In recent years, hydrogen has gained popularity as a clean fuel with the potential to decarbonize difficult-to-decarbonize sectors including transportation (shipping and aircraft) and industrial (e.g., steel and chemicals).
Such success would go a long way toward meeting the ambitious worldwide target of keeping global warming below 1.5 degrees Celsius (above pre-industrial levels) by the end of the century, as set out in the 2015 Paris Agreement. According to projections from the International Energy Agency, the International Renewable Energy Agency, and the Hydrogen Council, hydrogen could meet up to 22% of global energy demand and 25% of total oil demand by 2050, another sign that fossil fuel assets could be devalued by mid-century, reducing revenue for fossil fuel exporters like the Gulf Arab states. Oil- and gas-producing Gulf Arab states recognize that joining global forces to accelerate the development and deployment of clean fuels, such as hydrogen, is a way to hedge against some global energy transition risks, despite not being major contributors to global greenhouse gas emissions except as exporters.
The United Arab Emirates, Oman, and Saudi Arabia are pioneers in the field of hydrogen
In the Gulf Arab states, the production of gray hydrogen, which is obtained from natural gas without carbon capture and storage, is not new. Gray hydrogen is produced from hydrocarbons and utilized as a feedstock in refineries, steel mills, and petrochemical plants to make ammonia, fertilizer, and methanol, as well as for oil refining and steel production. The Gulf nations have just lately begun to generate clean hydrogen, both green (made by electrolysis with power obtained from renewables) and blue (produced by splitting water using electrolysis with electricity derived from renewables) (produced from gas with carbon capture and storage). Given the availability and cheap costs of oil and gas resources, as well as renewables, the Gulf Arab states are ideally positioned to manufacture clean hydrogen. The Gulf Arab governments differ in their pace and magnitude of hydrogen development, just as they do with other renewables. The United Arab Emirates, Oman, and Saudi Arabia have been the most aggressive in their pursuit of clean hydrogen development and deployment. While Bahrain, Kuwait, and Qatar have expressed interest in hydrogen development, they have yet to catch up with their neighbors.
Emirates of the United Arab Emirates
Through its “Green Hydrogen” initiative, a cooperation between Siemens Energy and the Dubai Electricity and Water Authority, the UAE was the first country in the area to manufacture clean hydrogen using solar power. The Mohammed bin Rashid Al Maktoum Solar Park’s testing facility was created to highlight the UAE’s hydrogen potential during EXPO 2020 Dubai. Masdar, Abu Dhabi’s renewable energy firm, is spearheading research for a new electrolysis plant to create hydrogen for the transportation industry, in collaboration with Siemens Energy, the Abu Dhabi Department of Energy, Etihad Airways, Lufthansa, Marubeni Corporation, and Khalifa University. The group wants to test green hydrogen for road transportation first, then build a kerosene synthesis facility to turn the bulk of the hydrogen into environmentally friendly aviation fuel. The program’s second phase will look at manufacturing hydrogen for use as a marine fuel. Mubadala Investment Company and Snam also inked a memorandum of agreement in March 2021 to engage on joint hydrogen investment and development activities. Furthermore, at the TA’ZIZ Industrial Chemicals Zone, the Abu Dhabi National Oil Company is establishing a large-scale low-carbon ammonia manufacturing facility and is looking into commercializing the product.
Since 2020, Oman has launched a number of large-scale hydrogen-related projects, using significant solar and wind resources as well as the newly formed Duqm port and free economic zone as an exporting center. The first project to build a large-scale electrolysis plant in Oman was announced in 2020, in the Special Economic Zone of Duqm. The “Hyport Duqm” green hydrogen project is a collaboration between Concessions (DEME) of Belgium and OQ Alternative Energy, an Omani state-owned oil and gas business, in collaboration with the Public Authority for Special Economic Zones and Free Zones. The first phase is planned to be finished in 2026, and the plant’s total production capacity is estimated to be 1 million metric tons of green ammonia per year once completed.
The Oman Company for the Development of the Special Economic Zone at Duqm, or Tatweer, and ACME Group signed a memorandum of agreement in March 2021 to build a large-scale plant in the Special Economic Zone at Duqm to manufacture green hydrogen and green ammonia. The factory will manufacture 2,400 tons of green ammonia per day using solar and wind energy. In October 2021, OQ, Marubeni Corporation (a Japanese integrated trade and investment business conglomerate), Linde, and Dutco, an Emirati construction firm, launched the “SalalaH2” project, which will use OQ’s current ammonia factory in Salalah. The project is set to begin operations in 2023, with a goal of producing up to 1,000 tons of green ammonia per day, which is simpler to store and transport than hydrogen and can be transformed into green hydrogen at a later date. Green ammonia will be used in OQ’s current ammonia factory in Salalah. There’s also talk about exporting green ammonia for applications like co-firing coal-fired power plants in Asia, supplying feedstock for fertilizer factories in Europe, and satisfying the global shipping industry’s decarbonization demands.
