Key Markets To Watch On The Road To Global Low Carbon Hydrogen Trade

Fitch Solutions / Freight Transport & Shipping / Global / Thu 12 Aug, 2021

fs disclaimer

Key View

  • A large number of countries are creating multilateral alliances and bilateral trade and cooperation agreements with one another, where potential major producers of hydrogen, such as Australia, Chile and a number of MENA states, will be able to export hydrogen to countries whose domestic production capacity cannot meet their high demand, such as Germany and Japan.
  • Rising production and demand will necessitate significant investment in more sophisticated and specialised hydrogen transportation infrastructure to facilitate international trade in the resource, going beyond the repurposing of existing natural gas networks.
  • While many governments have demonstrated the political will and ambition to implement the use of hydrogen, a number of policy hurdles could inhibit successful implementation.

Regulatory And Physical Barriers Present Hurdles To Hydrogen Trade

Global - Barriers To Low Carbon Hydrogen Market

Source: Fitch Solutions

    Increased low carbon hydrogen use across multiple sectors will be key to achieving global climate goals, in line with the Paris Agreement signed in 2015. Low carbon 'Green hydrogen' is distinguished from other types of hydrogen, as it is produced from renewable electricity, unlike the incumbent market leaders, grey and brown hydrogen, which use fossil-fuel based energy. Blue hydrogen is also fossil fuel based, but utilises carbon capture and storage (CCS) systems to mitigate the emissions and is also therefore low cabon. Due to a lack of capacity and physical resources, a number of countries, including those in Europe and Asia, will struggle to meet their demand for blue and green hydrogen, while others, such as some GCC states and Australia, are looking to develop hydrogen technologies and position themselves to become major hydrogen exporters. These imbalances can be addressed through increased international hydrogen trade, but the success of this will depend largely on supporting policies and regulations, adequate infrastructure, as well as strengthening trade relations between countries.  

    Supporting Regulations And Policies Needed To Kickstart Trade

    While many governments have demonstrated the political will and ambition to implement the use of cleaner hydrogen, a number of hurdles remain to be addressed in the regulatory and policy space for the commodity to be traded successfully. Some outperforming countries and regions in this regard, such as Australia and the EU, have already created regulatory roadmaps and strategies for the production and trade of clean hydrogen, but many others may struggle implementing their goals to action. A number of countries possess vast natural resources to produce blue and green hydrogen, but lack infrastructure and sound regulations, such as South Africa, Indonesia and Brazil, among others. 

    According to the International Renewable Energy Agency (IRENA), countries need certain key pillars for clean hydrogen policy making, as outlined below:

    • National Strategy: A number of states globally have already implemented blue and green hydrogen-related initiatives, with national and regional strategies in places, including in the EU, Japan and Australia, among others. The first process in establishing a successful strategy is to have in place adequate Research and Development (R&D) programmes to develop the technology and the knowledge base necessary for further development. China has adopted one of the largest R&D programmes globally, where projects to use hydrogen in cities are being explored, with funding being awarded to certain cities. For example, in cities such as Beijing, China's more traditional fossil fuel firms are looking at using more hydrogen energy, and the use of hydrogen-driven cars is being highly encouraged as part of cities' carbon neutral goals. The second stage is the development of a vision document that answers critical questions and guides industry efforts, usually created through Public Private Partnerships (PPPs). New Zealand published a successful vision document in 2019, outlining potential uses, as well as barriers to production. Finally, a roadmap is needed before a final strategy is developed, and this highlights short-term actions and highest priorities for demonstration projects, outlining the overall targeted plan. For example, in 2020 Russia approved its Hydrogen Roadmap 2024, where major regions and businesses will look to establish three regional clusters, along with international partnerships.  
    • Policy Priorities, Governance Systems And Regulatory Frameworks: For trade to occur successfully, regulations are necessary in both the clean hydrogen origin and destination countries, and policy signals need to be clear. For example, blue hydrogen is considered by many countries to be a bridging option between mostly fossil fuel energy and renewable energy; however, policy makers need to prevent public funds being channelled into this type of bridging energy over cleaner energy, and minimise financial lock-in effects in dirty fuels. In addition to governments creating a conducive environment, industry and civil society will need to become more involved in policy-making, so as to make use of diverse experts from academia and business. Until the time when the green hydrogen economy matures and reaches sufficient scale, additional ongoing incentives will be needed to entice various stakeholders to commit to longer-term purchases of green hydrogen. Such incentives may include subsidies, which can assist in reducing the capital costs of building hydrogen facilities, as well as feed-in tariffs and premiums. Finally, the introduction of standards for the safety and quality of hydrogen transportation and storage is necessary for trade to grow strongly, in addition to supporting infrastructure for its production.
    • Certification Of Origin: Due to the fact that the molecules of hydrogen are identical, regardless of the method of production, a certification system, or guarantee of origin, is needed for end users to know the origin and sustainable nature of the hydrogen production process for each delivery. A number of countries have already initiated certification schemes, such as the EU's CertifHy and Australia's Hydrogen Certification Scheme; however, for international trade it is vital to ensure that these standards are compatible internationally.

