Hydrogen diplomacy in the Middle East?

Numerous letters of intent have been signed, and the groundwork for some major initiatives has been laid. Hydrogen is a way for Gulf states to diversify their economies, but it also has other uses. Because of its compatibility with the petroleum industry's existing institutional and budgetary framework, the hydrogen economy presents a unique opportunity for the GCC economies to preserve their current economic and political hierarchies. Hydrogen from the Gulf is a powerful instrument for mitigating climate change, but Germany and Europe must weigh the benefits of this option against the costs.

One-third of the world's oil reserves and one-fifth of the world's natural gas reserves are located in the six countries that are part of GCC. Now, Gulf countries have revealed their grandiose ideas for a hydrogen economy. Green hydrogen (generated from renewable electricity) can be efficiently produced in regions with both high solar yields and ample land. Blue hydrogen, made from natural gas with carbon capture, benefits from similar geological conditions and natural gas sources. The economies of the GCC are well-suited to be among the first to adopt hydrogen because of their access to abundant money, decisive leadership, and existing infrastructure. Hydrogen, however, provides the Gulf states with more than just diversity; it ensures their continued economic and political dominance in a post-carbon world.

The Kingdom of Saudi Arabia has already begun to create solutions to combat the climate crisis by releasing the Saudi Green Initiative and the Middle East Green Initiative. During Saudi Arabia’s G20 presidency in 2020, it introduced the circular carbon economy to reduce, reuse, recycle, and remove carbon, and create ways towards economic growth. This means being energy efficient, becoming carbon neutral, and capturing carbon.

Hydrogen is the lightest element, is colourless, odourless, and will not generate pollutants by itself. It can be stored and transported easily with pipelines, ships, and trucks. Thus, becoming a great source of energy and an efficient replacement for fuel. However, it requires a chemical process for its development. There are three ways to develop hydrogen, they are named by colours such as grey, blue, and green.

Grey hydrogen: This is the most common form of hydrogen production and is created from natural gas or methane. Grey hydrogen uses steam at a high temperature and pressure to produce synthesis gas, consisting of hydrogen and carbon monoxide. The gas is then reacted with water to produce pure hydrogen and carbon dioxide. Since they produce a significant amount of CO2, they are termed "grey hydrogen."

Blue hydrogen: This is the second-most common hydrogen generation process. The process is similar to that of grey hydrogen but traps 90 percent of greenhouse gases through carbon capture technology. This method of capturing carbon is called carbon capture and storage (CCS). In certain cases, the carbon must be stored underground, but this raises costs.

Green hydrogen: It is obtained from renewable energy, which makes it sustainable creating zero pollution. It is a process of electrolysis powered by renewable energies such as wind or solar. Electrolysis is a chemical reaction that splits water into hydrogen and oxygen while emitting zero carbon dioxide in the process. This requires energy since it comes from surplus renewable energy sources, as mentioned above (solar or wind).

Green hydrogen promises to offer high efficiency at a low cost, but it requires a long startup time. It is an expensive process, but its cost may reduce if it becomes more common. Also, hydrogen is abundant but must be produced to get it in its pure form. 

Preparing for the Hydrogen Economy

Hydrogen is not yet commercially and widely available; and technological advancements are required to deploy it on a large scale. However, in 2021, Saudi Arabia’s Minister of Energy, Abdulaziz bin Salman al-Saud, announced a plan to become the world’s largest hydrogen producer.

Aramco is also taking steps to reach operational net-zero emissions by 2050. The company recently published its sustainability report which pledges to reduce its upstream carbon intensity by at least 15 percent by 2035 and use technology to produce low-carbon hydrogen.

Similarly, it has planned to explore and collaborate with Indonesia’s PT Pertamina (Persero). These companies signed an MoU that commits them to devise a solution to the global energy crisis and to achieving net-zero greenhouse gas emissions by 2050 at the B20 Summit in Bali. They will develop new ammonia and hydrogen pathways for an affordable, equitable, and sustainable transition for everyone. The MoU aims to understand the possibilities of developing the ammonia and hydrogen value chains. It will explore business options and be studied for the next two years; according to the results, it may develop further.

NEOM aims to achieve a US$5 billion world-scale green hydrogen-based ammonia production facility that will operate by 2025. It has also installed a Hydrogen and Innovation Development Centre developed by ENOWA, the energy, water, and hydrogen supplementary of NEOM.

According to the World Energy Summit, the demand for green hydrogen is set to increase in the coming years because it is a flexible and stable source of energy. As per recently published reports, it is set to double from 100 mega tonnes to 223 mega tonnes in 2050. The costs are around US$600 billion in investment.

Siemens Energy, the Dubai Electricity and Water Authority (DEWA), and Expo 2020 Dubai decided to establish the first solar-powered green hydrogen plant at the Mohammed bin Rashid Al Maktoum Solar Park in Dubai. They stated that 46 green hydrogen projects worth US$92 billion are possible in the MENA region. Further, it will roughly plan 50+ projects that have US$150 billion in investments. The UAE also declared at the COP26, 2021 summit to establish itself as the leader in hydrogen and will be developing a "Hydrogen Roadmap."

The King Abdullah Petroleum Studies and Research Centre (KAPSARC) is an advisory committee that will offer organisational solutions in the Saudi energy sector by focusing on energy economics as well as sustainability. It hosted a virtual roundtable partnering with the Columbia Centre on Global Energy Policy to accelerate hydrogen, meet demands, and increase international trade.

Moreover, many green and blue projects are in the beginning stages, and the market for them is also small. This would require regulation and support across all regions and sectors.

Hydrogen: A Path to a Sustainable Future

To reap the benefits of hydrogen and build a hydrogen-ready infrastructure, key concerns are vital. To deploy green hydrogen at a large scale, leaders need to make it available at a low cost and increase its efficiency across production, storage, and transportation stages. Industries also need to adopt green hydrogen and create demand for it across all sectors. This demand will give rise to investment.

Another concern is its environmental impact. Since it is a small molecule, it can pass through materials and create leakage issues. It can also cause damage to health if it has a high combustion reaction, releasing nitrogen oxide, causing asthma, and respiratory infections. To address them, strict health and safety standards need to be in place. Leaders’ and experts’ decisions will help understand how hydrogen is stored safely and efficiently.

Governments require regulations to ensure their environmental impact, market readiness, and safety. Thus, investing in research methods that are safe and economically beneficial for all with appropriate policies and collaborating with partners across the value chain will determine whether hydrogen is here to stay.