As a result of the NWO in Ukraine and the subsequent sanctions, Russia will lose its competitive niches in the supply of both traditional energy products and new types of energy, in particular hydrogen. Previously, it was assumed that Russia would be able to take up to 20% of the world market for its production, while maintaining the status of a major energy power due to this and other efforts. Lack of access to modern technologies will complicate and slow down the energy transition and make it impossible, and China will take Russia's place in the production of cleaner types of energy goods, according to experts from the American think tank GMF. An earlier report by the International Energy Agency suggested that a Russian-instigated energy crisis would, on the contrary, accelerate the energy transition, causing Russia's income from trade in traditional fuel commodities to decline faster. But in both scenarios, Russia misses the chance to adapt to the energy transition and maximizes the economic shock associated with it, according to experts from the online publication Re-Russia.
The energy transition was in any case a challenge for Russia, whose economic well-being is based on oil and gas trade. However, its stretch over time offered significant opportunities for adaptation: this way Russia could continue to receive significant income from trade in traditional energy products and invest them in adapting to new conditions. In particular, Russia's main competitive advantage — its colossal reserves of natural gas — allowed it to claim a significant share of the hydrogen market. However, the special operation and sanctions, on the one hand, will accelerate the decline in Russia's revenues from the sale of fossil fuels, and on the other, will deprive it of the opportunity to use competitive advantages for the development of cleaner energy.
Experts from the American analytical center GMF argue that in the near future hydrogen should become the basis of a new green economy. From the point of view of ecology, hydrogen is divided into four types: green is hydrogen, during the production of which there were no carbon dioxide emissions, gray and blue - hydrogen, which is produced with minimal emissions (the first is produced from natural gas, the second - from methane), and orange - which is produced with the help of nuclear energy (during its production there is no emission of CO2, but nuclear waste remains). At the moment, half of all hydrogen produced is grey, that is, it is produced from natural gas, and green hydrogen, due to the underdevelopment of technologies and small production volumes, remains the most expensive. In the future, only green hydrogen is supposed to be used, but the transition period involves the use of gray, blue and orange.
In 2021, Moscow set a goal of capturing 20% of the global hydrogen market by 2030. Due to geographic, infrastructural and economic factors, before the start of the NWO, Russia had high competitive advantages in creating large-scale and cheap production of green, orange, blue, and even more so gray hydrogen. Russia ranks first in the world (almost 25%) in terms of natural gas and methane reserves, which are needed to produce hydrogen with minimal CO2 emissions. The developed nuclear power industry makes it possible to set up the production of orange hydrogen in Russia, and the vast territory - to find geographically suitable places for the construction of plants for the production of green hydrogen.
However, to develop the hydrogen industry, the Kremlin needs modern Western technology and investment. For example, technologies for water electrolysis, the construction of wind turbines and the installation of solar panels, which are necessary for the production of green hydrogen, have not been developed in Russia. The amount of necessary investments for the implementation of these projects is more than $20 billion. Before the start of the special operation in Ukraine, it was assumed that Western partners would share technologies and partially finance these projects, but the sanctions made such cooperation impossible. For the implementation of such projects, preliminary agreements with future buyers are required. In 2021, the EU, Japan and South Korea were considered as the main markets for Russian hydrogen, but the energy war against Europe has destroyed Moscow's reputation as a reliable supplier of energy resources.
The NWO has also destroyed another competitive advantage for Russia. From a technological point of view, it was relatively easy to re-equip Russian gas pipelines for hydrogen transportation, which could significantly reduce the cost of Russian hydrogen for the end consumer in Europe. However, now the gas pipelines have been blown up, and the likelihood that Russia will be able to implement these projects without Western technology and investment is very low.
GMF experts warn that the impossibility of developing hydrogen energy in Russia in the current geopolitical situation creates two new challenges for the global economy. First, it is the slowdown in the energy transition in Europe and in the world. The absence of cheap Russian gas and hydrogen on world markets will make the development of hydrogen technologies more expensive and less attractive. The development of a green economy without Russia will require more time and resources. Secondly, it will increase the role of China, which is actively investing in the development of hydrogen energy and can become the main producer of a new type of fuel in the world (including getting cheap gas from Russia). GMF experts are confident that the EU and the US should now join forces to develop joint hydrogen production in order to reduce their dependence on authoritarian Beijing in the future.
The authors of the October report of the International Energy Agency (IEA), on the contrary, believe that the global energy crisis provoked by Russia will accelerate the energy transition, as high prices for traditional fuels will encourage investment in green technologies. As a result of these changes, the world will pass the peaks in demand for traditional fuels - oil, gas and coal much earlier. Therefore, Russian fossil fuel exports will never return to the levels they reached in 2021, and the decline in Russian revenues from the sale of traditional energy products will be much sharper than previously thought.
So, GMF experts believe that the Russian special operation against Ukraine will slow down the development of green technologies and postpone the energy transition due to the shortage of cheap hydrogen from Russia. On the contrary, the IEA believes that rising fossil fuel prices will boost investments in clean energy and accelerate the energy transition. But in both scenarios, as a result of the war and Russia-instigated energy crisis, it misses the chance to adapt to the energy transition and maximizes the associated economic shock.