A mixed integer bilevel approach for international trade in hydrogen supply chain

Abstract

International trade in hydrogen is expected to grow in the near future as demand for hydrogen increases. This fact calls for the development of new models for hydrogen trade. In this paper, we develop a novel mixed integer bilevel program for international hydrogen trade. In our proposed model, countries that export hydrogen play the leader role, whereas a single country with limited hydrogen production capacity plays the follower role. Our model is especially suitable for use by the importing country to shortlist the exporters. As a mixed-integer bilevel program cannot be solved directly, we develop a decomposition algorithm to solve it to optimality. We conduct numerical experiments to demonstrate our model. Through our numerical experiments, we analyze our model and its benefits from different perspectives. First, our model can shortlist exporting countries that are more suitable for international trade for the importing country. In other words, the importing country can use our model and narrow down its search for countries to buy hydrogen from them. Second, our model can reveal which international trading grid deserves to be more utilized. Therefore, the importing country can improve the security and the infrastructure of those grids that are more suitable for international trade. Third, we realize that SMR technology with CCS is more attractive economically in international trade when we do not consider CO2 emissions. To make green hydrogen technologies (e.g. wind electrolysis technology) more attractive for investment, a higher price of carbon is required to be placed in international policies and the hydrogen supply chain management.