Green Hydrogen Has The Potential To Displace Fossil Fuels As A Major Energy Source For Transportation, Electricity, And Heating In The Middle East, Which Now Accounts For Approximately Three-quarters Of Global Greenhouse Gas Emissions.

The 1.2 GW Noor Abu Dhabi solar facility is the world's largest single-site solar plant, and the 2 GW Al Dhafra solar plant will go live in the emirate this year. As of the date of the agreement on its funding in December 2020, Dhafra's solar price was the lowest in the world at $0.0132/kWh. The Mohammed bin Rashid Al Maktoum Solar Park in Dubai has a 1.6 GW capacity now and can expand to 5 GW.

Some of this capability will be used to produce green hydrogen, according to Gulf policymakers.

Strategy& said that in order for the Gulf Cooperation Council (GCC) countries to diversify their economies, they should take advantage of their competitive advantage of low-cost renewable energy resources. This potential can be attributed to two key aspects of the region's energy supply system: (1) an abundance of high-yield renewable resources, and (2) a financially viable model for private investment.

Hydrogen is now created using a chemical process that uses gas or coal, which generates significant volumes of carbon dioxide. Only about two percent of the world's hydrogen is "green," meaning it was produced using renewable electricity to separate water into its oxygen and hydrogen components in electrolysers.

Hydrogen is versatile since it may be used as a fuel source (with water as the only byproduct), stored to use later, transformed into other compounds, and used to store excess energy from renewable electricity plants.

Significant Bets on Hydrogen

Murray Douglas, Wood Mackenzie's Head of Hydrogen Research, believes the Middle East may become a key player in the green hydrogen business. The cost of electricity for a green hydrogen project can be significantly higher than expected.

In other words, as Douglas put it, "the lower the cost of electricity, the more competitive the project."

The Saudi Arabian government has committed $5 billion to the construction of the world's largest green hydrogen plant, which would use solar and wind energy to generate 650 tonnes of hydrogen each day. In 2026, production will begin.

From less than 100 Mt in 2022, Wood Mackenzie predicts demand for low-carbon hydrogen, which includes blue hydrogen that captures and stores carbon created when manufacturing the gas via conventional techniques, will increase to 223 Mt by 2050. The consultants estimate that the falling cost of green hydrogen production will open a $600 billion market for investors.

It appears that governments in the Gulf region share this view. The United Arab Emirates' energy minister stated in January that the government plans to produce hydrogen using electrolysis and natural gas in order to grab around 25% of the worldwide hydrogen market.

The time range will determine whether or not it is possible, Douglas said. The great draw of hydrogen is that you may enhance your diversity of supply due to potentially lower entry hurdles. This is especially appealing to policymakers in Europe and East Asia, where the hydrogen economy is still in its infancy.

When it comes to gas, the European Union no longer wants to rely so heavily on a single source, Russia, from which it previously imported 43 percent. The EU prefers to purchase from a wide variety of vendors, so the UAE's plans to corner the world's hydrogen market could be met with resistance.

Together with Emirates Steel, the Abu Dhabi National Energy Company (TAQA) plans to develop green hydrogen for use in the production of green steel. A green ammonia plant on an industrial scale is in the "advanced stage" of development by TAQA and Abu Dhabi Ports Co, both of which are majority controlled by the government of the emirate. The plant will use solar energy to create hydrogen from water. Green hydrogen will also be produced at Dubai's solar park.

The Sultanate of Oman and BP announced a deal in January to launch renewable hydrogen initiatives by the year 2030. The oil giant will analyse wind and solar data covering 8,000 square kilometres of land as part of the partnership.

On June 30th, Egypt announced a hydrogen project capacity of around 1.5 million tonnes per year, according to Wood Mackenzie.

As Douglas pointed out, "Egypt has the resources in terms of solar and wind potential," but the country is confronting severe economic and fiscal issues that it has historically found very hard to overcome.

A 'rapid action' is required for the Middle East's ambitious green hydrogen goals

According to 400 Middle Eastern energy industry executives, the area is poised to become a global leader in the production and distribution of green hydrogen. But the region’s own optimism needs to be backed by real action, notes a new analysis.

The goal of the region is to become a significant provider of sustainable energy to global markets, and the analysis by Siemens Energy and strategic consultancy Roland Berger examines the progress being made toward this goal.

It is not unexpected that the region prioritises green hydrogen, or the generation of hydrogen from sustainable sources of energy (or from low-carbon power). With the International Renewable Energy Agency projecting that hydrogen and its derivatives will be able to account for 12% of world energy consumption by 2050, green hydrogen is widely regarded as a cornerstone of the energy transition.

There was not a significant difference in opinion between the general public and the 400 energy professionals surveyed by Siemens Energy and Roland Berger. Karim Amin, a member of Siemens Energy's Executive Board, sums up the importance of green hydrogen for the company's ongoing energy shift.

The region has all the makings of a big exporter, thanks to its access to cheap and plentiful renewable energy sources, an established export infrastructure, and ample financial backing.

Europe is regarded as the top and logistically most realistic export opportunity. Demand for hydrogen in Europe is predicted to expand from its present level of 10 million tonnes a year to 20 million tonnes by 2030, and 95 million tonnes by 2050. Close to half of this need will be covered by importing.

According to Roland Berger Partner Pierre Samaties, "Exporting green hydrogen to Europe presents a big economic promise and the opportunity to earn geo-political relevance in the global decarbonisation effort."

The UAE and Saudi Arabia have been quick to notice the opportunity, and have created grandiose plans. It is the stated goal of the United Arab Emirates to corner 25% of the worldwide hydrogen market, and the Kingdom of Saudi Arabia's ambition to become the largest provider in the world. In addition to these countries, Oman and Egypt are also making significant strides forward in the region.

46 green hydrogen projects are now active in the MENA region. More than 40 investments totaling more than $20 billion have been announced for the period until 2030, along with several other smaller projects.

"Hydrogen developers like NEOM, ACWA Power, Masdar, and OQ are actively driving the development of green hydrogen." According to Samaties, the public sector is what makes opportunities like hydrogen valleys, open source software, well-defined regulations, and a skilled workforce possible for these companies.

On the charge

The paper underlines the necessity of increasing production capacity, however, to fulfil demand and the region's aspirations. As a result, the writers highlight the need for change in the realms of legislation, money, and technical advancement.

Having a consistent policy framework is crucial to the success of the energy transition. Institutions of commerce and finance require this reliable foundation on which to build their long-term, frequently irrevocable investments. Building the essential infrastructure for decarbonising society also requires finance that is front-loaded during the development stage of projects,” notes the research.

Meanwhile, technology is needed to streamline and organise (international) energy flows across networks, prepare the future energy grid for a greater share of intermittent renewable energies, and increase the efficiency with which hydrogen is produced (for example, to ensure that hydrogen can also decarbonize hard-to-abate sectors).

According to Saudi Aramco's Chief Digital Officer Nabil Alnuaim stated,"Transitioning to hydrogen demands tremendous investment to create technologies, implement projects, and establish marketplaces that collectively contribute to a cleaner energy future." It is imperative that politicians back this concerted effort by all parties involved.

Siemens Energy and Roland Berger argue that the cost of delay is increasing daily and that urgent action is required to prevent further damage. "Everyone gets [the burning platform for change] and has the same vision, but we have an execution problem, not an identification one," explains Christian Bruch, President and CEO of Siemens Energy.

H.E. Suhail Al Mazrouei, Minister of Energy and Infrastructure of the United Arab Emirates, agrees with the report's conclusion, saying, "We need to act, and we need to act swiftly."