In May 2021, an international consortium of companies, including OQ, InterContinental Energy, a Hong Kong-based renewable hydrogen developer, and Enertech, a Kuwait-based energy investor, announced plans to build one of the region’s largest hydrogen projects, powered by 25 GW of wind and solar energy. While still in the feasibility study stage, the building is expected to begin in 2028 and be completed by 2038.
Saudi Arabia is a country in the Middle East
Saudi Arabia announced in July 2020 the construction of a $5 billion green hydrogen factory in the future metropolis of Neom, which would be fueled by renewables. The project, which is jointly owned by Saudi Arabia’s ACWA Power and Air Products, is planned to generate 650 tons of hydrogen for export by 2025. In addition, the Ministry of Energy signed eight memorandums of understanding with local governments in January to develop pilot projects for sustainable aviation fuel and hydrogen fuel cell cars and buses.
Current and Planned Gulf Hydrogen Projects
|Project||Country||Date Online||Status||Type of Electricity (for electrolysis projects)||Product||Announced Size|
|Green hydrogen plant||BHR||Concept||H2||4 MW|
|Oman green H2 project, phase 1||OMN||2028||Concept||Others/Various||H2||4.7 GW|
|Oman green H2 project, phase 2||OMN||2038||Concept||Others/Various||H2||14 GW|
|Hyport@Duqm||OMN||2026||Feasibility study||Others/Various||Various||250-500 MW|
|Sumitomo Oman||OMN||2023||Feasibility study||H2||0.3-0.4 kt H2/y|
|Petroleum Development Oman’s solar-paneled car park||OMN||Feasibility study||Solar PV||H2|
|Amin Solar Renewable Energy Project||OMN||Feasibility study||Solar PV||H2|
|Port of Duqm NH3 plant||OMN||2023||Feasibility study||Unknown||Ammonia||2400 t NH3/d|
|SalalaH2 project||OMN||2023||Unknown||Wind and solar||Green Ammonia||400 MW 1,000 t NH3/d|
|Helios Green Fuels – Neom||SAU||2025||Final investment decision||Others/Various||Various||650t H2/d – 1.2Mt NH3/y|
|Dewa green hydrogen pilot project||UAE||2021||Implemented||Solar||H2||300 KW|
|Mubadala/Snam green hydrogen projects||UAE||Feasibility study||Solar||H2||Unknown|
|DoE/Masdar plus five firms pilot project||UAE||2022||Feasibility study||Solar||H2||1,000 mt/year20 MW|
|ADNOC low-carbon ammonia plant||UAE||2025||Under construction||Natural gas||Blue Ammonia||1 mt NH3/yr|
There are no indications of regional cooperation
National hydrogen policies have been implemented by Gulf Arab governments, but there has been a lack of regional coordination. Oman established a national hydrogen economy strategy in 2020, with the goal of creating a hydrogen-centric economy by 2040, with clean hydrogen production potential of 1 GW by 2025, 10 GW by 2030, and 30 GW by 2040. In August 2021, the Ministry of Energy and Minerals inked a deal with 13 local governments representing the public and commercial sectors, including the oil industry, research and academic institutions, and port operators, to form a national alliance for hydrogen. The Ministry of Energy and Minerals established a specialized department in March to supervise all regulatory elements of green energy and hydrogen. In addition, the minister of energy and minerals is directing a technical committee in the creation of Hydrogen Development Oman, a national hydrogen corporation committed to green hydrogen initiatives. The program is said to be a collaboration between Energy Development Oman, OQ, the Oman Investment Authority, the Ministry of Commerce, Industry and Investment Promotion, and the Authority for Public Services Regulation.
