quotes The race for green hydrogen production: Saudi Arabia poised to take the lead

20 September 2021
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Updated 21 September 2021

The race for green hydrogen production: Saudi Arabia poised to take the lead

Carbon-free hydrogen, produced by the electrolysis of water powered by renewable electricity, has recently received unprecedented attention around the world because it is a clean alternative energy source that reduces harmful climate impacts of the fossil fuel-based world economy.

Some of the many challenges facing nations attempting to transition to hydrogen-based economies are the relatively high cost of its production, the lack of technology infrastructure, the shortage of wind and solar exposure, and the lack of key natural resources.

Globally, the current demand for hydrogen is approximately 120 million tonnes (Mt) annually. Approximately 70 Mt of current world demand of pure hydrogen is for ammonia production and oil refining applications. Less than 0.7 percent of current hydrogen production uses fossil fuels associated with carbon capture and storage or from renewable energy. Worldwide production of hydrogen is responsible for 830 Mt of CO2 emissions per year.

Nevertheless, many nations have announced hydrogen strategies. To preserve the average global temperature rise at 1.5 degrees Celsius and to meet the objectives of the Paris Agreement, governments are adopting ambitious strategies to embed green hydrogen alternatives to reduce CO2 in hard-to-abate sectors such as long-distance transport, aviation, maritime shipping, and heavy industry, to achieve carbon neutrality. Today, the most common hydrogen production pathway derives primarily from fossil fuels in steam methane reforming and coal (about 95 percent). By decreasing the cost for renewable electricity in certain regions using both solar and wind technologies, the economic and political race is accelerating between countries to take a lead in the future hydrogen market.

Germany, for example, plans to invest €8 billion ($9.74 billion) to fund large-scale hydrogen projects to ensure that CO2 reduction is 55 percent lower than 1990 levels, while France has committed to invest $8.3 billion by 2030. Japan also plans to invest $3 billion, Britain $16.6 billion, and China $16 billion to transform their industries and replace fossil fuels with hydrogen. Recently, Morocco also announced a plan to establish a green hydrogen and ammonia facility. This project is forecasted to produce 183,000 Mt of green ammonia and save the world 28,000 Mt of CO2 annually. Oman also plans to invest $2.5 billion to develop a green hydrogen and ammonia project at Duqm City. Many other countries are currently developing own strategies for hydrogen and are expected to make important announcements in the coming year.

As governments and industries seek to find an alternative energy source, Saudi Arabia has become one of the first countries in the world to establish concrete plans, projects, and investments for green hydrogen to diversify its economy and to reduce dependence on oil revenue.

The Saudi government headed by Crown Prince Mohammed bin Salman launched the world’s largest green hydrogen project as part of Vision 2030. It is building a $5 billion plant powered entirely by solar and wind energy as a joint venture between ACWA Power, NEOM, and Air Products and Chemicals Inc. that will be operational by 2025 in Neom. This unique project will supply 650 Mt per day of carbon-free hydrogen and cut over 3 million Mt of CO2 emissions every year.

The NEOM project is located deep in a desert in the northwest of the Kingdom bordering the Red Sea. It has been constructed in a vast area that possesses a high average level of solar exposure. Neom is located in a strategic place that links two continents of the world with easy access to Africa, Europe and the rest of Asia. Its geographic position allows the Kingdom to become a global powerhouse in clean hydrogen production. It is further distinguished by its vicinity to international markets such as the Red Sea, a vital international artery for the world’s economy. Nearly 10 percent of all global trade passes through this region every year.

According to Bloomberg New Energy Finance, Neom is located in a distinct geographical location possessing rich resources including solar and wind energy with vast tracts of non-arable land, making the Kingdom especially cost-competitive for clean hydrogen production that could reach an estimated $1.50 per kg by 2030. The current cost of hydrogen production is around $5 per kg.

According to Nadim Chaudhry, CEO of World Hydrogen Leaders, an online platform of industry executives designed to accelerate the production and distribution of clean hydrogen, “the leaders in the geopolitical race for green hydrogen are Australia, Saudi Arabia, and the North Sea nations — the Netherlands in particular.”

Desiring to expand opportunities for the use of hydrogen in the Kingdom, the Kingdom’s energy minister and German Economic Affairs Minister Peter Altmaier signed a Memorandum of Understanding establishing a cooperative agreement on hydrogen. By exploring new opportunities for hydrogen, supporting innovation, and promoting knowledge transfer, Saudi Arabia’s ambition to become a global exporter of clean hydrogen and to confront climate change has become a central goal for its future role in world energy production.

Hydrogen-based economies are beginning to establish themselves all over the world. Saudi Arabia is in perfect position to lead the way and become a global clean hydrogen powerhouse in the 21st century. With a longstanding history of world leadership in the oil and gas industry, Saudi Arabia is now poised once again to take the lead in the global energy sector and the new green hydrogen market economy.

 

Dr. Mahdi Almana is an assistant professor at King Abdulaziz City for Science and Technology. He is also a specialist in solar energy, specifically hydrogen production. He is involved in many projects globally and works with several institutions to develop cutting edge and practical solutions for solar energy.