Developing nations face a complex landscape of opportunities and challenges when engaging in the global hydrogen trade. While hydrogen presents a pathway to economic growth and energy transition, structural barriers such as technology access, financing gaps, and infrastructure deficits must be navigated carefully. The emergence of regional alliances, like the Africa Green Hydrogen Alliance, signals a collective effort to overcome these hurdles, but risks of unequal trade dynamics and resource exploitation remain critical concerns.
One of the primary opportunities for developing nations lies in their abundant renewable energy resources, which can be harnessed for green hydrogen production. Countries with high solar irradiance or wind potential can position themselves as exporters of low-cost renewable hydrogen. This potential is particularly relevant for regions like North Africa, Sub-Saharan Africa, and parts of Latin America, where renewable energy generation costs are among the lowest globally. By leveraging these natural advantages, developing economies could secure a role in future hydrogen value chains, attracting foreign investment and fostering industrial development.
However, access to advanced hydrogen technologies remains a significant barrier. Electrolyzers, compression systems, and liquefaction technologies are often patented or concentrated in industrialized nations. Developing countries may face high licensing costs or restrictive intellectual property regimes, limiting their ability to scale up hydrogen production. Even when technology transfers occur, the lack of local technical expertise can hinder effective deployment. Capacity-building programs and partnerships with research institutions are essential to bridge this gap, but progress has been uneven across regions.
Financing presents another major challenge. The capital intensity of hydrogen infrastructure—including production plants, storage facilities, and export terminals—requires substantial upfront investment. Many developing nations struggle to secure affordable financing due to perceived risks, higher borrowing costs, and limited access to international climate funds. While multilateral development banks have begun supporting hydrogen projects, the scale of funding remains insufficient to meet demand. Innovative financing mechanisms, such as blended finance or green bonds tailored to hydrogen, could help mitigate these constraints, but implementation has been slow.
Infrastructure deficits further complicate participation in hydrogen trade. Export-oriented hydrogen projects require not only production facilities but also specialized transport infrastructure, such as liquefaction plants or ammonia conversion units. Many developing countries lack the ports, pipelines, or storage systems needed to integrate into global hydrogen markets. Retrofitting existing natural gas infrastructure for hydrogen use is technically feasible but requires additional investment and safety upgrades. Without coordinated planning, these infrastructure gaps could perpetuate dependency on foreign expertise and equipment suppliers.
The Africa Green Hydrogen Alliance exemplifies a regional approach to addressing these challenges. By pooling resources and harmonizing policies, member countries aim to attract investment, share knowledge, and negotiate better terms in international partnerships. The alliance focuses on creating economies of scale, reducing transaction costs, and ensuring that hydrogen development aligns with local economic priorities. Similar initiatives are emerging in other regions, demonstrating a growing recognition of collective bargaining power in the hydrogen economy.
Despite these efforts, risks of unequal trade benefits persist. Developing nations could find themselves locked into unfavorable long-term contracts, supplying cheap hydrogen feedstock while higher-value derivatives are processed elsewhere. There are concerns that hydrogen exports might divert renewable energy resources from domestic electrification, exacerbating energy poverty. Transparent contracting practices and local content requirements can help mitigate these risks, but enforcement mechanisms are often weak.
Resource exploitation is another critical concern. Large-scale hydrogen projects may compete with agricultural land or water resources, particularly in water-stressed regions. The extraction of minerals needed for electrolyzers, such as iridium or platinum, could replicate problematic patterns seen in other extractive industries. Robust environmental and social governance frameworks are necessary to ensure that hydrogen trade does not come at the expense of local communities or ecosystems.
Trade dynamics themselves pose challenges. Early hydrogen markets are likely to favor established economies with existing trade networks and regulatory frameworks. Developing nations may face non-tariff barriers, such as stringent sustainability certification requirements, that increase compliance costs. Preferential trade agreements could help level the playing field, but negotiations are still in early stages. Without proactive engagement in standard-setting bodies, developing countries risk having their interests overlooked in the design of global hydrogen trade rules.
The role of international cooperation cannot be overstated. Technology-sharing agreements, concessional financing, and capacity-building programs will be crucial in enabling equitable participation. Some industrialized nations have pledged support for hydrogen development in emerging economies, but follow-through has been inconsistent. South-South collaboration offers an alternative pathway, with countries like Chile and Morocco sharing lessons from their own hydrogen strategies.
Workforce development is another overlooked aspect. Building a skilled labor force for hydrogen industries requires targeted education and vocational training programs. Without local employment opportunities, the benefits of hydrogen trade may not translate into broad-based economic gains. Migration of skilled workers to more established hydrogen markets could further exacerbate brain drain, undermining long-term industrial development.
Certification and standards present both a challenge and an opportunity. Developing nations can advocate for inclusive certification systems that recognize diverse production pathways and local conditions. However, meeting international sustainability criteria may require additional monitoring and reporting systems, imposing administrative burdens. Proactive engagement in standard-setting processes is essential to ensure that requirements are realistic and achievable across different contexts.
The geopolitical dimensions of hydrogen trade add another layer of complexity. Traditional energy exporters are pivoting towards hydrogen, potentially crowding out newer entrants. Developing nations must navigate shifting alliances and competition while safeguarding their own strategic interests. Regional cooperation, as seen in the Africa Green Hydrogen Alliance, provides one model for enhancing bargaining power in this evolving landscape.
Looking ahead, the window of opportunity for developing nations to secure a favorable position in hydrogen trade is narrowing. Early movers are already establishing market share and shaping trade rules. Delayed action could result in marginalization or dependency on imported hydrogen technologies and services. Strategic planning, coupled with international support, will be decisive in determining whether hydrogen trade becomes a catalyst for inclusive development or another arena of global inequality.
The path forward requires balancing ambition with pragmatism. Developing nations must prioritize projects that align with local industrial capabilities and energy needs, avoiding overreliance on export markets vulnerable to price fluctuations. International partners, for their part, must move beyond rhetoric to deliver tangible support in technology transfer, financing, and market access. Only through such concerted efforts can the promise of hydrogen trade be realized equitably across the global economy.