Sustainability and Saudi Inc.

It is with this understanding that it has decided to become a frontrunner in the production and distribution of green hydrogen. The demand will continue to grow. In the Net Zero Emissions by 2050 Scenario, it is predicted that total hydrogen demand from industry is expected to expand 44% by 2030, with low-carbon hydrogen becoming increasingly important (amounting to 21 Mt in 2030) which means that the perennial need for a broad mix of energy solutions must be in place.

At a micro-level Saudi needs an inclusive approach founded and focused on citizenship, transparency & accountability, safety, merit, and ethics to enable more sustainable energy practices and to stay at the top of the sustainability chain. David Llanos from Stanford University affirms in his paper on Hydrogen Economy, that when it comes to hydrogen, the need for systems integration is inevitable.

Building the hydrogen economy trajectory requires the Kingdom to look at environmentally de-risking business portfolios to maintain competitiveness and differentiation under hydrogen-empowered scenarios. This would mean that the country would be obligated to develop diverse, sustainable, and globally competitive energy sectors in Saudi Arabia and beyond while adding robustness and efficiency to goal-setting.

Even under the most aggressive climate models, it has been noted that the demand for hydrogen will only continue to play an important role in the energy mix for years to come. The energy transition is picking up at a different pace across different markets. The need for green hydrogen will snowball in growing markets. In the foreseeable future, hydrogen is slated to replace its non-renewable counterparts oil and gas. “The oil majors have been building multibillion-dollar projects since forever. This green hydrogen, green ammonia stuff will be the new energy industry,” said Julien Rolland, head of power and renewables at commodities trader Trafigura Group Pte Ltd in a conversation with Mint. But there is also, another idea, Will the Middle East 

transition from being world leaders in Oil and Gas to being World Leaders in Hydrogen? Will the monopoly still stay or are we about to witness a change in the energy race?

The Economic Times stated as early as this June, “Hydrogen and its derivatives could cover up to 12% of global energy demand and account for 10% of reductions in carbon emissions by 2050, according to the International Renewable Energy Agency (IRENA), although other estimates are lower.”

If these estimates are right, then Saudi Arabia has picked the right destination and direction to get through in the world of sustainable energy. The 90-year young public enterprise Aramco has consistently demonstrated its ability previously to produce hydrocarbons at low cost and with one of the lowest carbon intensity footprints. When Saudi Arabia adopted the circular carbon economy approach, that was later endorsed by the G20, it brought the world a worthy alternative to a linear economy that was earlier based fundamentally on “make, take, and throw away” to an economy that circled around reducing waste and reusing and recycling finite materials. Now it wants to replicate this success with the initiation and propagation of Green Hydrogen.

As early as October last year, Aramco signed an initial agreement to build a new green hydrogen and ammonia plant with Hong Kong-based green hydrogen developer InterContinental Energy in order to promote a more sustainable public-private partnership. It is interesting to note that by the time these agreements were inked Intercontinental Energy was already developing two huge hydrogen and ammonia plants in faraway Australia and next-door Oman.

In the latest report, Aramco emphasized its strategic importance not just to the Kingdom but the world at large, stating,“This positions us to have a critical role to play in meeting the need for affordable energy whilst responding to the climate challenge. Our vision is to be the world’s pre-eminent integrated energy and chemicals company, operating in a safe, sustainable, and reliable manner. The global reach and diversification of Aramco uniquely advantage us to meet the world’s energy needs…” This is indeed true. Should one look at the kind of investments and the upcoming projects, one has a clear view that for a more successful energy transition there is a need for diversification and that by extension requires collaboration with a wide range of business and technology partners.

IRENA’s Director-General Francesco La Camera is reported to have said "Green hydrogen can be a game-changer for the energy transition," noting the fuel's particular advantage in hard-to-electrify sectors such as transportation and heavy industry.

The techno-empowerment in Saudi means that creating a legacy of projects that improve both natural habitats and shared resources, while incorporating circular economy principles across business activities is of the essence. To grow social value the Hydrogen supply chain efficiency program has an added burden, to increase employment opportunities. According to Jane Nakano, Senior Fellow, Energy Security, and Climate Change Program “hydrogen production speaks to the kingdom’s existing expertise and supply chain capacities, such as its experience in industrial-scale production of hydrogen and chemicals, as well as the capture and storage of CO2. Its expertise and capacities can help underpin the Saudi vision for commercially viable production and export of hydrogen, which is based on hydrocarbon resources with the carbon capture, utilization, and storage (CCUS) of emissions (“blue hydrogen”).”

In short, should Saudi become the hub for industrial-scale production, there will be more employment opportunities.

As we discuss Aramco’s ideas for a Hydrogen Economy, a parallel humongous project is also being brought to life in the guise of NEOM, a $500 billion city perched on the edge of the Saudi Arabian desert beside the Red Sea. The city which is targeting a life beyond conventional transportation and infrastructure complete with flying taxis and robotic domestic help – is planned with a commitment to use green hydrogen for electrification. This carbon-free fuel made from water using renewably produced electricity to split hydrogen molecules from oxygen molecules is slated to pick up as the fuel of the Now instead of the Future.

US Air Products & Chemicals, announced not too long ago that it has invested in building a green hydrogen plant in Saudi Arabia for the past four years. The plant is powered by four gigawatts of electricity from wind and solar projects that sprawl across the desert. Should these claims be right this is modern Arabia and the Modern World’s largest green hydrogen project – and more Saudi plants are on the drawing board.

Earlier this week, Group company Longitude Engineering was appointed to provide engineering support to NEOM Green Hydrogen project in Saudi Arabia for export jetty construction.

Longitude Engineering Managing Director David Bignold is reported to have said,

"This project is at the cutting edge of the energy transition. It will harness the carbon-free energy generated from abundant local wind and solar resources to generate hydrogen via electrolysis, which will then be transformed into ammonia for global distribution."

On the side, you also have SPG Steiner GmbH with its local partners MAN Enterprise and Al Majal Al-Arabi Group sign a contract to design and build the worldwide largest Ammonia Tanks for Air Products in NEOM, Kingdom of Saudi Arabia. Philippe Steiner and Oliver Steiner, CEOs of SPG Steiner in their joint statement have said: “The development and execution of an innovative megaproject such as the NEOM Green Hydrogen Project are one of many steps required to drive a successful energy transition. This project is a frontrunner in the green hydrogen economy. We are proud to contribute to this development by designing and building the infrastructure of tomorrow for the safe storage of natural gas, hydrogen, and its derivatives.

In NEOM too, Aramco has a significant role to play although in a slightly different way because it is gearing up to reach 12 gigawatts of solar and wind capacity by 2035, and produce 11 million tonnes of blue ammonia by 2030 as part of its net-zero drive. The Saudi state giant would require 1.93 million tonnes of blue hydrogen, produced from natural gas linked to carbon capture and storage (CCS), to reach the targets, according to its first sustainability report.

The Saudis aren’t alone in seeing green hydrogen as the next big thing in energy. While the fuel is still trudging along in the United States, there is a visible green hydrogen rush underway from India to China and far off Chile too. Researchers can only hope that this increase in the use of Hydrogen will finally close the chapter of fossil fuels sooner rather than later.

Commenting on the progress of the Saudi projects, Peter Terium, the head of energy and water for the new region said, “The kingdom is on track to sell carbon-free hydrogen from a $5 billion project in Neom by 2026. Engineers have finished flattening the site in northwestern Saudi Arabia and U.S.-based Air Products & Chemicals Inc. will soon begin building the facility.”