    Europe's Infrastructure Highly Focused On Natural Gas And Hydrogen Networks...

    According to the Fitch Solutions' Power And Infrastructure teams, the adoption of hydrogen in Europe’s natural gas sector is likely to accelerate, with an increased focus on blending the gas into existing networks. That said, as hydrogen becomes a more popular commodity, transportation infrastructure will need to go beyond repurposed natural gas networks and become more specialised, catering to cross-border hydrogen trade specificallyHydrogen infrastructure spending will therefore increase in Europe over the decade to support the growing project pipeline due to investment into hydrogen hubs. Countries with existing hydrogen production facilities, significant carbon dioxide storage capacity, and well-developed infrastructure, such as for natural gas, will most benefit from this kind of adoption.

    Ammonia Potentially A Preferred Method Of Transportation In Asia

    Countries where renewable energy can be produced at the lowest cost are the ones most likely to be able to go forward with longer distance transportation options. In terms of longer-term potential, hydrogen can be transported in liquid form and converted back to a gas at its destination; however, in order to be kept in liquid form, it needs to be stored at a temperature of -252.87 degrees Celsius in tanks that are perfectly insulated, raising the costs of this type of transportation. As such, many potential exporters need to address technical and economic hurdles, before such mass transportation in liquid hydrogen form could become successful. Hydrogen handling requires specialised training, equipment and infrastructure owing to volatile nature of the gas, and as such, ammonia, which is converted from low-carbon blue or green hydrogen, is a much more convenient energy carrier for long distances and is increasingly being seen as a more viable alternative. As Asia's natural gas infrastructure and supply chains are not as developed and intricate as those in Europe, many Asian states are opting for the use of ammonia for transportation of hydrogen. For example, Eneos Corporation, Japan's largest refiner, plans on developing a carbon dioxide-free hydrogen and ammonia supply chain with Saudi Aramco.

    Low Carbon Hydrogen Policies Laying Ground Work For Global Hydrogen Trade

    Global - Countries With Low Carbon Hydrogen Policies

    Source: Fitch Solutions

    Hydrogen Becoming A Global Commodity Through Increased Trade

    We expect that the development of ‘hydrogen hubs’ will remain a favoured pathway for the sector's development, offering distinct benefits in reducing costs and concentrating expertise. That said, as the global hydrogen market grows substantially by 2050, the majority of demand will be met through trade. Already, a large number of countries are creating multilateral alliances and bilateral trade and cooperation agreements with one another, where potential, as well as major producers of hydrogen, such as Australia, Chile and a number of MENA states, will be able to export to countries whose domestic production capacity cannot meet their high demand, such as Germany and Japan. Potential European importers have already declared a preference for green hydrogen, but large Asian states, such as Japan, China and South Korea have an energy strategy revolving around a combination of grey, blue and green hydrogen, which would mostly be supplied by blue hydrogen exporters in the GCC. While GCC states use high volumes of grey hydrogen from their vast natural gas resources, many MENA countries have made moves to gear themselves for the production of blue and green hydrogen. For example, in September 2020, Saudi Arabia transported the world's first blue ammonia cargo to Japan for the purpose of emissions-free electricity, which marks the importance of ammonia trade as an energy vector. Furthermore, Japan's Suiso Frontier, the first vessel designed to carry liquid hydrogen globally, is set to begin shipments from Australia between October 2021 and March 2022. That said, a number of major economies, such as the US and China, are not expected to become major players in the export of hydrogen due to their extensive domestic demand for it, which means that the majority of their investment and production of hydrogen will be geared to their local markets. Below, we highlight some major potential hydrogen exporters, as well as importers:

