Russia’s Hydrogen Energy Strategy
This commentary is part of Energy Rewired, a project from the CSIS Energy Security and Climate Change Program studying the industrial strategies of major economies for the energy transition. The project examines countries’ big bets on emerging energy technologies and how these will rewire the world’s energy map.
- Russia’s primary goal is to become a world-leading producer and exporter of hydrogen energy. Its official goals are to export 0.2 million metric tons by 2024 and 2 million by 2035.
- As a major hydrocarbon producer, Russia is seeking to capitalize on its current infrastructure and technical strengths to manage the substantial risks it faces as many of its customers work to decarbonize their economies.
- Russia sees its resource endowment, large and mature gas industry, and scientific/academic expertise as suitable strengths to become a global leader in hydrogen.
- Much of Russia’s current strategic documents are essentially calls to action. Russia has yet to firmly establish priorities, feasibility, and actual steps needed to develop its hydrogen sector.
In June 2020, the Russian Federation released its Energy Strategy to 2035. This document outlines Russia’s overarching, medium-term plans for its energy sector, a vital segment of its economy. The strategy includes a broad overview of its plan for hydrogen: to export 0.2 million metric tons of hydrogen by 2024 and 2 million by 2035. For context, global hydrogen production was approximately 70 million metric tons in 2019.
Russia’s hydrogen strategy was further fleshed out with the October 2020 release of the Roadmap for Hydrogen Development until 2024. The document outlines, still in broad terms but with some detail, a multi-year action plan for the development of a hydrogen energy sector in Russia. The Russian government’s most recent and most detailed release, the Concept for the Development of Hydrogen Energy in Russia (August 2021), is the first step in the lengthy action plan outlined in the roadmap.
Russia’s energy strategy spells out two broad goals: (1) increasing socioeconomic development and (2) maintaining a commanding position in global energy. The strategy outlined in the document includes structural diversification, doubling down on domestic fossil fuel energy infrastructure in key regions, growing Russia’s presence in Asia-Pacific markets, and non-committal calls for climate action.
Russia’s hydrogen strategy echoes these goals and strategic aspects, but how this strategy will materialize remains unclear. Many key questions—what the priority areas will be, how much money will be dedicated to developing this sector, how many clusters will be created, what the role(s) of the private sector will be, etc.—have yet to be answered.
Russia believes it has a competitive advantage in hydrogen because of its vast fossil fuel resource endowment coupled with a global, mature oil and gas industry. Natural gas is currently the dominant feedstock for hydrogen energy production globally; Russia remains the second-largest producer globally, a potential boon in terms of cost competitiveness. Furthermore, conventional wisdom ranks the oil and gas sector (and its workforce) among the highest in terms of transferable skills for hydrogen energy production. The roadmap also lists Russia’s already-existent expertise in hydrogen fuel—in production, transportation, and storage—as a boon.
Russia’s hydrogen strategy is not solely based on the country’s strengths. All strategy documents acknowledge changing global demand in the face of the energy transition, and Russia’s hydrogen strategy is clearly an attempt to adapt. As a major hydrocarbon producer, Russia also faces compounding risks in a decarbonizing global economy.
Both the concept and the roadmap highlight the defensive aspects of Russia’s plans, with nods to climate change, the global energy transition, and rising demand for low-carbon products. A variety of action items/tactics named in the documents demonstrate a recognition that emissions from future hydrogen fuel production may receive greater scrutiny from foreign buyers. For example, Russia’s strategy explicitly outlines the creation of low-carbon, export-oriented hydrogen production facilities within the Northwest cluster (or “hub”), with an eye toward low-carbon demand from Europe. While it is unclear how much effort will be put into green hydrogen, it is mentioned numerous times in both the roadmap and the concept as a likely priority.
The concept spells out three phases of development:
- Stage 1 (2021–2024): Reach 0.2 million metric tons of exports by creating hydrogen clusters and a research ecosystem, developing technologies and manufacturing of industrial products for hydrogen, implementing pilot projects, and creating domestic demand for hydrogen.
- Stage 2 (2025–2035): Reach 2 million metric tons of exports by launching commercial projects for hydrogen production, particularly large, export-oriented production facilities. Continue to expand and integrate hydrogen energy into the domestic market. Scale up the production and export of domestically produced hydrogen equipment.
