COP27: Egypt signs hydrogen framework agreements, Saudis aiming high

Egypt announced its intention to establish itself as a center for hydrogen production and capture 5% of the world market by 2040 on Tuesday by signing eight framework agreements to advance green hydrogen and ammonia projects.

In order to separate water from oxygen, electrolyzers driven by renewable energy are used to produce so-called green or clean hydrogen. Although it has mostly been used for experimental projects up to now, it is thought to be a future power source that could reduce emissions.

According to business sources, experts, and academics, there is a long number of obstacles to its growth, including high costs and energy inputs, safety worries, and the need to spend extensively on infrastructure to transport and store the fuel.

At the moment, refineries and fertilizers employ hydrogen mostly generated from natural gas, and the majority of these processes produce significant volumes of carbon dioxide.

The agreements made on Tuesday at the COP27 climate meeting are centered on the Red Sea port of Ain Sokhna and the Suez Canal Economic Zone and included firms including AMEA Power, Alfanar, TotalEnergies, Globeleq, EDF, Fortescue Future Industries (FFI), ReNew, and Scatec.

At the Sharm el-Sheikh negotiations, Egypt unveiled the broad contours of a low-carbon hydrogen plan, supported by the Egyptian Sovereign Fund and the European Bank for Reconstruction and Development (EBRD).

According to Egypt’s electricity minister, Mohamed Shaker, “the plan has a goal that Egypt would be one of the global leaders in the low carbon hydrogen economy,” making use of its abundant natural gas reserves, favorable geographic location, and renewable energy sources.

According to the draft strategy, Egypt’s primary sources of future hydrogen demand were fertilizer products, ammonia, and methanol for use as marine fuels or energy exports, jet fuel, and road or rail transportation.

The lack of fresh water, the distance between the finest locations for producing green hydrogen, and the requirement to export it through seaports were all mentioned as obstacles to the growth of a hydrogen economy.

The framework agreements are an expansion of other memoranda of understanding Egypt signed in recent months, including those for an $8 billion green hydrogen plant in the Suez Canal Economic Zone and a $3.5 billion project by Saudi Arabia’s Alfanar to generate green ammonia.

Noam Boussidan, a World Economic Forum specialist on energy transition, said hydrogen’s price needs to drop and it needed to be employed in the proper industries during a separate event at the COP27 conference.

He described a typical misconception as “the hydrogen is going to save us all, that hydrogen is going to save the planet kind of thinking.”

Saudis aiming high

Zeid al-Ghareeb, the head of the hydrogen for the energy ministry, stated at the UN Climate Change Conference in Egypt that Saudi Arabia has set its sights on becoming a global supplier of renewable and low-carbon hydrogen, configuring production standards to meet market demands in both Europe and the Asia-Pacific region.

According to al-Ghareeb, hydrogen would play a significant role in the future energy mix. Saudi Arabia plans to manufacture 4 million mt/year of “clean” hydrogen by the year 2030.

As the demand increased, he warned that this quantity might be exceeded.

The nation preferred an emphasis on carbon intensity over making a distinction between the “green” and “blue” hydrogen (both of which it is creating).

Al-Ghareeb replied, “We shouldn’t concentrate on the source of energy. We ought to be agnostic.

Instead, in accordance with net-zero goals to lower greenhouse gas production, he advised a focus on emissions.

Construction on Saudi Arabia’s Neom project, which will create 650 mt/d of renewable hydrogen starting in 2026, has already begun, according to Serhan.

Four GW of wind and solar energy will be used to support the Neom plant.

In order to manufacture 420 mt/d of hydrogen, the business is also building a “world-scale” hydrogen factory in Jubail that will reform natural gas with carbon capture technology.

The adoption of clean hydrogen required regulation. By 2030, Aramco hopes to export 11 million metric tons (mt) per year of low-carbon hydrogen. He stated the existing markets for fertilizer production and refining would be the first-use cases.

What buyers in those markets wanted would dictate Saudi standards of production and carbon intensity.

Aggregating demand centers around clusters would be crucial in the medium term because ammonia is a ready end-market and route of transportation for hydrogen.

Saudi Arabia was conducting experimental initiatives to gather information on hydrogen mobility, including testing hydrogen buses at Mecca to accommodate the 2 to 3 million pilgrims who travel there annually.

In the medium run, pipelines would be the least expensive supply option, provided that clusters of demand existed to support the infrastructure expenditure.

Longer future, the main end market for green products like steel made with renewable hydrogen might emerge, resolving the issue of hydrogen conversion losses and prices.