“Hydrogen: The Future is Now in the Gulf Region’s Energy Transition”

16 August 2023  Monica Cai   monica.cai@crm.szc-group.com

“Saudi Arabia plans more hydrogen projects”
Source: MEED

After decades of riding the waves of oil and gas prosperity, Gulf countries are now setting their sights on “green” hydrogen, aiming to transition away from oil-based economies and make significant strides in addressing the climate crisis. This marks a monumental journey towards “diversification and decarbonization under the umbrella of new energy.”

Nations such as Saudi Arabia, the United Arab Emirates (UAE), and Oman are swiftly formulating their own renewable energy development goals. Renewable energy is rapidly becoming a cornerstone of the future energy landscape, enabling low-carbon progress on a global scale.

With abundant sunlight and vast desert landscapes at their disposal, Gulf countries possess crucial conditions for the rapid development of new energy sources. The proliferation of renewable energy technologies is not only catering to local low-carbon transitions but also serving as a pivotal export commodity, assuming a vital role in regional and global energy dynamics.

Simultaneously, the spotlight is on hydrogen, particularly clean hydrogen like green and blue hydrogen, which is garnering widespread global attention. Differing from oil resources, the distribution of green hydrogen, generated using wind or solar power, is relatively concentrated, giving nations with relative advantages a strategic edge.

***Leading with Projects***

Undoubtedly, the philosophy of “starting early solves 80% of anxieties” is propelling hydrogen development in the Gulf Arab countries. The UAE, as a trailblazer, has been at the forefront of hydrogen development in the region. Since the establishment of Masdar in 2006, Abu Dhabi has entrusted the company with the responsibility of advancing hydrogen technology research. Masdar has set ambitious goals, targeting 100 GW of global renewable energy installations and an annual production capacity of 1 million tons of green hydrogen by 2030. Collaborations with Germany, France, Japan, and China have paved the way for innovative hydrogen ventures, with the UAE’s first green hydrogen demonstration project already operational and larger initiatives in the pipeline.

Similarly, Saudi Arabia is taking strides in the hydrogen domain through flagship projects. The NEOM-based project, developed in partnership with ACWA Power, NEOM, and Air Products, is set to yield significant volumes of green ammonia. The region’s rich renewable energy potential complements these ventures. The UAE’s hydrogen partnership with countries like Germany, France, and the USA demonstrates the commitment to a diversified energy future.

“Saudi Arabia, the United Arab Emirates and Oman have announced hydrogen projects”
*Source: Apricum hydrogen project database

***Strategic Endeavors***

The UAE has recently approved its National Hydrogen Strategy, becoming the first nation in the Middle East to formulate such a comprehensive plan. The strategy envisions the UAE as a global leader in low-carbon hydrogen production and export by 2030. With a resolute vision to elevate its clean hydrogen production to 25% of the global market share by 2030, the UAE government is laying the foundation for a sustainable energy future.

Oman is setting a bold trajectory towards becoming a powerhouse in green hydrogen production. With a visionary approach, the nation aims to achieve an annual output of 1 million tonnes of green hydrogen by 2030, representing a major leap in its commitment to sustainable energy. Looking ahead, Oman’s ambitions continue to soar, with targets of 3.75 million tonnes annually by 2040 and a staggering 8.5 million tonnes per year by 2050. This strategic roadmap underscores Oman’s dedication to a future that is not only low-carbon but also pioneering in the realm of green hydrogen, contributing significantly to the global renewable energy landscape.

In contrast, Qatar is still charting the course for its hydrogen ventures, with options encompassing blue and green hydrogen. As of now, a national strategy in this realm has yet to emerge.
Meanwhile, Kuwait has commissioned the Kuwait Foundation for the Advancement of Sciences (KFAS) to delve into the prospects and costs of hydrogen development. In Kuwait, the cost of producing hydrogen from megawatt-scale renewable sources currently exceeds $3 per kilogram. This dynamic landscape underscores the diverse approaches the Gulf nations are taking towards the hydrogen horizon.

“Kuwait Hydrogen White Paper – Executive Summary”
*Source: KFAS (Kuwait Foundation for the Advancement of Sciences)

***Challenges on the Horizon***

While the Gulf region’s advantages in hydrogen development are evident, several common challenges need addressing. Costs remain a central concern; although the cost of green hydrogen production is decreasing, it still competes with cheaper traditional energy sources. Issues related to storage and transportation, as well as the need for international cooperation, are critical components of a sustainable hydrogen ecosystem.

***The Road Ahead***

The Gulf region’s hydrogen development showcases a promising future. Abundant resources, strategic policies, and the partnerships that are flourishing between Gulf and international players are driving hydrogen forward. Challenges are expected, but the dynamic collaboration unfolding in the region is a testament to the market’s potential.

***Reference***
1. Saudi Arabia plans more hydrogen projects: https://www.meed.com/saudi-arabia-plans-more-hydrogen-projects
2. Masdar sets 100 GW renewable energy target for 2030: https://www.energyvoice.com/renewables-energy-transition/380412/masdar-renewable-energy-hydrogen/
3. Gulf Cooperation Council: the low-carbon hydrogen powerhouse of the future: https://apricum-group.com/the-gcc-the-low-carbon-hydrogen-powerhouse-of-the-future/?cn-reloaded=1#gcch23
4. NEOM Green Hydrogen Company: https://www.acwapower.com/news/neom-green-hydrogen-company-completes-financial-close-at-a-total-investment-value-of-usd-84-billion-in-the-worlds-largest-carbon-free-green-hydrogen-plant/#:~:text=An%20equal%20joint%20venture%20between%20ACWA%20Power%2C%20Air,solution%20for%20the%20transportation%20and%20industrial%20sectors%20globally.
5. Onan | Green Hydrogen Vision: https://gh2.org/countries/oman
6. UAE Net Zero 2050: https://u.ae/en/information-and-services/environment-and-energy/climate-change/theuaesresponsetoclimatechange/uae-net-zero-2050#:~:text=The%20UAE%E2%80%99s%20Hydrogen%20Leadership%20Roadmap%20is%20a%20comprehensive,the%20country%20as%20a%20competitive%20exporter%20of%20hydrogen.
7. UAE targets 25% of global hydrogen fuel market by 2030: https://www.reuters.com/business/cop/uae-targets-25-global-hydrogen-fuel-market-by-2030-2021-11-04/
8. Kuwait Hydrogen White Paper – Executive Summary: https://www.tresor.economie.gouv.fr/Articles/04a6e749-3ebf-4024-b663-e8f0e6c5be60/files/1eefadd0-39bc-41e0-946b-500c4b04cf4a