The Role of Hydrogen in Asia's Energy Transition

Hydrogen's role in Asia's energy transition has moved from theoretical possibility to active investment reality, though the path to commercial scale remains longer and more complex than many early proponents anticipated. Arkadia's research into the hydrogen economy across Asia-Pacific reveals a sector characterised by genuine long-term potential, significant near-term uncertainty, and a wide dispersion of outcomes depending on technology choices, policy support, and infrastructure development timelines.

The fundamental case for hydrogen rests on its ability to decarbonise sectors that are difficult to electrify directly — heavy industry, long-haul transport, and high-temperature industrial processes. In Asia, where steel, cement, and chemical production are concentrated and where long-distance freight demand is growing rapidly, these hard-to-abate sectors represent a substantial share of total emissions. Green hydrogen, produced by electrolysing water using renewable electricity, offers a pathway to decarbonising these sectors without the limitations of direct electrification.

The challenge is cost. Green hydrogen currently costs USD 4–8 per kilogram to produce in most Asian markets, compared to USD 1–2 per kilogram for grey hydrogen produced from natural gas. Achieving cost parity requires a combination of falling electrolyser costs, cheaper renewable electricity, and the scale benefits that come with larger production facilities. Most credible analyses suggest that green hydrogen will reach cost competitiveness in favourable locations — Australia, Chile, the Middle East — by the late 2020s, with broader Asian market competitiveness following in the early 2030s.

Japan and South Korea have emerged as the most advanced markets for hydrogen demand development, driven by government policy support and the strategic imperative of energy import diversification. Both countries have established hydrogen import targets and are actively developing the infrastructure — liquefaction facilities, specialised shipping, and regasification terminals — needed to receive hydrogen from overseas production centres. Australia is positioning itself as a major hydrogen exporter, with several large-scale green hydrogen projects in advanced development targeting Japanese and Korean offtake. Arkadia is advising on two hydrogen supply chain projects in the Australia-Japan corridor, providing transaction structuring and offtake negotiation support.