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In the long run, Arab countries will benefit from solar energy in Green Hydrogen projects further enhancing their competitiveness in this field.
This article was translated from Arabic.
In recent years, several Arab countries, including Egypt, Oman, the United Arab Emirates, Saudi Arabia, Algeria and Morocco, have embarked on ambitious new green hydrogen production projects. This development signifies the growing significance of the Middle East and North Africa region in global green hydrogen production and exports in the forthcoming years.
The escalating global demand for hydrogen underscores the opportunity for the region’s countries to expand their market share and influence in the energy sector. Moreover, this shift toward green hydrogen production positions the Arab oil-producing nations for a post-depletion era of fossil energy reserves, serving as a long-term preparation strategy.
Why is the world moving toward hydrogen consumption now?
Hydrogen possesses numerous chemical properties that position it as a promising alternative to fossil fuel sources in the future. As one of the lightest chemical elements, hydrogen is abundant in nature and exhibits exceptional ignition capabilities, making it an efficient energy generator. Unlike fossil fuels, the combustion of hydrogen results in the emission of only water vapor, without any toxic or greenhouse gases.
Moreover, hydrogen stands out due to its sustainable production potential through water atom dissolution. This characteristic ensures a continuous supply of energy, setting it apart from finite fossil fuel sources that will eventually become depleted.
As a result, hydrogen emerges as a viable solution for a post-depletion era of environmentally detrimental energy sources. Additionally, this feature enables flexible hydrogen production, accommodating energy demand rates, unlike oil and gas which rely on limited reserves.
Historically, the hydrogen market faced challenges, including the high costs associated with storage and transportation. These factors restricted its use in daily transportation, industrial operations, and electricity production.
Consequently, hydrogen adoption remained confined to specific areas, such as space rockets, for instance. However, ongoing advancements aim to address these limitations, paving the way for broader utilization of hydrogen in various sectors.
However, in recent years, there have been remarkable scientific advancements in terms of the production, consumption and storage of hydrogen. These advancements have led to lower production costs, improved safety standards and increased efficiency in harnessing hydrogen as an energy source.
Consequently, there is a growing global demand for hydrogen as a viable alternative to non-renewable energy sources. This increasing demand has piqued the interest of private sector companies, motivating them to develop hydrogen-based energy technologies across various industries that traditionally rely on non-renewable energy.
At the same time, prevailing energy trends and conflicts have caused disruptions in energy supply lines, leading to higher prices for fossil fuels in 2022. These developments have amplified the interest of Western countries in utilizing hydrogen as an alternative energy source.
By embracing hydrogen production, Western countries not only align themselves with the goals of transitioning to clean energy, but also reduce their dependence on nations abundant in oil and gas reserves. Moreover, adopting hydrogen helps diversify energy sources and mitigates risks associated with vulnerable supply chains.
The ongoing disagreements between major industrialized countries and the oil-producing group “OPEC+” regarding oil production rates and prices have further underscored the negotiating power held by oil-producing nations, which can influence politics and the economy.
Regardless of these disagreements, industrialized countries also acknowledge the long-term prospect of fossil fuel depletion, necessitating a search for alternative and renewable sources of energy.
What are the types of hydrogen? How is it produced?
There are several types of hydrogen, all of which share similar properties, chemical composition and methods of consumption. However, they differ based on the energy source used during the production process. Generally, hydrogen production requires electrical energy to facilitate the chemical reaction that generates hydrogen from water molecules, producing more hydrogen than the oxygen present.
When renewable energy sources such as solar energy, wind farms or water turbines are utilized for hydrogen production, the resulting product is referred to as green hydrogen. In this scenario, hydrogen production serves as a means to store clean energy during periods of high solar radiation or wind abundance, particularly in countries with favorable natural conditions.
Following the production of green hydrogen, the substance can be used as compressed fuel in regions lacking natural characteristics for abundant clean energy generation. These areas may have low solar brightness, limited water or wind resources.
Moreover, green hydrogen can be stored for consumption during seasons with limited solar radiation or water availability, as well as during nighttime periods when solar energy production ceases.
In this way, green hydrogen effectively addresses the key challenges posed by renewable energy sources. One such challenge is the fluctuation in production rates between seasons or over the course of the day, along with the high cost associated with storing renewable energy through batteries.
Moreover, green hydrogen offers a solution to the issue of disparate natural resources across different regions of the planet, which can be harnessed for renewable energy production. By utilizing green hydrogen, clean energy can be stored and utilized at any time and in any location. Consequently, this prompted many energy experts to consider it to be the fuel of the future.
In addition, there exist two other types of hydrogen production: gray hydrogen and blue hydrogen. Gray hydrogen is generated by using oil or gas to produce electricity, which is subsequently employed to break down water molecules and extract hydrogen.
However, this method negates hydrogen’s environmentally friendly attributes since the same gases emitted during the direct consumption of oil or gas are released during the production process. As for blue hydrogen, it follows a similar production technology, but it incorporates the capture of greenhouse and polluting gases resulting from the production process. These gases are stored in specialized facilities underground or underwater, thereby reducing the environmental impact of the production process.
Nevertheless, both gray and blue hydrogen face the common challenge of high production costs compared to using gas or oil directly as an energy source. This circumstance has led oil-exporting countries to favor the export of fossil fuels instead of employing them in the costly hydrogen production process.
Additionally, these technologies associate the production of hydrogen with the limited availability of fossil fuels, rather than linking it to renewable energy sources as observed in the green hydrogen production process.
