WFES: More investment in green hydrogen necessary to lower prices, ministers say

Cop29 host Azerbaijan is co-operating with the EU to harness offshore wind resources in the Caspian Sea for green hydrogen production, country's energy minister says

Azerbaijan's Minister of Energy Parviz Shahbazov speaks at the Saudi Green Initiative Forum in 2021. Reuters
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Ministers at the Global Hydrogen Summit on Tuesday called for more investment in green hydrogen infrastructure to reduce the price of the low-carbon fuel and support global energy transition efforts.

Green hydrogen, which is produced using renewable energy sources such as wind and solar, is expected to become a critical fuel, particularly in hard-to-abate sectors such as shipping and steel manufacturing.

“We need to increase [the] sphere [of] concrete national strategies [and] we need legal frameworks,” Parviz Shahbazov, Azerbaijan’s Energy Minister, told the event, which was held as part of the World Future Energy Summit in Abu Dhabi.

“We need large investments in this area. It is also very clear we need competitive production in terms of price."

Despite hydrogen’s growing potential, industry executives and policymakers are concerned about its high cost of production and the absence of a well-established market.

Azerbaijan, which is hosting the Cop29 climate conference this year, is co-operating with the EU to harness offshore wind resources in the Caspian Sea for green hydrogen production, Mr Shahbazov said.

“We have designated green zones in the recently liberated territories where [we will implement] hydrogen production," he said. "This is also one of the important elements in our strategic partnership with the EU."

Azerbaijan and Armenia were embroiled in a prolonged conflict spanning decades over Nagorno-Karabakh. Baku regained control of the region following a swift offensive against Armenian separatists last year.

Azerbaijan, which aims to have renewables account for 30 per cent of its total installed electricity capacity by 2030, plans to export much of its wind energy to Europe via a Caspian-EU green energy corridor.

The country has signed initial agreements with Georgia, Romania and Hungary for a subsea cable under the Black Sea.

Azerbaijan is also seeking to boost energy ties with countries in Central Asia.

“We also have another project under way that connects us with Kazakhstan and Uzbekistan to establish the green corridor, where green hydrogen plays a vital role,” Mr Shahbazov said.

By 2050, clean hydrogen demand could account for up to 73 per cent to 100 per cent of total hydrogen demand, according to McKinsey.

Green hydrogen is considered crucial to Europe’s future energy security as the continent looks to halt Russian gas imports.

Meanwhile, the Netherlands seeks to become the “hydrogen backbone” of Europe and aims to redistribute green hydrogen transported from the UAE and the Mena region to north-western Europe, said Frederik Wisselink, special energy envoy of the Netherlands' Ministry of Economic Affairs and Climate Policy.

“We have tenders in place, together with Germany … before the end of this year to create demand and hopefully to give the fairest price signals to the markets and to bring the costs down,” he said.

In 2021, Germany launched the H2Global Project, employing a "double auction" framework. Under this model, the government procures green fuel from producers and subsequently offers it to industrial consumers at a discounted rate.

“We are going to be the first country in the world to have a large-scale infrastructure ready for … green hydrogen,” Mr Wisselink said.

“We have around 1,000km of pipeline that will be ready in 2030 [and] we will repurpose our existing gas infrastructure to be hydrogen ready."

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The Dutch government plans to permanently shut down Europe's largest gasfield, in Groningen, ahead of its previous timetable of 2030. Normal gas production from the field in the Netherlands’ north was stopped last year after years of earthquakes.

Meanwhile, energy-starved Japan is investing heavily in hydrogen to reduce its reliance on fossil-fuel imports.

The country plans to increase the domestic hydrogen supply by 50 per cent of the current level to 3 million tonnes by 2030 and aims to reach 20 million tonnes by 2050.

Japan set up a 2 trillion yen ($13 billion) green innovation fund in 2021 to promote technology for the development of hydrogen.

“Price of hydrogen is relatively high compared to fossil fuels making it [a] difficult energy to select, therefore it is necessary to gradually increase economic rationality of hydrogen while creating an environment for hydrogen can be selected by users,” said Yoshida Nobuhiro, Japan’s vice minister of economy, trade and industry.

“Japan is looking to reduce the cost of hydrogen by utilising the innovation fund to promote the technologies in the hydrogen field."

Updated: April 16, 2024, 2:34 PM