The search for new trade routes for hydrogen

A new McKinsey report this morning looks at how hydrogen could reshape international and regional energy corridors.

Why it matters: North America, Europe and East Asia will likely account for 65% of global hydrogen demand, but figuring out how to get the fuel there efficiently, reliably and cost-effectively remains a big question mark that's restricting growth.

Driving the news: Nearly two-thirds of the hydrogen that will be needed to go carbon-neutral by 2050 will need to be shipped over long distances, the McKinsey report says.

• Yes, it's McKinsey, commissioned by the Hydrogen Council, so take it with a grain of salt if you like, but hydrogen transportation bottlenecks are a real challenge.

The big picture: There is no good alternative, currently.

• Pipelines would be the cheapest and most environmentally friendly method, but existing networks aren't a great long-term solution.
• Hydrogen molecules are tiny. Blending them with natural gas is safe, but incorporating anything more than 5% hydrogen starts raising the risk of leaks.
• Meanwhile, shipping pure hydrogen by ship or truck is expensive. One effort to send hydrogen across the high seas cost $350 million.

What they found: The solution will not be one-size-fits-all.

• Shipping pure hydrogen will likely be a regional business, the McKinsey report says.
• Longer routes will likely depend on ships, which will transport hydrogen derivatives such as ammonia or synthetic fuels.

• The optimal balance: 50-50 between pipelines and ships.
• Either way, expect to see calls for new pipelines, particularly for regional routes. (Permitting reform bill, we hardly new ye.)

What's next: Countries and the private sector will need to invest $150 billion by 2030 in transportation infrastructure to meet hydrogen demand, the report predicts.

• For perspective, global investment in renewable energy, EVs and other parts of the energy transition hit $500 billion in 2020 and soared to $755 billion the next year.

What we're watching: Don't lose sight of how the hydrogen is being produced — and how green hydrogen that's made with renewable energy compares to the other colors of the rainbow.