactured. As a result, earnings are unlikely to reach the levels traditionally achieved by oil and gas producers, he added.

Major energy consumers including the US, China, EU, Japan, India and South Korea have already made hydrogen an important part of their energy plans.

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About $65 billion is earmarked for hydrogen production over the next decade, with Germany, France and Japan being the biggest investors.

Although the gas is difficult to transport, it can be converted to ammonia for long-distance transport or transported through existing natural gas pipelines. A handful of hydrogen-derived ammonia was sold to Japan last year from Saudi Arabia and the United Arab Emirates.

Irena, an Abu Dhabi-based group with more than 160 member countries, conducted a survey that found Australia, Chile, Saudi Arabia, Morocco and the US to be top hydrogen producers due to supportive policies and the availability of renewable energy to become .

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Fossil fuel producers could also switch to producing hydrogen as an alternative to oil and gas. Saudi Arabia, which is trying to diversify from its reliance on oil and gas, said this week it aims to become the world’s cheapest producer of green hydrogen.

There are two main methods of hydrogen production: green hydrogen is produced using renewable electricity, and blue hydrogen is produced from natural gas.

To meet climate targets, blue hydrogen must be combined with carbon capture to limit the impact of associated carbon dioxide and methane emissions.

The recent rise in gas prices has made the economics of green hydrogen relatively attractive compared to blue hydrogen, which requires natural gas to produce.

The Irena report projects that green hydrogen will reach price parity with blue hydrogen in many countries by 2030, although other studies point closer to 2040. Currently, the cost of electrolysers, the machines needed to produce green hydrogen, makes it expensive to manufacture.

“What’s happening right now really underscores the need for a faster transition,” Press said. It shows that we need a different energy mix that makes it safer, more secure and more diverse.”

Colors of the hydrogen rainbow

© Christopher Furlong/Getty Images

Green Hydrogen Manufactured by using clean electricity from renewable energy technologies to electrolyze water (H2O), separating the hydrogen atom it contains from its molecular twin, oxygen. Very expensive at the moment

Blue Hydrogen Produced using natural gas but with CO2 emissions that are captured and stored or reused. Negligible volumes in production due to lack of capture projects

Gray Hydrogen This is the most common form of hydrogen generation. It is derived from natural gas through steam methane reforming, but without emissions capture

brown hydrogen The cheapest way to produce hydrogen, but also the most polluting due to the use of thermal coal in the production process

Turquoise Hydrogen Uses a process called methane pyrolysis to produce hydrogen and fixed carbon. Not proven to scale. Concerns about methane leaks


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