New study warns hydrogen shift could reshape global industrial landscape more than expected

Hydrogen strategies for heavy industry are still being built on assumptions that may prove too optimistic, according to a new study in Nature Reviews Clean Technology that argues policymakers are underplaying the geopolitical risks around a global shift to renewable hydrogen.

The research suggests that many current plans for decarbonising steel, chemicals and other energy-intensive sectors assume a relatively stable world of dependable alliances, open trade and smooth cross-border investment. In the current climate of sanctions, conflict and industrial competition, the authors say that is increasingly hard to justify.

The issue is not simply where hydrogen will be made, but how its rise could redraw industrial geography. As Laima Eicke of the Research Institute for Sustainability at GFZ told the study, the key question is whether energy-intensive production will stay in established industrial hubs and import hydrogen, or move closer to places where renewable power is abundant and cheap.

The paper sets out three broad pathways. The first, known as Fuel Switch, is the one most policy discussions in Europe still lean towards: existing industrial centres keep their core position, but retrofit operations to use hydrogen and rely in part on imports. That model depends on large-scale transport infrastructure, durable commercial ties and limited efforts by producing countries to build more of their own industrial value chains.

The authors warn that those conditions may not hold. Differences in production costs across regions, along with a more assertive industrial policy in resource-rich countries, could pull investment away from traditional manufacturing centres. In that case, betting too heavily on an import-led system could leave countries with stranded infrastructure and badly placed capital expenditure.

A second pathway, Industrial Relocation, envisages more production moving to countries with abundant renewable resources, many of them in the Global South. In that scenario, transport needs fall and some emissions are reduced through shorter supply chains, while host countries gain a chance to capture more industrial value. But the study also stresses that many of these economies would still need external finance, partnerships and regulatory support if they are to benefit fully.

The third model, Dispersed Production, sits between the two. Hydrogen would be produced and converted on site into intermediates such as ammonia or directly reduced iron, which would then be shipped to established industrial centres for final manufacturing. The authors argue that this approach could preserve some advantages of existing industrial ecosystems while spreading value creation more widely.

The findings echo a broader body of work on the geopolitics of hydrogen. The International Renewable Energy Agency has warned that while falling renewable costs could allow many countries to become exporters, the expense of moving hydrogen may still encourage regional trade patterns rather than a truly global market. Other research has pointed to new dependencies between importers and exporters, alongside intensified competition over technology, infrastructure and industrial leadership.

For governments in import-dependent economies, the message is that hydrogen policy can no longer be treated as a narrow engineering exercise. Decisions on ports, pipelines, storage and industrial support will need to work under more than one geopolitical future. For countries in the Global South with strong renewable resources, the challenge is different: to build policy and regulatory frameworks that allow them to capture real industrial gains rather than merely supplying raw molecules to richer markets.

The study’s central warning is that the hydrogen transition may not preserve the industrial map of the past. If policymakers want it to support both decarbonisation and long-term competitiveness, they will need to plan for a world that is more fragmented, more competitive and less predictable than the one many current strategies appear to assume.