Central Asia and the South Caucasus region possess significant renewable energy potential, including high solar and wind resources, which could support large-scale green hydrogen production. However, the region faces challenges in realizing this potential due to its reliance on fossil fuels, socio-economic and geopolitical challenges, and the absence of comprehensive national hydrogen strategies.
The region’s energy sector is heavily dependent on fossil fuels, with hydropower being the only significant renewable energy source in some countries. This reliance exposes economies to global market fluctuations and hinders progress towards decarbonization. Green hydrogen offers a promising solution for decarbonizing hard-to-abate sectors, such as steel and ammonia production, and could catalyze industrial innovation and enhance energy security.
Despite the drivers, several barriers hinder green hydrogen development. The lack of national hydrogen strategies and clear roadmaps, low electricity prices, ageing energy infrastructure, water scarcity, and technological and skill gaps pose significant challenges. To overcome these obstacles, the report recommends a coordinated and phased approach, prioritizing no-regret applications such as ammonia and steel production, modernizing infrastructure, leveraging raw material potential, and building capacity for skills development.
The report identifies five key pillars for advancing green hydrogen deployment:
- Strategic approach: Focus on no-regret applications, develop a national hydrogen strategy, implement a phased approach, and engage in regional collaboration.
- Enabling environment: Enhance awareness, establish an implementation framework, introduce risk mitigation measures, and encourage corporate sourcing.
- Power sector and water infrastructure co-benefits: Implement value sharing in power grid and water infrastructure, prioritize projects with lower water impact, and monitor the water-related effects of green hydrogen production.
- Greening of industry: Adopt carbon pricing policies, leverage raw material potential, and capitalize on proximity to technology providers.
- Skills development: Build knowledge for political decision makers and public authorities, develop standards, curricula, and capacity building for educators, target the fossil fuel workforce, and expand the pool of talent to include a diverse workforce.
By focusing on these areas, Central Asia and the South Caucasus can leverage its renewable energy potential and establish a sustainable green hydrogen economy, contributing to global climate goals and fostering economic resilience.