In the UAE, Mubadala Investment Company, ADNOC, and Abu Dhabi holding company ADQ signed a memorandum of understanding in January 2021 to form the Abu Dhabi Hydrogen Alliance for collaboration in advancing the country’s hydrogen industry, including the development of the UAE’s national blueprint Hydrogen Leadership Roadmap, which was released in November 2021, aiming to support the domestic hydrogen industry as well as enhance the country’s position in bl
Saudi Arabia’s Ministry of Energy has pledged to develop a national hydrogen policy. Furthermore, hydrogen production is an important part of Saudi Arabia’s technology-driven circular carbon economy, which aims to use all available clean energy technologies to reduce emissions without favoring one over the other or putting restrictions on specific energy sources, such as fossil fuels. A memorandum of understanding was signed by the Ministry of Energy with a number of local governments to show the practicality of hydrogen use in transportation and industries.
In a similar vein, the Kuwait Foundation for the Advancement of Sciences released the white paper “Towards a Hydrogen Strategy for Kuwait” in January 2021, in collaboration with the Kuwait Petroleum Corporation and its subsidiaries, to aid in the development of a strategy for Kuwait’s domestic hydrogen production and exportation.
Gulf nations have already reached bilateral agreements with other governments and businesses to develop and run hydrogen infrastructure and promote cross-border hydrogen commerce. Feasibility studies, letters of intent, memorandums of agreement, energy alliances, and even trial shipments are all part of these arrangements. Some of the nations involved have a long-standing energy trading connection. Japan, for example, purchases crude oil from Saudi Arabia and is trying to extend its trading connection to include blue ammonia. Saudi Aramco said in September 2020 that it had shipped the world’s first shipment of blue ammonia to Japan, where it was utilized in power plants to create emissions-free energy. Blue ammonia is made from natural gas with carbon capture and storage in the hydrogen facility in Jubail.
Gulf states, on the other hand, exhibit more diversity than homogeneity in their international hydrogen relationships. Belgium, Germany, the Netherlands, and the United States, for example, have bilateral agreements with Oman. In March 2021, Saudi Arabia and Germany signed a memorandum of understanding aimed at enhancing bilateral collaboration on hydrogen, in addition to the bilateral trade deal with Japan. To facilitate conversation on the geopolitical consequences of a global hydrogen market, the German Federal Foreign Office established a specialized hydrogen diplomacy office connected to its embassy in Riyadh. In the same month, the industry ministers of South Korea and Saudi Arabia conducted a bilateral energy policy dialogue, promising to deepen bilateral collaboration in nuclear power, renewable energy, and hydrogen. ADNOC, the UAE’s national oil company, has formed relationships with Japan, Malaysia, and South Korea to investigate hydrogen trade opportunities, and it has already exported four test cargoes of blue ammonia to Japan. In 2017, the UAE and Germany formed an energy partnership to stimulate conversation and research on the transition to renewables, as well as to provide a framework for collaboration on specific aspects of sustainable energy. The research “The Role of Hydrogen for the Energy Transition in the UAE and Germany” was issued in January 2021 by the two nations. Masdar and Reliance Industries, an Indian conglomerate, have lately looked into collaborating on green hydrogen development. Qatar has reached a deal with Shell to collaborate on blue and green hydrogen projects in the United Kingdom while investing elsewhere. Following the Russia-Ukraine conflict, Qatar and Germany signed a joint statement of intent on May 20 to expand their collaboration in LNG trading and hydrogen development.
The Road Ahead
Because they are among the world’s lowest-cost producers of oil, natural gas, and renewables, the Gulf Arab states are ideally positioned to manufacture competitive blue and green hydrogen. Furthermore, the infrastructure and resources required to create and export hydrogen are already in place. Existing industrial ports (e.g., Oman’s Duqm, Salalah, and Sohar ports; the UAE’s Jebel Ali ports; and Saudi Arabia’s Jeddah ports) and free economic zones, where energy-intensive clusters such as petrochemical industries, steel companies, and refineries are located, are ideal centers to produce hydrogen because they have access to renewable energy resources, can scale up the use of carbon capture and storage technology to produce hydrogen, and represent locations where hydrogen can be In addition, Gulf nations have well-established natural gas infrastructures that might be utilized to transport hydrogen. Given the region’s extensive history and expertise with gray hydrogen generation, skills from the oil and gas sector will be readily available and very easy to transfer.
However, the creation of blue and green hydrogen necessitates large-scale investments in carbon capture and storage as well as other renewable energy sources such as solar and wind. Although the size of these technologies and investment in them has grown rapidly in the region over the previous two decades (total renewable energy installed capacity climbed from 17 megawatts in 2011 to 3,271 MW in 2020), capacity remains relatively small. Before completely unlocking the hydrogen market, Gulf Arab governments will need to carefully address institutional, technological, cultural, and commercial hurdles that are impeding the spread of renewables and carbon capture and storage.