The emerging international trade in hydrogen: Environmental policies, innovation, and trade dynamics

Werner Antweiler and David Schlund

Journal of Environmental Economics and Management, 2024, vol. 127, issue C

Abstract: Hydrogen produced from renewable energy and other carbon-neutral sources has the potential of becoming an important medium for storing and transporting energy, partially taking on the role that fossil fuels play to date. We develop a novel theoretical and empirical model of sequential trade based on long-term contracts with one or more fixed-capacity projects entering each period in a modified Nash-Cournot competition. We simulate the emerging international trade in hydrogen using calibrated demand, supply, transportation, and policy data, exploring a set of scenarios to determine which factors have significant influence—in particular environmental, innovation, and trade policies. Our findings suggest that hydrogen trade exhibits significant price dispersion and two-way trade as vintages of contracts overlap in a market defined by endogenous innovation and policy interventions. Trade costs and the mode of transportation (pipelines or ammonia conversion, possibly others) play a pivotal role and influence the relative share of hydrogen production types (green, blue, or turquoise). Trade policies emerge as a more essential determinant of hydrogen trade than carbon and innovation policies.

Keywords: International trade; Hydrogen economics; Long-term contracts; Carbon policy; Endogenous innovation; Sequential markets; Computational economics (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:127:y:2024:i:c:s0095069624001098

DOI: 10.1016/j.jeem.2024.103035

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