    Major Exporters Major Importers Characteristics







    South Korea


    • A hydrogen trade deal between Australia and Germany was signed on September 11 2020.
    • Australia and its major importers (left) are all part of the International Partnership for Hydrogen and Fuel Cells in the Economy and are discussing a certification or a digital distributed ledger scheme for the international trade of hydrogen. 
    • Australia is collaborating with Indonesia and South Korea on green hydrogen projects, green technologies and resource mobilisation. 
    • Australia has signed a USD22.8mn deal with Singapore for the adoption of hydrogen in the maritime sector, with a goal to lower emissions in the port and shipping industry. 
    • Japan's Advanced Hydrogen Energy Chain Association for Technology Development, together with Brunei, launched a pilot project to transport hydrogen from Brunei to Tokyo Bay, marking the world's first supply chain of foreign-origin hydrogen. Brunei has reported that it has a solar power generation potential of 3,600 MW of onshore potential, with a renewable energy target of 954,000 MW by 2035. According to the government, the remaining solar power potential could be used to produce green hydrogen, which would be around 3,000MW.



    • In July 2021, Russia initiated a hydrogen working group as the country attempts to respond to the energy transition demands of its major exporting markets in Europe and Asia, which are focusing on cleaner fuels.
    • Russia's planned production of hydrogen will be mostly geared to the blue version and will be majorly reliant on natural gas. 

    South Africa



    • South Africa has potential to become a global supplier of green hydrogen due to its abundant renewable energy resources (South Africa has world-leading solar and wind resources). 
    • South Africa's government is expected to approve the Hydrogen Society Roadmap in 2022.
    • That said, South Africa's investor and regulatory environments act as key hurdles for successful capitalisation of this opportunity. 



    Saudi Arabia







    South Korea

    • Due to lower-for-longer oil prices and the global move for decarbonisation, select MENA countries are moving towards a major energy transition, which could carve a path for them to become main exporters of hydrogen to Europe by 2030. 
    • With expansive solar and wind energy, Saudi Arabia has hopes of becoming a global hub for green hydrogen over the next decade. In late 2020, a USD5bn deal was signed between US chemical industry company, Air Products & Chemicals and Saudi Arabia's ACWA Power to develop Helios Green Fuels in the planned megacity of Neom, the world's largest green hydrogen-to-ammonia plant, powered entirely by sun and wind energy. Saudi Aramco is also exploring blue hydrogen opportunities while seeking to export to key Asian and European markets. For example, in August 2021, a memorandum of understanding was approved between the Saudi Arabia's Ministry of Energy and Germany’s Federal Ministry of Economic Affairs and Energy to explore hydrogen trade opportunities.
    • In early 2021, Oman developed a strategic green hydrogen project, HYPORT Duqm, in its Duqm Special Economic Zone (SEZ), allocating a 150kmsq renewable energy generation site. In its first phase, HYPORT Duqm plans to develop a green hydrogen facility of between 250 - 500MW. In future phases, Oman plans to scale up the green hydrogen value chain and turn the Duqm SEZ into regional green hydrogen hub, connecting it to the Port of Duqm's new export terminal and storage infrastructure as a gateway for exports. 
    • in January 2021, the UAE Ministry of Energy and Infrastructure launched a new Hydrogen Alliance with three of the country's biggest government-backed firms (Abu Dhabi National Oil Co.Mubadala Investment Company and ADQ) for the production of blue and green hydrogen. The UAE is also looking to sign long-term supply chain contracts with states such as Japan and South Korea. For example, Abu Dhabi National Oil Co. is looking to export blue ammonia to Japan's Idemitsu for use in petrochemical operations and refining.
    • Italy's Eni is exploring producing green hydrogen in Algeria, together with Sonatrach, Algeria's state-owned oil company. In July 2021, Eni also signed an agreement with Egypt to produce and export green hydrogen.
    • Algeria, together with Egypt, have high potential for green hydrogen production due to their abundant capacity of wind energy. 
    • Algeria is also well placed regarding the transportation of hydrogen, as there are already existing gas pipelines from Algeria through Morocco to Spain, where the Spanish and Portuguese gas grids are supplied (Maghreb–Europe Gas Pipeline). Egypt, on the other hand, has easy access for transporation through the Suez Canal.



