Competition and equilibrium in future global renewable hydrogen trade: a game-theoretic analysis
File(s)
Published version
Author(s)
Alanazi, Khalid
Shah, Nilay
Mittal, Shivika
Hawkes, Adam
Type
Journal Article
Abstract
Global renewable hydrogen trade is expected to play a key role in decarbonizing future energy systems. Yet hydrogen exporters may deviate from perfectly competitive behaviour to influence prices, similarly to the existing fossil fuel market, with important implications for consumer welfare and the pace of the energy transition. This study develops a global renewable hydrogen trade model that captures potential strategic interactions among exporters using a Stackelberg game-theoretic framework. The model is formulated as an Equilibrium Problem with Equilibrium Constraints (EPEC) and solved under three alternative equilibria: a profit-maximizing Nash equilibrium, a cost-minimizing Nash equilibrium, and a welfare-maximizing benchmark representing perfect competition. Results indicate that producers may strategically reduce their export quantities by up to 40 % relative to perfect competition to maximize profits. Such behaviour raises prices to a minimum of 4.5 USD/kg in 2050 across major import markets, thereby significantly eroding consumer surplus. Strategic behaviour of dominant exporters also shifts trade flows, reshaping the global allocation of hydrogen supply. Sensitivity analysis further reveals that financing costs play a key role in shaping strategic producers' behaviour, with lower financing costs helping to reduce prices and stimulate demand. These findings highlight the implications of imperfect competition in global hydrogen trade and suggest that policy measures may be needed to mitigate potential negative consequences.
Date Issued
2026-01-01
Date Acceptance
2025-11-01
Citation
Applied Energy, 2026, 402 (Part B)
ISSN
0306-2619
Publisher
Elsevier
Journal / Book Title
Applied Energy
Volume
402
Issue
Part B
Copyright Statement
© 2025 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
License URL
Subjects
AFRICA
COMPLEMENTARITY
COST
DECARBONISATION
ENERGY
Energy & Fuels
Energy trade
Engineering
Engineering, Chemical
Game-theoretic modelling
GENERATION INVESTMENT EQUILIBRIA
GREEN
Hydrogen
Imperfect competition
JAPAN
Science & Technology
Strategic behaviour
Technology
TRANSPORT
Publication Status
Published
Article Number
127000
Date Publish Online
2025-11-10