According to Jane Nakano, senior fellow at the Center for Strategic and International Studies, China and India could overtake the United States as global leaders in “clean” hydrogen (CSIS).

Nakano stated on Friday’s episode of “Squawk Box Asia” of CNBC that “I think both China and India have potential to become big powers… not just as potential suppliers and exporters of clean hydrogen, but also consumers and users of clean hydrogen.”

Nakano noted that although many nations still generate and use grey hydrogen, which is obtained from natural gas and created using fossil fuels, China, like many others, continues to do so. The least renewable type of hydrogen is this one.

Since hydrogen doesn’t produce any carbon dioxide, which warms the environment, it has the potential to be a key player in the fight against the climate issue. On the other hand, it is a leak-prone gas that, if poorly handled, might produce its own warming impact, which would exacerbate the climate crisis. In addition to being expensive to create, “clean” hydrogen is also a young business.

According to a CSIS analysis, China presently produces 33 million tonnes of hydrogen annually, the majority of which is derived from fossil fuels.

She stated that it is crucial for China to continue moving away from the creation of grey hydrogen due to the size of its prospective hydrogen production as well as consumption.

The government of China has set the year 2025 as the deadline for expanding the usage of green hydrogen.

By 2030, India hopes to produce 5 million tonnes of renewable hydrogen annually. However, almost all of the hydrogen produced in the nation is still grey.

Much work remains.

Nakano notes that there isn’t much of a market for hydrogen right now, and it will take some time for it to become commercially viable.

Besides industries that are hard to electrify and decarbonize, she stated that the transportation and steelmaking sectors are prospective buyers.

She noted that widespread hydrogen use has not yet become a reality. Most hydrogen is created and stored at the same location. There is almost no trading; if any, it occurs in a very small area.

“What we’re seeing right now is much more government-led projects,” Nakano said, noting that nations like Australia, Japan, and South Korea are working with Southeast Asian nations like Indonesia and Malaysia that are resource-rich.

Nakano reports that Australia is a growing supplier and exporter of hydrogen, and that it intends to rank among the top three exporters.

A hydrogen exporting pact was signed between the nation and Japan at the start of this year with the objective of broadening Australia’s hydrogen sector.

Wood Mackenzie forecasts that both Australia and the Middle East are forecast to become key suppliers of green hydrogen exports in the coming years.

Despite the fact that Europe is leading the way in commercialising hydrogen, Nakano noted that it might take some time for the continent to make the switch.

For better or worse, there is still a long way to go, according to Nakano. From the perspective of climate change mitigation, probably for the worse.