    • A hydrogen cooperation deal was signed between Canada and Germany in March 2021, with the main aspects of partnership including integration of renewable energies, technological innovations and security of supply.
    • In August 2021, Petronas Energy Canada Ltd., together with Itochu Corp. from Japan announced plans to potentially build a USD1.3bn facility in central Alberta that will be able to produce 1mn tonnes of ammonia annually, while capturing carbon in the process, making it a blue ammonia project. The facility will be geared towards exporting blue hydrogen to Asian markets.
    • Canada aims to become one of the world’s top three producers and exporters of hydrogen by 2050.

    South America:







    North America



    • The Brazilian government is in the process of developing a regulatory framework for hydrogen, with a number of pilot projects launched. A green hydrogen hub at Pecem port in the state of Ceara has been launched in partnership with Australia's Enegix Energy. The state of Ceara is looking to become a green hydrogen hub state in Brazil, as it leads other states on the renewable energy front, increasing the country's potential to become a major hydrogen producer and exporter.
    • In March 2021, Brazil's Porto do Açu Operações S.A. signed a Memorandum of Understanding with Australia's Fortescue Future Industries to conduct feasibility studies for a 300MW green hydrogen plant at the Port of Açu in Brazil, Latin America’s largest privately-owned deep-water port-industrial complex. The plant will make use of solar power and offshore wind development projects in the states of Rio de Janeiro and Espirito Santo.
    • Chile and Germany signed a letter of intent for a bilateral alliance on hydrogen production and trade in June 2020. A task force is in the process of being set up to build up hydrogen economies and identify feasible projects based on an initial energy partnership deal established in 2019. In December 2020, Germany made a USD9.8mn contribution to a Chilean hydrogen plant planned by Siemens Energy.
    • Argentina is fast becoming a pioneer globally for producing hydrogen from renewable electricity, as it has some of the best wind power sources globally. Since 2008, Patagonia's Hychico project has been producing hydrogen through water electrolysis powered by one of the country’s first wind farms. In 2019, Argentina signed a Memorandum of Cooperation with Japan to boost the development of hydrogen and increase collaboration.
    • Uruguay is currently developing its hydrogen strategy for domestic consumption. as well as for exports, with the assistance of the Inter-American Development Bank. To stimulate investment in hydrogen, Uruguay's government is contemplating tax incentives and preferential electricity prices for green hydrogen projects. Uruguay has extensive renewable energy, and in early 2021, the government launched a joint effort with the industry, energy and mining ministries, along with Ancap, the state-owned oil company and UTE, the state-owned utility, to analyze proposals for the country's first green hydrogen pilot project.
    • Colombia is increasing its hydrogen collaborations, where it's agreed on a green hydrogen research programme together with Chile, as well as a deal with Germany regarding a green hydrogen roadmap. Furthermore, Ecopetrol, Colombia's largest oil and gas firm, is working with the government on a hydrogen strategy, assisting the country to reach net zero emissions by 2050 and become an exporter of hydrogen. By September 2021, Colombia will launch official plans to develop the production and use of hydrogen as a long-term clean energy source.
    • Paraguay possesses a comparative advantage when it comes to hydrogen production, as daily electricity surpluses are generated at a low cost, with the country having the highest per capita energy surplus globally. Paraguay's Director of Primary Energy Resources for the Vice Ministry of Mines and Energy anticipates that part of the clean energy surplus can be used for the production of green hydrogen in the heavy cargo transport sector and as an exportable commodity. 
    Source: National sources, Fitch Solutions

    This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2021 Fitch Solutions Group Limited. © Fitch Solutions Group Limited All rights reserved. 30 North Colonnade, London E14 5GN, UK.

    Download Indicator Summary

    Thank you. Your download link will be emailed to you shortly.

    Please complete to access all articles on


    Thank you for registering. To read the article please click on the link we have sent to your email address.

    Download Now

    Thank you. Your download link will be emailed to you shortly.