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A week before the Russian government adopted the concept for the development of hydrogen energy on 9 August, the department head of Gazprom Exports, Sergey Komlev, made it clear that Russia would maintain its export position on the European market using blue hydrogen deliveries. Acknowledging the economic impact of European policy on carbon neutrality, which will inevitably affect future natural gas demand, Russia has started working on developing a hydrogen energy strategy that would address the future needs of global energy markets. The concept for the development of hydrogen energy is thus a welcome addition to Russia’s energy strategy adopted in 2020 that declared a goal for Russia to become a world leader in hydrogen production and export by achieving export targets of 0.2 million tons by 2024 and 2 million tons by 2030.

However, as it currently stands, the development of hydrogen energy is largely influenced by the dynamic implementation of hydrogen strategies adopted in potential export markets, particularly in Europe and East Asia, then by the urgent need of the Russian government to transform its energy sector or address national climate issues. The concept for the development of hydrogen energy is implicit in this regard as it undertakes the development of at least three territorial production clusters: Eastern cluster in Sakhalin region with a focus on exporting hydrogen to Asia-pacific region; North-Western cluster in St. Petersburg and Leningrad region to export hydrogen to the European countries; and the Arctic cluster in Yamalo-Nenets Autonomous District to develop autonomous hydrogen power supplies. 

Russia’s hydrogen energy roadmap prioritizes the development of production capacities in yellow and blue hydrogen. Yellow and blue are simply colors denoting how hydrogen is made using the common extraction methods. Hydrogen on earth does not appear pure in nature which means it requires energy and method to extract. For instance, one of the most commonly used methods for hydrogen extraction which accounts for 96% of total hydrogen production worldwide uses fossil fuel to make hydrogen in a process called steam- methane reforming. The reforming method uses high-temperature steam between 700-1000° Celsius to produce hydrogen from a methane source, generally natural gas. The production of hydrogen using this method is called grey hydrogen. Likewise, when hydrogen is produced using lignite coal, it is called brown hydrogen and bituminous coal-black hydrogen. 

The downside to all these methods is that they are both energy-intensive and harmful to the environment as they emit vast amounts of carbon dioxide. Another effective or greener method of making hydrogen is through a process called electrolysis. In this process, an electric current is used to split water into hydrogen and oxygen. If the electricity used in this process is generated from renewable sources such as solar or wind, then the hydrogen is labelled green as it does not emit any greenhouse gasses. Similarly, if the electricity required is powered by nuclear energy it is called pink hydrogen and if it is powered solely through solar, it is called yellow hydrogen. Green hydrogen is naturally an environment-friendly option. However, the cost of production is too high, making it less competitive compared to the currently produced grey hydrogen. Market experts estimate that by 2030, with substantial improvements in large scale electrolysis manufacturing and installation technologies, green hydrogen may become cost effective-enough to compete with the pricing of grey hydrogen. 

Until then, a solution that can be used is blue hydrogen, which forms an integral part of Russia’s hydrogen energy roadmap. Blue hydrogen is produced in a similar way as grey hydrogen using the steam methane reforming method. But unlike in those methods, carbon dioxide is captured and stored, usually underground, using the Carbon Capture Use and Storage process. Although this process is also expensive, it is still cheaper than green hydrogen and does not pollute the atmosphere like grey hydrogen. Given its vast reserves of natural gas and experience in using Carbon Capture Use and Storage technology, Russia is relying on blue hydrogen as its preferred energy for export. Moreover, concerning the demands of the European market, the European Union hydrogen strategy calls for the production and consumption of not only green hydrogen but also blue and grey in the near term, which would create export opportunities for Russia. 

At present, Russia has relatively limited capabilities in hydrogen production with annual production estimated at roughly 2-3.5 million tons. In the long run, it can significantly boost its production targets regardless of the method it chooses. One of the positives of Russia’s power generation capacity is its low carbon footprint. The power generation sector is dominated by gas-fired heat and power stations, which account for 48% of the total power generation capacity, followed by nuclear power stations 18% and hydroelectric power stations 17%. This energy production mix works for Russia’s hydrogen future. Given its vast water resources and its potential for generating wind energy, Russia can produce large amounts of green hydrogen to meet the future demands of energy markets. In addition, it is also among the world’s top producers of nuclear energy with 38 operational nuclear plants, which can further contribute to producing low carbon hydrogen. 

Russia’s preferred strategy for hydrogen production as stated by Anatoly Chubais is to start with blue hydrogen—given its vast natural gas resources—and then gradually transition to green hydrogen once the market becomes competitive enough for its exports. In other words, Russia does not intend to miss out on future energy markets and has started planning to take advantage of the resources it has to implement a long-term strategy for hydrogen production. With its ample potential in renewable energy and its key geographical location, Russia can act as a bridge between Asia and Europe once the market for hydrogen expands.

Trivun Sharma is a PhD Student in International Relations, University of Warsaw, Poland.

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