The Brief / Energy COMMENT
Khalid Salem President – MENA and GTCC business unit leader – EMEA, Mitsubishi Power
Hydrogen: The path to decarbonisation The Middle East is key to unlocking the true potential of hydrogen in the global energy mix
ILLUSTRATION: GETTY IMAGES/ALFA STUDIO
However, traditional methods of producing hydrogen generate large volumes of CO2, and while clean hydrogen technologies are available, the cost of production remains a factor to consider. Green hydrogen production costs have fallen by 40 per cent since 2015 and are expected to fall further, with projections showing that production costs could decline to $1.4 to $2.3 per kg by 2030. Technology risks combined with significant capital costs, that currently cannot compete with fossil fuel prices and evolving regulatory development, pose challenges to accessing finance. The Energy Transitions Commission (ETC) – an international think tank focusing on economic growth and climate change mitigation, recently announced that decarbonising energy and other industries globally using hydrogen could require investments of up to almost $15 trillion between now and 2050. A GROWING BUSINESS CASE
W
ith a staggering estimate of $42bnworth of green hydrogen-related projects being planned across the Middle East and North Africa (MENA), there is increasing confidence in the region’s ability to utilise hydrogen as a clean energy alternative. While the element’s rise as an energy source comes on the heels of a wider global shift to a low-carbon economy, the opportunity for hydrogen production in the Middle East is already vast, given the region’s strategic location for potential green hydrogen exports and convenience of renewable energy resources. In 2021, Saudi Arabia announced its ambition to become the world’s top exporter of hydrogen. The UAE is also drawing up a hydrogen roadmap and is looking to add the fuel to its clean energy mix by 2050. Similarly, last year, Egypt also added green hydrogen to the country’s Energy Strategy 2035, with a distinct focus on clean fuel generation and use across sectors. 14
January 2022
GREEN HYDROGEN PRODUCTION COSTS HAVE FALLEN BY
40%
Annual revenues from green hydrogen in the GCC are expected to grow up to $200bn by 2050, according to Dubai-based consultancy Dii and Roland Berger. Energy players are building a business case for first mover projects of industrial scale. The key technology components for hydrogen production and utilisation are available across the globe today. It now needs to be brought up to commercial scale with implementation across sectors that present the most attractive business case – covering key factors such as indirect value creation, local job creation and grid stabilisation. Over the last few years, the versatility of hydrogen has also attracted stronger interest from governments across the region. Saudi Arabia aims to sell hydrogen that will be transported by pipeline to Europe. Simultaneously, oil producers, who are prioritising the gas for export, are looking at possible domestic uses such as in steelmaking. From 115 million tonnes currently, hydrogen use is forecast to grow up to 500800 million tonnes by 2050 – if all potential use cases materialize. It is anticipated to account for 15-20 per cent of total final energy demand. The development of the hydrogen economy and potential localisation of value chain activities will also represent new employment opportunities across gulfbusiness.com
