Frontier Economics worked in partnership with Naturgy Foundation to produce The Hydrogen Transport Report.
Clean hydrogen will play a key role in decarbonisation, replacing fossil fuels in various uses. Although there is still uncertainty about the precise sectors in which it will be used, different estimates quantify the contribution of hydrogen between 13% and 25% of the world's energy demand. This clean hydrogen will have to be transported internationally, from countries with a high production capacity (for example, those with abundant renewable resources) to densely populated and highly industrialised countries.
Hydrogen can be transported internationally via pipelines or ships. Pipelines present economies of scale, which means they tend to be the most efficient option for very large volumes while transport by ship is cost-efficient for long distances. Shipping also has the advantage, unlike pipelines, of avoiding the dependency on countries located physically between the producing and the consuming countries. By ship, transporting hydrogen in the form of ammonia is currently the best alternative, given its costs, maturity and existing infrastructure, to meet Europe's objective of importing 10 million tonnes of hydrogen by 2030.
In the case of Europe, the cheapest source of imported hydrogen is piped hydrogen from the North of Africa. Additional cost-effective sources include South America and the Middle East, from where hydrogen pipelines are unfeasible or not competitive for certain volumes with respect to shipping. All these factors suggest that a competitive and reliable hydrogen supply combines pipelines and transport by ship in the form of ammonia, similarly to the current supply of natural gas.
To find out more you can download the full report we have prepared for the Naturgy Foundation (in Spanish) and an English version of the executive summary here.
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El impacto de la estrategia de descarbonización en las oportunidades de inversión del sector energético español