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Hydrogen trading, however, will not only be defined by the economic benefit. In the long term, when technologies have reached full maturity and are deployed at large, it is expected that importing countries will be able to count on multiple alternatives within a small cost range. Therefore, trading partners will, to a large extent, be defined by non-economic factors (see Figure 3).

Hydrogen is produced on a commercial basis today – it is used as a feedstock in the chemical industry and in refineries, as part of a mix of gases in steel production, and in heat and power generation. Global production stands at around 75 MtH2/yr as pure hydrogen and an additional 45 MtH2/yr as part of a mix of gases. This is equivalent to 3% of global final energy demand and similar to the annual energy consumption of Germany.

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As at the end of 2021, almost 47% of the global hydrogen production is from natural gas, 27% from coal, 22% from oil (as a by-product) and only around 4% comes from electrolysis. Electricity had a global average renewable share of about 33% in 2021, which means that only about 1% of global hydrogen output is produced with renewable energy. Electrolytic hydrogen from dedicated production remained limited to demonstration projects adding up to a total capacity 0.7 GW in 2021. In contrast, the 1.5°C Scenario would need 4-5 TW by 2050, requiring a faster rate of growth than that experienced by solar photovoltaic (PV) and wind to date.

Hydrogen use as an energy carrier remains limited and is principally limited to road vehicles. By June 2021 more than 40 000 fuel cell electric vehicles were in circulation around the world, with almost 90% of those in four countries: Korea, the United States, the People’s Republic of China, and Japan. By the end of 2020 there were about 6 000 fuel cell electric buses (95% of those in China) and more than 3 100 fuel cell electric trucks. These totals are small fractions of the global vehicle fleet.

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The higher energy density of hydrogen-derived commodities effectively increases the distance that energy can be transported in a cost-effective way, connecting low-cost renewable energy regions with demand centres that have either limited renewable potential or costly renewable energy. Global energy trade through hydrogen derivatives would provide economic benefits as importing countries can tap into cheaper (than domestic) resources, improving the resilience of the system since there are alternative ways to satisfy final energy demand, and hence strengthening energy security.

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In the transportation industry, original equipment manufacturers (OEMs) play an integral role in maintaining high quality standards and addressing the needs of fleet managers in areas like vehicle maintenance and cost control.

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At MICHELIN Connected Fleet, we offer OEM fleet management solutions that integrate purpose-built hardware and software, allowing organisations to unlock the full potential of their fleets and reap all the benefits we’ve discussed. Moreover, our customised offerings are designed to meet your specific industry needs, ensuring you have the tools to succeed in a competitive market.

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Hydrogen is a versatile energy carrier (not an energy source). It can be produced from multiple feedstocks and can be used across virtually any application (see Figure 1). Renewable electricity can be converted to hydrogen via electrolysis, which can couple continuously increasing renewable energy with all the end uses that are more difficult to electrify. This coupling also allows electrolysers to provide flexibility to the grid, complementing alternatives such as batteries, demand response and vehicle-to-grid in smart electrification.

In recent years an increasing number of countries have committed to achieving net zero emissions. By April 2022 131 countries covering 88% of global greenhouse gas emissions had announced net zero targets. Anthropogenic emissions have already led to a global temperature increase of 1.1°C compared to pre-industrial levels. There is a broad understanding that net zero by 2050 is imperative to increase the chances of keeping this temperature increase to within 1.5°C. This renewed focus means that emissions from all the energy end uses need to be mitigated. While energy efficiency, electrification and renewables can achieve 70% of the mitigation needed, hydrogen will be needed to decarbonise end uses where other options are less mature or more costly, such as heavy industry, long-haul transport and seasonal energy storage. Considering these applications, hydrogen could contribute 10% of the mitigation needed to achieve the IRENA 1.5°C Scenario and 12% of final energy demand.

The full value of hydrogen, however, is only fully realised when it is further converted to derivatives. Hydrogen can be combined with carbon from CO2 to produce hydrocarbons and virtually any molecule. It can be used to produce ammonia, which can be used as feedstock for fertilisers (the majority of current use) or as fuel for new applications such as shipping. It can also be used to produce methanol, synthetic fuels, or even as a reducing agent to replace coal in iron production. Once it is converted to these commodities, the energy density is increased further, making long-distance transport and long-term storage cost-effective. Thus, the conversion to hydrogen derivatives effectively unlocks global renewable energy trade. For instance, liquid ammonia has almost eight times the energy density (MJ/m3) of lithium-ion batteries and more than 20 times the gravimetric energy density (MJ/kg) (see Figure 2).

For example, an OEM might produce advanced braking systems designed to improve the safety and efficiency of specific vehicle models. In the IT industry, an OEM could supply processors and operating systems vital to the functioning of fleet management hardware and software.

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An OEM is a business or company that produces parts, software, or equipment which other organisations incorporate into their products. OEMs are essential in various industries, including automotive and IT.