The global energy trade is a colossus, on a par with China’s entire energy market in terms of size and carbon emissions. Trading is geographically concentrated, with Northeast Asia and Europe accounting for nearly half of global imports and the Middle East, Russia, Australia and the United States responsible for more than half of all oil, gas and coal exports.
This is all poised to change, however. As the major energy-importing nations lead the charge to net-zero carbon emissions, the course is being set for the most dramatic disruption to the global energy trade since the 1970s and the rise of the Organization of the Petroleum Exporting Countries (OPEC).
Electrification is at the heart of the changing energy mix, with innovation driving down the cost of renewable power, denting longer-term demand for hydrocarbons. Electrification, though, can only take the world so far. Many industrial sectors, as well as heavy-duty trucking, shipping, aviation and chemicals, will need alternatives.
Low-carbon hydrogen has great potential to capture a sizeable market share, with the world’s major energy importers already rolling out their hydrogen roadmaps. In turning the energy-trade world order on its head, net zero simultaneously offers energy exporters – current and future – a once-in-a-lifetime opportunity to secure future revenues by developing low-carbon hydrogen supply.
This will include blue hydrogen from those with access to low-cost natural gas resources and carbon capture potential – Russia, Canada, the United States and Saudi Arabia – and green hydrogen from those with vast renewable resources – Australia and the Middle East. The stakes couldn’t be higher.
Wood Mackenzie’s base-case Energy Transition Outlook (ETO) forecasts average growth in the seaborne trade of oil, gas and coal to slow from 4% per annum over the past two decades to only 1% a year from 2020 to 2050, while its accelerated energy transition (AET) scenarios see a collapse in trade, especially for oil and coal.
Conversely, the currently minimal seaborne trade in low-carbon hydrogen is set to grow in all scenarios. It could account for around a third of the seaborne energy trade in a net-zero 2050 world, so the race for suppliers is on.