The Green Hydrogen Opportunity for Emerging Markets
Green hydrogen is gaining interest worldwide in both developed nations and in emerging markets, but for very different reasons. Developed nations are particularly attracted to the potential for lower carbon emissions when utilizing green hydrogen and while that is of interest to emerging markets, there is another benefit of green hydrogen. Locally sourced energy is the opportunity for emerging market countries. A recurrent problem for emerging nations is energy shortages. This is especially acute with electricity production. A myriad of problems frames this energy crisis, including the lack of power plants, lack of suitable energy deposits, net energy imports, poor grid infrastructure and ironically, a large amount of theft. Lack of energy is a major problem for these nations yet green hydrogen does offer a solution.
Green hydrogen allows for emerging nations to have domestically developed gas. Many emerging nations import natural gas which in turn creates balance of payments problems, which could then lead to a currency crisis. Energy is also often heavily subsidized in developing nations, leaving governments vulnerable to energy price spikes. The ability to use domestic clean energy in the creation of hydrogen to replace natural gas would help ease the import demands for many countries. It would also help countries better manage government budgets. Green hydrogen, at scale, has potential to be cheaper than either imported LNG or diesel.
Avoiding poorly maintained and insufficient grids is another benefit to clean energy. Emerging nations have historically underinvested in electrical grids, which is then exacerbated by high theft levels. This has held back energy investments since it would always be a challenge to recoup an investment that is poorly utilized and often stolen. The use of green hydrogen by taking the electricity that is produced and putting it into tanks to be sold as either fuel for generators, for cooking, or for industrial feedstock creates a better way to recoup the investment.
The pathway to not only replace energy imports but to encourage the use of clean energy is a major boost for green hydrogen. Historically, developing nations were laggards in clean energy since it was capital intensive and intermittent. For nations that already faced problems with consistently delivering energy, the intermittency of clean energy exacerbated that issue. Green hydrogen alleviates the intermittent issue. It allows for the surplus clean energy to be turned into hydrogen which could be stored for days, weeks, or even months.
Green hydrogen is now attracting a large amount of interest from emerging nations. In India, tens of billions of dollars of investment have been announced. Green hydrogen will become a key player in emerging nations’ energy production and security. This tailwind for green hydrogen investment in emerging markets is another reason that the hydrogen economy is coming into existence which is creating an incredible investing opportunity.