With nations emphasising the SDG targets and Net-zero goals, hydrogen has been recognised as an essential fuel, while Green Hydrogen, the gold standard of Hydrogen- hydrogen generated through the process of electrolysis- also known as the fuel of the future, has gained significant traction. With nations dolling out their national strategies on Hydrogen. Russia announced its Hydrogen Strategy in 2020 and the concept of developing the Hydrogen energy sector in 2021. These two documents envisioned the Russian Federation capturing 20% of the World’s Hydrogen markets by 2030. Russia’s domestic energy basket consists of the world’s largest volumes of natural gas, a well-developed nuclear sector, suitable geological conditions for carbon capture and Storage, and significant potential for renewable energy production aid in hydrogen production. At present, using natural gas, Russia produces Blue hydrogen which is a viable low-carbon source of Hydrogen, which the nations could use until Green Hdrogen reaches its scale of potential. Russia’s Hydrogen strategy was to profit Moscow between $23 billion-$100 billion annually. With the invasion of Ukraine and a geo-economic reconfiguration. Moscow’s Hydrogen Strategy is under threat.
For the energy reserves Moscow has at its disposal, it was late in rolling out its hydrogen strategy. Japan rolled out its strategy in 2017, South Korea in 2019, and the European Union in 2020. Moscow lost out on sharing its ideas on the World stage on the codes and standards. Russian energy firms were negotiating hydrogen supplies with long-term business partners on behalf of the government even before the Hydrogen concept was formally approved by the Russian Government. 33 projects were set up across the country to produce low-carbon to zero-carbon hydrogen and ammonia, one of which is set up in Crimea. Gazprom, Novatek, Rosatom, Lukoil and En+ were involved in producing a different form of Hydrogen-blue, turquoise, Green and pink that would be trnsported using pipelines to European nations, reducing their energy bills. With the Nordstream 2 pipeline being shut, Europe is not exporting hydrogen from Russia. The pipelines in the West are only operational to fulfill Russia’s contractual obligations, which were secured under the EU’s godfathering provisions. Otherwise, these pipelines are operational.
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Tomake matters worse, Russia cannot export hydrogen to Japan or South Korea as they’ve imposed sanctions on Russia, not to mention the logistical challenge and burden for the Kremlin coffers to pay for Hydrogen tankers, as Hydrogen storage is costly. Due to the war in Ukraine, Russia’s export ambitions have shrunk from 2.2 million tonnes in 2030 to 1.4 million tonnes. As a result of the war and the consequent loss of markets, Russia is now expected to lose at least half of its long-term hydrogen export potential, which would be around 4.5 million tons (Mt) per year by 2050 instead of exceeding 9.5 million Mt. The current circumstances require Russia to build new hydrogen infrastructure from the ground up, which will be a costly endeavour. The estimated profits of $12.8 billion are still high, but the investment in production alone will need to be close to double that amount, at least $21.1 billion.
Secondly, the Russian Hydrogen sector has another major challenge it has to address: the echnological one. The electrolyser and the spare parts, not to mention the software required to produce hydrogen are sanctioned for Russia. Even though China is a big electrolyser market, China will not be keen to sell Hydrogen technology to Russia, as it has its own ambitions to become a Green Hydrogen Hub. Furthermore, China uses Russia’s natural gas as fodder for its production of blue hydrogen.
However, Europe being cut-off from Russian energy is resulting in price inflation of energy, the current rate of dependence on Russian energy in April 2022 was 43 percent, that number has come down drastically and is being replaced by the United States, Norway, Australia and so on. This remains an issue as emphasized by Dr Jurgen Fredrich, the ministerial Envoy for International Hydrogen Project, Federal Ministry for Economic Affairs and Climate Action, that due to the supply shocks and price inflation, the impetus for harnessing Green Hydrogen is receiving more takers, however,the increasig cost of blue hydrogen, caused due to energy sanctions on Russia may cause challenges in the project of attaining clean energy transition.
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The conflict in Ukraine has created a hurdle in attaining the timely transition to cleaner energy; Russia’s ambition to be among the key suppliers of Hydrogen is derailed by its invasion of Ukraine. The loss of technology transfer, foreign direct investment, and R&D temporarily halted Russia’s promising hydrogen strategy. As one set of discourse dominates the usage of green technology and energy transition, the other fell off the wagon continuing to sell Hydrocarbons to markets both sanctioned and unsanctioned. If the current situation persists, Russia will likely ditch its Hydrogen Strategy.
The author is Doctoral candidate, Russian and Central Asian studies, Jawaharlal Nehru University, New Delhi.
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