With Gulf nations that are wealthy in hydrocarbons trying to decrease their carbon emissions, some are turning to multi-colored hydrogen as a more ecologically sustainable alternative.
Hydrogen is viewed as a possible low-carbon or zero-carbon fuel that can help us move away from fossil fuels, alongside renewable sources like solar and wind.
It is crucial to remember, however, that various kinds of hydrogen have distinct environmental effects.
When natural gas undergoes a steam reforming process, for example, blue hydrogen is produced. Although CO2 is produced during this process, the great majority of it is collected and stored, resulting in a low-carbon fuel.
Green hydrogen is the most ecologically friendly type, since it is made by splitting water using an electrolysis method that produces just hydrogen and oxygen. Green hydrogen, which is powered by renewable sources such as solar and wind, is regarded as the most efficient fuel for the future, although accounting for only 0.1 percent of worldwide hydrogen production at the moment.
Grey hydrogen is the most prevalent type of hydrogen fuel, and it has been around for a long time. It is produced using a steam reforming method similar to blue hydrogen, but the CO2 byproduct is not collected, resulting in a greater environmental effect.
Pink hydrogen is made by electrolysis in the same way as green hydrogen is made, however the process is fueled by nuclear energy rather than renewable energy.
According to the International Energy Agency, hydrogen accounted for just 4% of global energy consumption in 2019, although some projections say it may reach 18% by 2050.
While hydrogen has the potential to revolutionize the global energy market, Gulf nations stand to gain the most.
“Renewable power and electrolysers are the two essential components to consider for green hydrogen. “When it comes to creating low-cost renewable power, the area has a competitive advantage,” Ahmed Ali Attiga, CEO of Arab Petroleum Investment Corporation, told OBG.
“In terms of blue hydrogen, MENA has a competitive edge due to its large resource base, low cost of natural gas supplies, and availability to CO2 storage in depleted oil wells.”
As a result, several governments have made considerable measures to strengthen their capabilities, with the UAE leading the way in the area.
In May, the Khalifa Industrial Zone Abu Dhabi (KIZAD), a subsidiary of Abu Dhabi Ports, revealed intentions to build a green hydrogen and ammonia manufacturing facility in the zone.
Helios Industry, a special project vehicle business, will invest $1 billion in the plant’s development, which will be powered by solar energy. When fully operational in 2026, the facility will be able to create 40,000 tonnes of green hydrogen per year, which will be transformed into 200,000 tonnes of green ammonia, the plant’s carrier fuel.
Early in July, Abu Dhabi Ports announced that it had inked a preliminary deal with the Abu Dhabi National Energy Company to explore the building of a 2-GW green hydrogen and ammonia project, also in KIZAD.
In another initiative, Abu Dhabi National Oil Business (ADNOC) announced in May that it had partnered with Fertiglobe, a local chemicals company in which it holds a 42 percent share, to construct a blue ammonia factory in Ruwais. The plant, which is expected to operate in 2025, will have a manufacturing capacity of 1 million tonnes per year.
Saudi Arabia has positioned itself as a significant player in the rapidly expanding hydrogen sector.
In July of last year, NEOM, the $500 billion smart metropolis under development in the country’s north-west, revealed that it had inked a deal to create a $5 billion green hydrogen-based ammonia factory with US gas business Air Products and local company ACWA Power.
The facility, which the businesses describe as the world’s largest of its type, would create 650 tonnes of hydrogen per day and 1.2 million tonnes of green ammonia per year once it is operational in 2025, saving an estimated 3 million tonnes of CO2.
Meanwhile, Oman’s state-owned oil company, OQ, is leading a partnership to construct a solar- and wind-powered facility capable of creating millions of tonnes of carbon-free green hydrogen each year.
Consolidated Contractors Company, based in Greece, stated in May that it had reached an agreement with Fusion Fuel Green, based in Ireland, to construct green hydrogen facilities in the Gulf, specifically in Oman, Kuwait, and Qatar.
Governments and businesses have proposed a variety of uses for hydrogen, ranging from fueling public transportation in Dubai to powering industrial production in Abu Dhabi – and, as OBG previously reported, powering freight ships to reduce the shipping industry’s carbon footprint.
In addition to domestic usage, governments in the area are attempting to establish a successful hydrogen export sector by leveraging their expertise in exporting liquid fuels.
As a result, hydrogen is gaining traction as a means of achieving both energy and economic diversification objectives.
Fertiglobe secured three separate arrangements to export blue ammonia to Japanese businesses INPEX, Idemitsu, and Itochu in August, complementing Abu Dhabi’s attempts to boost its hydrogen manufacturing capacity.
In July, ADNOC issued a collaborative study with a number of Japanese businesses that looked into the prospect of exporting 1 million tonnes of blue ammonia to Japan yearly, while in March it inked an agreement with GS Energy of South Korea to look into hydrogen export opportunities.
Last year, Saudi Aramco delivered the world’s first blue hydrogen cargo to Japan, and the firm stated that it was aggressively investigating new Asian export markets.
For its part, Helios Industry’s green ammonia project would target imports largely to the US and Europe after production begins in the second quarter of 2024.
While hydrogen fuel provides tremendous advantages in the move away from fossil fuels, the sector still faces challenges in realizing its full potential.
Despite its potential, many analysts believe hydrogen will only play a modest part in the Middle East’s energy mix in the future.
“Hydrogen has a crucial role to play in supplying energy while decreasing carbon dioxide emissions. According to Ali Al Janabi, country chairman for Shell in Iraq and the UAE, “if research and development is to contribute to both corporate success and broader socio-economic development goals, a sizeable investment is required at the early stages of any given technology, well before there is any certainty of a breakthrough,”
“Hydrogen-based fuels are no exception, with Shell developing the concept in the 1990s. Shell is involved in a number of programs targeted at increasing the use of hydrogen in transportation, and we’re looking at ways to provide hydrogen to households, companies, refineries, and factories.”
Although there is a strong need for alternative fuels to reduce carbon emissions, hydrogen production and export projects are expected to cost billions of dollars, necessitating a large investment from potential investors.
“Regardless of color, logistics is the primary impediment to the development of the hydrogen economy. Hydrogen must be stored and delivered to consumers at a reasonable cost. However, establishing the necessary infrastructure would be rather costly, according to Oussama El Jerbi, Consolidated Contractors Company’s area managing director for Qatar.
“The hydrogen quantities to be transported must be big enough for the investment to be economically feasible and produce a timely and appropriate return on investment. As a result, the difficulty in the early days of the hydrogen industry is to scale up production and make the process financially viable.”
To add to these worries, foreign media reported earlier this year that Gulf hydrogen-producing countries were looking for investors to buy equity shares in hydrogen export facilities and sign long-term supply contracts before pushing forward with the projects.