On the other hand, green hydrogen production requires significant investments in renewable energy, but it eliminates the need for regular reliance on oil and gas, thereby reducing the export revenues of oil-producing countries.
Moreover, green hydrogen production technologies enable non-oil-producing countries to transition into energy-exporting nations without relying on fossil fuels during the production process.
For these compelling reasons, green hydrogen production stands out as the most strategic choice for both oil-exporting and importing countries. It is also widely regarded as the optimal global solution for environmental preservation, achieving carbon neutrality, and utilizing an abundant and renewable alternative fuel source.
It is worth noting that alternative hydrogen production technologies exist, such as black hydrogen, which is generated using coal and is widely recognized as the most environmentally damaging option. The term yellow hydrogen is also used to describe hydrogen produced through nuclear power electricity.
Increasing global demand for hydrogen
Arab countries’ interest in hydrogen production is justified by the growing global demand for this resource. An example of this is the European Union’s objective of relying on hydrogen for 14 per cent of its energy needs by 2050. In February 2023, the European Commission introduced a support program to encourage investments in hydrogen-based power generation and transportation.
The United States Congress approved a special support package of $369 billion in August 2022, providing various tax incentives to fund projects related to climate change mitigation. This package includes investments in hydrogen storage, transportation, and consumption infrastructure.
The United Kingdom is actively promoting the use of hydrogen as a replacement for natural gas in heating and cooking, with a target of 30 per cent by 2030. To achieve this, the U.K. government is exploring options to repurpose natural gas pipelines for hydrogen transportation and consumption. By 2030, the British government plans to generate 10 gigawatts of electricity from hydrogen, aligning with its commitment to emissions reduction and carbon neutrality.
In 2022, over $240 billion was invested in more than 680 global hydrogen projects, marking a 50 per cent increase in investments compared to the previous year. This significant influx of funds highlights the global commitment to gradually transition toward hydrogen as a sustainable component of the energy mix.
Green hydrogen production projects in Arab countries
Arab countries are driven by diverse motives as they expand their investments in green hydrogen production. Gulf oil-producing and exporting nations currently aim to utilize their financial surpluses, which have resulted from the surge in oil prices since 2021, to invest in such projects.
Through this approach, the Gulf countries are striving to bolster their presence and market share in the energy sector, including the clean energy market. Moreover, they are actively working to transition their economies for a post-fossil fuel era by capitalizing on the revenue generated from exporting green hydrogen.
These initiatives align with the economic visions of the Gulf countries, which prioritize diversifying their revenue sources instead of solely relying on income from fossil fuel exports. By entering the green hydrogen market and capitalizing on its revenues, the Gulf countries aim to mitigate their exposure to the risks associated with oil and gas price fluctuations.
Conversely, other countries in the region, such as Egypt and Morocco, are focused on establishing local green hydrogen production capacities to ensure energy security and support their domestic manufacturing sectors with sustainable energy sources. By reducing their reliance on oil imports from abroad, these nations aim to enhance their energy independence.
Simultaneously, the projects enable them to secure stable revenue streams in hard currency through the export of green hydrogen. These export activities are facilitated by long-term sales contracts with Western countries.
It is worth noting that many countries in the Middle East and North Africa region possess inherent advantages that position them as key players in green hydrogen production. These advantages include abundant solar irradiation, conducive climates for harnessing solar energy in hydrogen production projects, and favorable environmental conditions.
Saudi Arabia is particularly ambitious in its pursuit of green hydrogen. It aims to construct the world’s largest green hydrogen project in the city of Neom, located in the northern part of the Kingdom. This mega project is projected to utilize up to 4 gigawatts of solar and wind energy to produce approximately 600 metric tons of green hydrogen per day.
Once operational by 2026, the entire production of the facility will be allocated for export, in accordance with pre-established sales contracts with foreign companies. Saudi Arabia aspires to become the world’s leading exporter of hydrogen, boasting the lowest production costs and securing a prominent position in this burgeoning market.
The UAE is actively competing with Saudi Arabia to become a leading global producer of green hydrogen. With the aim of monopolizing a quarter of the global green hydrogen production, the UAE has already established the first green hydrogen production plant in the Middle East region in November 2022. To achieve its production targets, the UAE has entered into a series of agreements with various global energy companies.
In Egypt, the Cabinet approved the issuance of eight licenses for hydrogen production in late 2022. Leveraging its existing gas production and liquefaction infrastructure, Egypt is capitalizing on the opportunities in green hydrogen projects. Emirati involvement is notable in Egypt, with Masdar signing an agreement to implement projects capable of producing 480,000 tons of hydrogen annually.
Currently, there are over 14 green hydrogen production and export projects being planned across Egypt, taking advantage of gas export chains and facilities.
Morocco is also striving for global leadership in green hydrogen production. Benefiting from its favorable geographical location, which allows for easy transportation of hydrogen through pipelines to Europe, one of the largest hydrogen markets worldwide, Morocco aims to produce more than 3 million tons of green hydrogen annually by 2030. The country has engaged in multiple projects with international energy companies and possesses a robust industrial base that stands to benefit from the availability of sustainable energy, thereby attracting foreign companies.
Hydrogen production projects are also underway in Oman, Algeria, Iraq, Mauritania and others. These projects collectively position the Arab countries as key players in the global hydrogen market, similar to their role in the fossil energy sources market.
In the long run, Arab countries will benefit from the favorable climate for utilizing solar energy in these projects, as well as from financial surpluses generated by oil and gas exports, further enhancing their competitiveness in this field.