The Hydrogen Economy: Opportunities and Challenges For Developing Countries

As interest in the hydrogen economy grows, many think allowing developing countries to participate would unlock far-reaching, mutual benefits. Progress is possible, but achieving it is not as straightforward as it may seem. Collaboration will be a primary ingredient for success, alongside conscious efforts to identify and overcome barriers that might otherwise cause projects to fail.

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Setting specific clean energy goals for developing countries is an excellent start, but there must also be viable strategies for achieving them. Unfortunately, a 2025 study revealed notable delays for planned green hydrogen projects.

Researchers examined hydrogen production intentions for 2023, measuring how frequently people achieved their goals that year. They analyzed 1,232 projects announced globally, finding the high associated costs were significant barriers those involved were unwilling to bear. Such outcomes meant implementation occurred for only 7% of the publicized projects.

However, those studying this matter found continuing interest. For example, the number of announced hydrogen projects has nearly tripled in the past three years, but additional evidence suggests people may underestimate the actual costs. The study’s data indicated the projects need approximately US$1 trillion in additional subsidies for financial support.

The researchers advocated for a combined strategy to close the implementation gap, using direct subsidies and demand-side regulations in the short term and relying on a realistic foundation and robust approach for long-term adoption.

A World Bank program for emerging markets and developing countries recently contributed $1.5 billion in financing to advance green hydrogen and electrolyzers. It is believed that the anticipated improvements made possible with the bank’s support will generate 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers annually. Because these developments will also raise the country’s renewable electricity capacity, they should reduce emissions by 50 million tons per year. 

The initiative is part of the World Bank’s Hydrogen for Development partnership and aligns with the Indian energy ministry’s broader security strategy. This illustrates why leaders from developing countries must familiarize themselves with relevant programs and set clear goals to catch the attention of those distributing funds.

Labor Shortages and Knowledge Transfer

Successful participation in the hydrogen economy requires an adequate local labor force and subject matter expertise. Training people locally and sending global experts to supervise the work takes time and requires well-coordinated efforts. Additionally, those within developing countries must quantify the extent of existing labor shortages to help them chart a feasible path forward.

In 2024, the South African government published a report to identify the skills necessary for the country to participate in the hydrogen value chain. It identified 138 occupations within the hydrogen value chain. The research also found that 77 of these occupations do not exist inside the country’s Organizing Framework for Occupations (OFO), which the Department of Higher Education and Training uses to analyze the nation’s labor market. Even those reflected in the OFO may require learners to gain new skills or qualifications to compete.

However, it named several sector education and training authorities offering 27 work-related qualifications trainers could supplement to ensure curriculums include specifics to help green hydrogen professionals succeed. Collaboration between multiple relevant parties can close labor market gaps and nurture long-term stability for new participants in the clean energy transition.

Elsewhere, those familiar with hydrogen adoption potential and challenges have identified several labor-related difficulties for Latin American nations. A lack of domestic knowledge and skills increases already-high hydrogen development costs, and most of the region’s current projects need foreign support.

Clara Rabelo Caiafa, a doctoral researcher at Eindhoven University of Technology, is interested in how developing countries can unlock green power’s potential. She recognizes that knowledge transfer plays an important role, but although more nations have made knowledge-transfer commitments, many are frequently ineffective. They do not mobilize adequate resources and often prioritize donor nation interests over those receiving educational support, Caiafa argues.

Life Cycle Analyses

Water is the sole by-product of hydrogen energy, but research suggests that any nation considering increased participation in the hydrogen economy should first conduct complete life cycle analyses.

A June 2024 study revealed such projects do not always achieve the expected climate-related benefits. Developing nations relate to the research because Dutch researchers conducted it. Officials from the Netherlands have been making investments in countries with plentiful renewable power, including Namibia and Brazil.

The study involved environmental scientist Kiane de Kleijne calculating the greenhouse gas emissions associated with more than 1,000 planned hydrogen projects. The researcher noted that producing this gas does not emit CO2, but initiatives can only reduce emissions if they use clean energy. Even then, manufacturing wind turbines and solar panels has accompanying emissions.

De Kleijne clarified that full life cycle analyses may reveal that planned projects will not cause the hoped-for environmental gains. However, she recommended several strategies to maximize emissions reductions, including prioritizing countries best suited for renewable energy because of their abundant sunshine and wind.

She also argued that the transport-related emissions from sending hydrogen to far-flung countries can negate the environmental benefits, so decision-makers must choose the most appropriate methods. More specifically, her research indicated pipelines have the lowest transport emissions for short distances, while shipping is the least emissions-heavy option for longer journeys.

These particulars show the importance of considering all emissions sources and types before proceeding with any hydrogen project. Leaders of developing countries must take that balanced approach to prevent feeling disappointed by outcomes. In-depth research provides accurate life cycle analyses that inform them if it is time to take the next steps.

Overcoming Challenges to Maximize Opportunities

No hydrogen project is without obstacles, but those in developing nations may experience them more acutely than parties in better-resourced countries. Positively, though, many of them have ideal conditions for a prosperous energy transition, especially if their weather conditions support the ramping up of other renewable sources to complement hydrogen.

Since many proposed projects include developed countries supporting developing ones, concerned parties can participate in these efforts regardless of where they live. If people in developed nations hear their leaders may soon support green hydrogen production in a developing country, they should strongly consider encouraging them to remain aware of the issues identified here and elsewhere. Phone calls, emails, social media campaigns, and petitions from citizens can remind leaders that citizens have noticed and collectively advocate for the best outcomes.

Additionally, parties directly involved in implementing hydrogen-based clean energy programs should assess all potential locations to accurately understand the pros and cons. They must also develop realistic timelines to fill labor force, educational and infrastructural gaps. Periodic milestones can keep everyone accountable, while ongoing communication encourages entities to share their observations, difficulties and successes.

Determining the likely outcomes for increasing a developing country’s hydrogen production can take years. However, careful assessments give everyone reliable information to shape their decisions. Successful case studies can inspire other national leaders to become more serious about their previously casual aspirations, especially if these instances provide concrete recommendations.

Expanding the Hydrogen Economy

Including developing countries in the green energy transition can be a viable way to give them additional revenue streams and increase national competitiveness. Although this overview highlights some of the well-known challenges, it also illustrates the abundant opportunities that can strengthen a nation’s position among its global peers while providing more labor market opportunities for residents.

More on the topic: How Green Hydrogen Can Become a Cost-Competitive Climate Solution