According to a newly published analysis titled “The United Arab Emirates’ Role in the Global Hydrogen Economy,” the UAE has the foundations and competitive advantages to become one of the world’s largest and lowest-cost producers of low-carbon hydrogen.
The report, co-authored by Dr. Julio Friedmann, a Senior Research Scholar at Columbia University SIPA’s Centre on Global Energy Policy, and Robin Mills, CEO of Qamar Energy and a non-resident fellow at the Arab Gulf States Institute in Washington, D.C., discusses the importance of hydrogen as a future fuel and the UAE’s strong start in leveraging existing assets to position itself at the forefront.
Hydrogen is predicted to be a key enabler of worldwide decarbonization and sustainable development initiatives, as well as the global transition to lower-carbon energy sources. According to the Hydrogen Council, it is expected to account for up to 18 percent of global energy demand by 2050, with over 30 nations having announced hydrogen roadmaps and more than 228 large-scale projects active across the hydrogen value chain. For global energy providers, tapping into this growing demand represents a substantial potential.
ccThe company recently announced the sale of three blue ammonia cargos to Japanese consumers, as well as plans to build a new one-million-tonne-per-year blue ammonia facility at TA’ZIZ in Ruwais.
The UAE is pursuing a balanced strategy that includes both blue and green hydrogen, with blue hydrogen being easier to scale up and hence critical to the global market’s growth.
Green hydrogen is hydrogen created from the electrolysis of water using renewable electricity and minimum CO2 emissions, whereas blue hydrogen is hydrogen produced from natural gas with the related carbon trapped and stored underground. Blue hydrogen is now less expensive and is seen as a key step toward a low-carbon hydrogen economy; however, the cost of creating green hydrogen is predicted to decrease with time.
According to the analysis, in addition to its current infrastructure and manufacturing capacity for both types of hydrogen, the UAE has significant natural advantages. The UAE’s competitive blue hydrogen production is made possible by abundant and competitive hydrocarbons, existing large-scale hydrogen and ammonia production facilities, and large-scale carbon capture and storage capacities, all of which ADNOC already has and is developing.
In its downstream facilities, ADNOC already produces over 300,000 tonnes of hydrogen per year, which is mostly used for industrial purposes. The company is pursuing a number of new growth prospects, particularly in blue ammonia, and wants to raise hydrogen production to 500,000 tonnes per year. This includes the construction of a new world-scale blue ammonia facility in Ruwais, as well as the selling of the first blue ammonia trial cargos to Japanese clients.
The UAE’s attempts to produce green hydrogen will benefit from the country’s outstanding solar generating conditions and cheap solar electricity levelised cost. Several green hydrogen initiatives have been launched by the Abu Dhabi Future Energy Company (Masdar), including the development of a green hydrogen demonstrator plant in Masdar City in collaboration with Siemens Energy, Marubeni, Etihad Airways, Lufthansa Group, Khalifa University of Science and Technology (KU), and the Abu Dhabi Department of Energy (DoE).
The UAE’s strong existing infrastructure and export facilities, central geographic location between key markets, and stable, business-friendly environment all help to allow the production of both types of clean, low-carbon hydrogen, according to Dr. Friedmann and Mills in their paper.
Hydrogen is a new industry that faces considerable problems in terms of technology, economics, and regulation. A nascent market must be formed to provide certainty to producers and consumers for the hydrogen economy to take shape sustainably. As project sizes and associated finance requirements grow, costs must be decreased. This necessitates collaboration between governments, between companies and research institutes, and between companies and end-users.
Fortunately, the UAE has a long history of public-private partnerships in the energy, infrastructure, and heavy industry sectors with both domestic and international entities. The creation of the Abu Dhabi Hydrogen Alliance by ADNOC, Mubadala Investment Company (Mubadala), ADQ, and the UAE Ministry of Energy and Infrastructure (MoEI) was a significant step forward in what has evolved into a concerted effort to develop the nation’s hydrogen economy.
Dr. Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and ADNOC Managing Director and Group CEO, expressed optimism earlier this year during a High-Level Ministerial Session at a virtual Hydrogen Roundtable that ADNOC, with its existing infrastructure and commercial-scale carbon capture, utilization, and storage (CCUS) capabilities, can become a major player in developing a hydrogen economy.
He said that ADNOC was working on a plan to build a hydrogen ecosystem that would serve both the UAE and the rest of the world. “We are collaborating with our partners, customers, and other stakeholders to build the value chains required to jumpstart the global hydrogen market.” “As a responsible investor, we are actively engaged in a number of new energy investments that will contribute to more efficient and lower-emission energy solutions,” Khaldoon Khalifa Al Mubarak, Managing Director and Group CEO of Mubadala Investment Company, said of Mubadala’s efforts in driving the UAE’s energy transition. In this context, hydrogen has enormous potential, and Masdar’s renewables knowledge and experience position us well to create leadership in the green hydrogen value chain.”
Dr. Friedmann and Mills concluded their report by stating that hydrogen has quickly become an essential component of every major energy-producing and consuming company, and that the UAE has made a strong start in establishing itself as an early mover and leader in the emerging global hydrogen market.