- Stage 3 (2036–2050): Develop, and be a major player in, a global hydrogen energy market on a large scale. Export 15–50 million metric tons to the global market by 2050.
The crux of the strategy seems to lie in developing hydrogen clusters. Strategic documents have so far avoided defining these clusters. Beyond inferred export and production facilities, and an explicit mention of leveraging university systems, it is unclear what other institutions and facilities mentioned will be part of these clusters. (More on the clusters below.)
Aside from these clusters, the concept is more a lengthy menu of tactics than a coherent set of guiding principles, goals, or instructions. There is little sense of priority, or even a discernible strategy, within the laundry list of potential actions.
The roadmap offers more structure, including distinct steps and timelines for various aspects of the strategy. The eight aspects include strategic planning, state support, production capacity, pilot projects, research and development, regulatory development, workforce development, and international engagement.
That said, the roadmap’s timelines only go to 2024, and much of the document is essentially a plan to make a plan. Most steps simply require government entities to report on various broad aspects of the strategy (e.g., the state of the workforce) to better define priorities, feasibility, and actual steps needed to be taken.
Responsibility for executing these and future aspects remains ambiguous. The roadmap lists the entities involved in each step—sometimes at great length—but does not provide a sense of hierarchy or assignment for fleshing out the development of the hydrogen sector. The Ministry of Energy may be the most vital actor in this strategy, as it has been made responsible for annual reporting on the sector’s development.
The concept repeatedly references or alludes to mobilizing the private sector (largely unmentioned in the roadmap), but without much specificity. However, in July 2021 the government founded a working group, involving large companies including Novatek, Sibur, and Sistema. State-owned enterprises in the group include Rosatom, Rosneft, Gazprom and Gazpromneft, Kamaz and Rostec, as well as Rosnano.
Russia clearly intends to be a global, geopolitical leader on hydrogen energy. The concept emphasizes international cooperation, including working with other countries on pilot projects, industry standards, and trade regulation. (Interestingly, Russia’s strategy includes the promotion of “technological neutrality,” an effort to safeguard hydrogen energy produced from fossil fuels and, notably, from nuclear power.) The roadmap lists the following potential international partners: Germany, Japan, Denmark, Italy, Australia, the Netherlands, and South Korea. Outside these documents, Russian officials have also expressed interest in joint projects with Saudi Arabia.
Russia has recently signed bilateral cooperation agreements on hydrogen energy with the United Arab Emirates (UAE) and Japan. The extent of cooperation with either country remains vague, though the agreement with the UAE includes a working group on issues pertaining to hydrogen energy development.
Per the concept, Russia plans to create three hydrogen clusters, or hubs: a Northwest cluster, an Eastern cluster, and an Arctic cluster. The document also leaves the possibility for a fourth Southern cluster.
The Northwest and Eastern clusters are in direct response to anticipated demand centers for hydrogen. Russia intends to use the Northwest cluster to export to European markets—with an eye toward low-carbon (and, theoretically, zero-carbon) products—and the Eastern cluster for exportation to Asian markets. The Arctic cluster aligns with supply; the cluster would likely correspond with new gas resource development. This cluster also fits clearly within Russia’s broader strategic interest in maintaining a strong economic (and military) presence in the Arctic. (A Southern cluster would presumably be contingent upon demand growth for hydrogen fuel, but the concept offers little on this, geographically or otherwise.)
Precisely where these clusters will be located is yet to be determined. The definitional ambiguity of the clusters, combined with the lack of geographic specificity in the document, leaves this an open question. However, it is strongly implied that the geography of these clusters will mirror the current geography of Russia’s natural gas sector. (Russia is already exploring the use of Nord Stream 2 for hydrogen.) Based on current economic and infrastructure realities, one can infer likely candidates for the Northwest, Eastern, and Arctic clusters: the Leningrad Oblast, Primorsky Krai, and Yamalo-Nenets Autonomous Okrug, respectively.
The concept also mentions the creation of a domestic research ecosystem and local and regional markets—domestic demand creation and research hubs are mentioned throughout the strategy. But beyond the clusters and hydrogen-fueled urban transport, the geographic picture for Russia’s research ecosystem and domestic demand remains unclear.
Ian Barlow is program manager for the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Nikos Tsafos is the James R. Schlesinger Chair in Energy and Geopolitics with the CSIS Energy Security and Climate Change Program.
This commentary is made possible by support from the Hewlett Foundation.
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