Gulf eyes becoming clean hydrogen hub

Gulf eyes becoming clean hydrogen hub

16 Feb 2021

With Abu Dhabi and Saudi Arabia both announcing plans to export green and blue hydrogen, the GCC is emerging as a potential global clean hydrogen hub

With Abu Dhabi and Saudi Arabia both announcing plans to export green and blue hydrogen, the GCC is emerging as a potential global clean hydrogen hub.

On 17 January, Mubadala Investment Company, Abu Dhabi National Oil Company (Adnoc) and ADQ signed an agreement to establish the Abu Dhabi Hydrogen Alliance. “The aim is to position Abu Dhabi as a trusted leader of low carbon hydrogen in emerging international markets and build the green hydrogen economy in the UAE,” says Dr Faye Al-Hersh, part of Masdar’s Corporate Strategy Team.

“The Alliance aims to accelerate the UAE’s adoption and use of hydrogen in major opportunity sectors, which are mobility, industry and utilities, and position Abu Dhabi as a reliable and secure supply of hydrogen, and its carriers, globally, as demand grows and picks up.”

 

Unique opportunity

 

Al-Hersh says that hydrogen will play a key part in the global push to decarbonise and meet ambitious net-zero targets.

“Clean hydrogen, and in particular green hydrogen, is expected to play a critical role because it can decarbonise sectors that are difficult to meaningfully reduce CO2 emissions,” she explains. “The UAE is uniquely positioned to produce that decarbonised hydrogen because of the low cost of solar resources that we have here and in the region as a whole, as well as abundant space and those two are very important factors.”

According to Al-Hersh, the UAE’s existing infrastructure and stable political environment makes it an ideal place to become a regional and international hub for hydrogen production. Its geographic location provides it with a unique opportunity to serve trade routes to the East and West.

Also in January, Mubadala’s clean energy subsidiary Masdar joined forces with the Abu Dhabi Department of Energy, Etihad Airways, Khalifa University, Siemens Energy, Lufthansa group and Marubeni Corporation to sign a memorandum of understanding (MoU) for cooperation in the green hydrogen sector.

The firms will work together to explore the development of green hydrogen, sustainable fuels and e-kerosene production for transport, shipping and aviation. Masdar, Siemens Energy and Marubeni will develop a demonstrator plant at Masdar City.

Abu Dhabi’s announcements followed shortly after Saudi Arabia announced in December that it would partner with European companies to develop blue and green hydrogen.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told the Future Investment Initiative (FII) that the Kingdom was working with a number of countries in the field to support the kingdom’s goal of becoming “the next Germany” in renewables.

“We saw a significant shift in mindsets and priorities in the Mena [Middle East and North Africa] region since last year, which can be seen as the year when hydrogen became big and unstoppable,” says Cornelius Matthes, Chief Executive of Dii Desert Energy. “These GCC announcements are a testament to this, with Saudi Arabia stating it wishes to become the world’s largest hydrogen exporter, which is a bold statement. Dubai also deployed the first green hydrogen pilot in the whole region.”

 

Economic diversification

 

Matthes says there is many synergies between hydrogen and oil and gas. With oil and gas exploration and production still generating the lion’s share of government revenues in the GCC, hydrogen can play a key part in helping countries diversify their economies and energy sectors.

“With the importance of oil and gas to decline over the next few years, the imperative is to look at future opportunities,” he added. “Purely from an economic point of view, the major business will be green hydrogen and, looking at the region, there are huge opportunities for the oil and gas sector to repurpose existing capabilities, capacities, jobs, infrastructure, like pipelines, and others in storage, synergies for power fuels, e-kerosene, e-diesel, e-petrol, and methanol.”

Hydrogen will provide an opportunity to compensate for declines in hydrocarbon revenues, create new jobs and allow the region to become a global powerhouse in green electrons and green molecules.

“The export revenue will compensate for a shortfall in oil revenue and there’s a lot of synergies for energy transition,” Matthes explains. “There will be significant benefits for the energy system: smoothing out the diversification of the energy system, making it safer, huge environmental benefits and energy security, as well as electrifying all kinds of mobility and transport, and even decarbonising industries.”

 

Competitive advantage

 

The combination of some of the lowest cost hydrocarbons and renewable energy in the world gives the GCC a competitive advantage when it comes to producing green and blue hydrogen and derivatives, according to Frank Wouters, vice president of business development for clean hydrogen at Worley.

“The intellectual and physical infrastructure, combined with a favourable geographic location between major markets in Europe and Asia provide for a winning proposition.”

Wouters says the launch of hydrogen strategies in major countries and regions across the world is laying the foundation for a new energy industry. This year, he expects to see those ambitions turned into concrete proposals and projects.

“Although renewable energy is available everywhere, and green hydrogen can be produced everywhere, some regions will have advantages over others. Where there is more land available and the renewable resources are better, those regions will be able to produce cheaper hydrogen,” he explains.

“This imbalance will lead to growing trade volumes of clean hydrogen and other clean fuels in the future. The GCC is predestined to become a major clean fuels powerhouse, building on decades of trade relationships all over the world.”

Wouters says there is numerous ways in which countries and energy companies in the region can utilise clean hydrogen as it can be transported as a gas, in liquid form or can be converted to ammonia, jet fuel or methanol. “All have different conversion steps and requirements in terms of logistics, and they need to match what a global customer base requires,” Wouters said.

 “Since decarbonisation is a major driver for the transition of energy markets, a global system to assess and certify the lifecycle carbon content of new fuels is required. And as green fuels are currently more expensive than traditional fuels, mechanisms to close the cost gap are required until they are competitive.”

 

Global supplier

 

The regions’s rise to become the world’s dominant hydrocarbons producer has enabled it to develop the physical and intellectual capacity to tap into the growing momentum for carbon-free energy and produce clean hydrogen at scale.

“Rather than leaving the space to new entrants, they are well positioned to grab this new opportunity and contribute to the urgent need for a future without carbon pollution,” Wouters adds.

With European countries expected to only have the capacity to meet half of their future energy demand from clean sources, the Middle East has a unique chance to prosper from its natural resources and cheap renewables to drive down the cost of clean hydrogen and establish itself as a global hydrogen hub.

Al-Hersh believes this may happen sooner than many had predicted.

“Ten years ago, no one would have imagined that renewable electricity, like solar and wind, would now be considered one of the cheapest forms of electricity,” she says. “There is now the same drivers for hydrogen. This is definitely going to happen at a faster pace than we think - it's exciting and I hope to see it happen very soon”.

Written by Caline Malek

 

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