On Saudi Arabia’s northwest coast, a multibillion-dollar hydrogen factory is planned as part of the world’s biggest oil exporter’s aspirations to become a significant generator of this renewable energy source. If the new facility meets its aim of producing 650 tons of “green” hydrogen per day, it will become the world’s largest such plant.
The settlement of Neom, on the Red Sea coast, has yet to begin large-scale building. The building process is expected to begin in 2026, according to a local spokesperson. Saudi Arabia’s aim to dominate hydrogen production is part of the country’s efforts to diversify its economy, which is heavily reliant on gas and oil, and generate new employment.
In 2021, oil accounted for 60% of Saudi Arabia’s budget ($ 149 billion), and it is evident that the government will need alternative sources of revenue as the globe becomes less reliant on fossil fuels.
“We’re putting a lot of money into hydrogen and aim to dominate the market. We’ll be the most competitive manufacturer “The kingdom’s energy minister, Prince Abdulaziz bin Salman, said at a press conference earlier this month.
Other nations, such as Russia and the United Arab Emirates (UAE), have also looked at the market, and some analysts are skeptical that the factory on the Red Sea would achieve the expected results. Green hydrogen, unlike oil, can be created everywhere. It is the least detrimental alternative for the environment, as it uses water and renewable energy.
The competition will be tough if the market “takes off,” as projected (with a volume of $ 600 billion by 2050).
According to Alexander Araman, an expert at consultancy company Wood Mackenzie, Saudi Arabia clearly aspires to have a dominant position. For decades, hydrogen has been considered a viable alternative to fossil fuels, and according to the International Renewable Energy Agency’s newest research, it might meet up to 12% of the world’s energy demands by 2050.
This resource may be utilized to power automobiles, manufacture goods, and even heat and lighthouses. Hydrogen is unquestionably the road to decarbonization that oil firms wish to adopt. According to Christine Dion of the Washington Institute for the Arab States in the Gulf, Saudi Arabia’s decision to focus on “green” hydrogen makes perfect sense.
The most environmentally friendly fuel is “green” hydrogen, which is created by the electrolysis of water using renewable energy.
Solar panels and wind turbines can be powered all year round in Saudi Arabia’s northwestern coast, which receives lots of sunlight and wind.
Splitting methane molecules in natural gas and collecting carbon produces “blue” hydrogen.
Saudi Arabia uses both green and blue hydrogen, according to Araman.
The $ 500 billion sovereign wealth fund led by Crown Prince Mohammed bin Salman is at the heart of Saudi Arabia’s “green” ambitions. Aside from the Neom plant, the fund inked a memorandum in January with two South Korean businesses, Samsung (Samsung) and Posco, to investigate a hydrogen-for-export project. Neom is also slated to build a hydrogen-fueled vehicle manufacturing facility. The Saudi initiative, according to Neom project manager Roland Kepner, comes at the opportune time, when the entire globe is seeking for innovative methods to transition away from fossil fuels.
He stated, “We cannot decarbonize every aspect of the economy by relying just on energy.”
However, there are still some reservations. Hydrogen is difficult to manufacture, store, and transport, and the expenses are prohibitively expensive. “Will customers be willing to pay a higher price?” Robin Mills, executive director of Qamar Energy, poses the question.
Saudi Arabia has a reliable ally “Excellent solar and wind resources, suitable topography, and quick access to Europe for exports are all advantages. So far, the fundamentals are sound. I’ve always believed Saudi Arabia has the opportunity to do so, but now is the moment to do so and demonstrate it “Mills went on to say.
“When it comes to gas and oil, we are the lowest-cost producer, and the same is true for renewable-energy power,” stated the Kingdom’s Minister of Energy.
Other countries, on the other hand, are betting on hydrogen. Russia aspires to dominate 20% of the market by 2030, while the UAE has proposed the construction of a hydrogen plant with the goal of capturing 25% of the market by 2030. Oman, Morocco, and Egypt have all announced the construction of new power plants. The UAE borders Saudi Arabia and is a key political ally of Riyadh, but the two nations’ economic rivalry now stretches beyond oil to hydrogen production and exports.
Saudi Arabia became the first country to export ammonia, a lightweight hydrogen storage ingredient, to Japan in September 2020. The National Oil Company of Abu Dhabi (Adnoc) announced its first delivery of ammonia a year later.
“We’ve witnessed Saudi Arabia attempting to assert itself as a leader,” Araman remarked. “Every time Riyadh does anything like this, Abu Dhabi’s National Oil Company promptly follows suit and invests more,” he continued.
Like oil in the past, the hydrogen market is about to become a battlefield of even fiercer and more merciless struggle, and those who want to take it over will have to play their trump cards extremely effectively, pursuing only their own interests on the way to one. The earth is carbon neutral.
