Future energy production that is cleaner and more environmentally friendly will mostly use hydrogen. According to experts, it may eventually entirely replace more traditional and polluting sources. The “hydrogen race” is intensifying as a result. Additionally, it fosters fresh rivalries between the parties.
The European Union, an area with a competitive advantage in knowledge just two years ago, is now involved in developing its own regulatory framework. These regulations are required to design a hydrogen supply chain and provide confidence for local hydrogen project implementation in order to enable international export initiatives.
One such example is EU collaboration with the Middle East and Gulf nations. The project’s creators believe that the area has great potential for hydrogen generation. There is an abundance of land, renewable energy, infrastructure, and ports. Such massive projects boost productivity but demand more care. Billion-dollar losses can result from investment mistakes.
Since these projects need more time to design, secure permits and form partnerships, it takes a while between the signing of the MoU and the final investment decisions, according to Alexander Ritschel, Head of Technology at Masdar.
The UAE government owns the renewable energy company Masdar, which is also a significant hydrogen investor in the area. In order to establish itself as a market leader, the corporation is awaiting restrictions on import markets from EU member states and Asian nations like Japan and South Korea.
If crucial guidelines are not stated, funding becomes more challenging. The most crucial regulations must be made clear, but we don’t have to wait for all the specifics, according to Ritschel.
Masdar praised the apparent political will of Asian nations and said he was looking forward to the release of regional incentive programs. “These specifics will presumably be completed the next year. When they’re prepared, we can continue.
Ritscheel claims that the Middle East has the resources to supply all of Asia’s and Europe’s hydrogen demands.
Everyone does not concur that harmony will result from importers not competing with one another. According to some experts, the developing hydrogen economy will bring about new international rivalries.
The hydrogen market is misunderstood across Europe, particularly in Germany. Unaware that other nations are far faster, they believe they can wait because they will finally select who will manufacture hydrogen. According to Daoud Ansari, a researcher at the German Institute for International and Security Affairs, exporting nations are increasingly choosing which nations to collaborate with (SWP).
Germany’s caution may be due to European risk aversion, according to Ansari, but this could also lead to higher energy prices in the future.
Companies that specialize in hydrogen perceive things well. European institutions are being pushed to create an equally alluring structure to prevent shifting technology suppliers over the Atlantic by recent US procedures intended to bring the full supply chain of green hydrogen technologies within their borders.
Politicians compete with one another. Because most support programs have expiration dates, there is competition among customers to implement their projects, according to Manuel Kyun, head of sales for sustainable energy systems at Siemens Energy.
On the other hand, competition within the EU can be riskier, according to Kühn. It demands standardized EU regulations. In addition to the regulatory environment, many hydrogen developers have the incentive to delay.
Prices for technology will decrease, mostly as a result of economies of scale, he said.
Major regional projects are unlikely to begin producing green hydrogen in the next two years, according to Siemens Energy.
The Gulf states are developing political and trade ambitions, according to Ansari. Their tactics are based on a blend of cooperation and competitiveness. For instance, Kuwait and Bahrain participate in projects in other nations because they don’t have a lot of flexibility in the green hydrogen sector.
He emphasized that nations are attempting to specialize in various sectors of the emerging hydrogen economy, adding that Saudi Arabian participants in Oman’s hydrogen projects and UAE players are involved in Saudi ones.
In addition to setting up green steel and cement factories, Oman intends to go up the manufacturing chain and directly export environmentally beneficial hydrogen. Qatar is dedicated to exporting LNG and assisting customers in immediately converting LNG into hydrogen and ammonia in the recipient countries.
The Western management consulting firms who have been imposing their model on the Gulf nations for years, according to Ansari, “look solely at their own profit and show neither interest nor expertise of the region,” disregard it. The area needs an alternative logic.
Competition is not merely an issue of hydrogen supply, as recent conflicts over American incentives demonstrate. Technology related to hydrogen also plays a role. The emerging hydrogen markets will heavily rely on technology vendors.
On the supply side, we need to build an entire industry, which might take some time, Kyune said. “When suppliers, who are frequently smaller businesses, obtain orders, they invest. Support programs drag on to providers over time.
Slower development would ease tensions at the same time. Companies will have enough time to standardize new parts like electrolyzers, which are essential for producing hydrogen from renewable sources, and boost the output of existing parts like compressors, transformers, and rectifiers.
The supply chain could move more quickly in some nations, including China. Experts predict that U.S. initiatives like the Inflation Reduction Act will help the supply chain. As a result, the EU’s policies and regulatory framework are essential for attracting investment to the continent.
Players will make their choices about who they want to be and what part they want to play in the energy transition during the coming years. As it happened in the solar and wind industries a decade ago, I would anticipate disruption, Kühn added.
Experts generally concur that competition between nations and technologies will continue. The market for these components is, nevertheless, extremely large, therefore all technology suppliers are prepared to profit.
Each participant will have the opportunity to reach a specific level of scale effect in order to win the game, Kyune said.