Low carbon hydrogen complements the growing electrification of the energy system through its use in processes and activities in industry and transport that are hard to electrify and as a source of long-duration energy storage in power markets. The higher cost of low carbon hydrogen relative to fossil fuel alternatives means its significance in the global energy system depends on the pace of the energy transition.
The relatively high cost of transporting hydrogen, especially in its pure form, means that trade in low carbon hydrogen is concentrated in relatively localised, regional markets. But some global trade develops over the outlook, including to the key importing regions of the EU and developed Asian economies, dominated by Japan, South Korea and Singapore, with the major exporting regions including the US, the Middle East, and Australia.