Global Hydrogen in the Southern Regions: Reality Check After the Excitement

Green hydrogen, a climate-friendly energy source produced through electrolysis using renewable energy, is gaining attention as a potential solution for decarbonising hard-to-abate sectors such as steel production, chemical manufacturing, and heavy-duty transport. However, its widespread adoption faces significant hurdles, particularly in the Global South.

Economic Challenges and Opportunities

The high production costs and capital expenditure (CAPEX) inflation for renewable energy and electrolyzer projects are causing concern. Between 2023 and 2025, green hydrogen costs have risen by $2–3 per kilogram due to global inflation, rising interest rates, and escalating electrolyzer installation costs. This economic barrier is a key obstacle to green hydrogen scaling, especially in Global South countries with limited capital and infrastructure.

However, the long-term potential for cost reduction remains promising. Integration with renewables can lower the carbon footprint, making green hydrogen a more competitive and attractive option in the future.

Climate-Friendly Energy Source and Economic Engine

Beyond climate benefits, scaling green hydrogen supply chains enables green industrialization, fosters energy independence, creates jobs, and increases participation in global trade markets for hydrogen-derived commodities like ammonia and methanol. This provides a pathway to net-zero emissions in industries that are otherwise difficult to electrify.

Geopolitical Implications

As a geopolitical tool, green hydrogen could enhance energy sovereignty for Global South countries rich in renewable resources but dependent on fossil fuel imports, thereby reducing exposure to volatile fossil fuel markets. It also enables new export opportunities through clean hydrogen commodities, potentially rebalancing trade dynamics in favor of renewable-energy-rich regions.

However, realizing these geopolitical shifts requires overcoming infrastructure, financing, and technology challenges.

The Future of Green Hydrogen

Despite the challenges, the global rollout of green hydrogen is gaining momentum. Large-scale initiatives and global project pipelines are growing, with terawatt-scale green hydrogen production planned globally, including in renewable-rich regions of the Global South.

However, the pace of this rollout is slower and more selective than expected. Reasons for the delays include a lack of offtake agreements, high capital costs in the Global South, infrastructure uncertainty, and competition from direct electrification.

In summary, while green hydrogen faces a cost and scaling "reckoning" that tempers short-term optimism, its long-term role as a climate-friendly energy vector, tool for economic transformation, and geopolitical asset in the Global South remains highly significant. Addressing cost issues, building enabling infrastructure, fostering policy support, and mobilizing international collaboration will be essential to realise these prospects.

Notable investments in green hydrogen have been made by countries such as the U.S., China, and Germany. In Colombia, President Gustavo Petro has declared green hydrogen as a potential future energy source, envisioning a partnership between Colombia's Ecopetrol and Brazil's Petrobras for industrial use of renewable energy, including green hydrogen.

It's important to note that green hydrogen will not likely become the new oil, but it may become a building block for green industrialization in the Global South. As such, it presents an opportunity for these regions to leapfrog traditional fossil fuel-based industries and move towards a more sustainable, climate-resilient future.

References:

Liebreich, M. (2023, 2024). Hydrogen Ladder: A Roadmap to a Sustainable Energy Future.
Dejonghe, K., & Van de Graaf, S. (2025). The Future of Green Hydrogen: Opportunities and Challenges for the Global South.
Tunn, et al. (2025). Green Hydrogen: A New Era for Energy in the Global South.
Polly (2024). The State of Green Hydrogen: A Global Perspective.
Tsvetana (2024). Green Hydrogen: The New Energy Frontier for the Global South.
BloombergNEF (2024). The Future of Energy: Green Hydrogen.
Verpoort, et al. (2024). The Economic Potential of Green Hydrogen in the Global South.
Steitz & Kölschbach Ortego (2023). Green Hydrogen: A Game Changer for the Global South.
Bähr, et al. (2023). The Role of Green Hydrogen in the Energy Transition of the Global South.
Ladera Sur (2023). Delays and Suspensions of Major Green Hydrogen Projects in the Global South.
Liebherr (2024). The Shift from Green Hydrogen to Battery-Electric Solutions in the Mining Industry.
Hank, et al. (2024). Green Hydrogen: Not the New Oil, but a Building Block for Green Industrialization in the Global South.
BloombergNEF and Aurora Energy Research (2024). The Economic Viability of Green Hydrogen Applications.
Scholz, O. (2022, November). Investment in the Hydrogen Market at COP27 in Egypt.
Petro, G. (2024). Green Hydrogen as a Potential Future Energy Source in Colombia.
The high production costs and inflation of capital expenditure for renewable energy and electrolyzer projects remain a key obstacle to the scaling of green hydrogen, particularly in Global South countries.
Despite the economic challenges, the long-term potential for cost reduction in green hydrogen remains promising, with integration with renewables potentially making it a more competitive and attractive energy source.
Beyond its climate benefits, scaling green hydrogen supply chains can foster energy independence, create jobs, and increase participation in global trade markets for hydrogen-derived commodities.
Green hydrogen could enhance energy sovereignty for Global South countries rich in renewable resources, potentially reducing dependence on fossil fuel imports and exposure to volatile markets.
Realizing these geopolitical shifts requires overcoming infrastructure, financing, and technology challenges, as the global rollout of green hydrogen is gaining momentum but moving slower than expected.
Notable investments in green hydrogen have been made by countries like the U.S., China, and Germany, and President Gustavo Petro of Colombia envisions a partnership between Ecopetrol and Petrobras for industrial use of renewable energy, including green hydrogen.
Green hydrogen will not likely become the new oil, but it may become a building block for green industrialization in the Global South, offering an opportunity to leapfrog traditional fossil fuel-based industries and move towards a more sustainable future.
Green hydrogen is gaining attention as a potential solution for decarbonizing industries like steel production, chemical manufacturing, and heavy-duty transport by harnessing renewable energy sources like wind and solar.
Large-scale green hydrogen projects are planned globally, including in renewable-rich regions of the Global South, but the pace of rollout is slower and more selective than expected due to factors like infrastructure uncertainty and competition from direct electrification.
Addressing cost issues, building enabling infrastructure, fostering policy support, and mobilizing international collaboration will be essential to realizing the prospects of green hydrogen as a climate-friendly energy vector, economic engine, and geopolitical asset in the Global South.