Hydrogen: The Hottest Energy topic of 2020 shows strong start in 2021

With its vast potential, but also plenty of uncertainty about how it can be scaled up, hydrogen definitely has a vital role to play in the global energy transition; but what exactly does that role look like? We examine the growing levels of interest and investment in hydrogen and its place in the wider trend of global decarbonisation.

The final months of 2020 and early 2021 have already seen a number of promising political decisions regarding the intended acceleration of major nations towards a carbon-free energy reality. From China’s announcement of net-zero by 2060 target, to the US re-joining the Paris Climate Agreement, the will to clean up the global energy industry is being exhibited much more strongly than at any point in history.

Hydrogen has marked potential to accelerate the progress of this seismic shift. Global hydrogen capacity increased to 26GW at the beginning of February 2021, over seven times more than the 3.5GW available just one year previously. However, this is still a tiny fraction of what’s needed; over 1000GW of electrolyser capacity needs to be established by 2050 to meet our demand forecasts. Also by 2050, global demand for green hydrogen specifically will top 530 million tonnes, which is roughly the equivalent of 7% of global primary energy consumption, or 10.4 billion barrels of oil.

The Middle Eastern Hydrogen Context: An enviable market position with potential to grow

With demand established and increasing all the time, a ramping up of hydrogen production, particularly green hydrogen, is desperately needed. For the Middle East, there are a number of natural advantages to be leveraged, most obviously the reliable access to inexpensive solar energy as well as wind. With so much of the region already committed to scaling up wind and solar farms for domestic and even export uses in the future, green hydrogen represents a natural synergy that shouldn’t be passed up.

Creation of green hydrogen is only the first step of the process, as it needs to be stored and converted to green ammonia for transportation and then returned to gaseous hydrogen form at the intended plant destination through cracking. This is another area where the Middle East is primed to become more competitive, by scaling up and refining its ammonia production capacity as well as its logistical infrastructure. Expansion of key UAE and Saudi ports in particular will be crucial in making the region a more attractive green hydrogen export prospect. Similarly, the creation of ‘green hydrogen hubs’ will allow domestic hydrogen and ammonia production levels to be increased in tandem, while making strategic use of new and existing port and industrial infrastructure.

Last month’s announcement by the Chairman of Saudi Arabia’s ACWA Power is indicative of the wider region’s potential to become a green hydrogen powerhouse. A new $6 billion hydrogen project partnership between NEOM and US-based Air Products will establish facilities capable of producing 650 tonnes of carbon-free hydrogen per day and 1.2 million tonnes of green ammonia per year. This project alone will reduce carbon dioxide emissions by the equivalent of 3 million tonnes per year.

Other key developments in hydrogen this month

  • Germany’s Fraunhofer Institute announced that it will construct a production plant this year for a new hydrogen-based fuel based on solid magnesium hydride. Called ‘POWERPASTE’ the solid fuel offers 10 times greater energy storage density than current batteries for electric vehicles.
  • An alliance of energy firms began a pilot project to generate green hydrogen from photovoltaic energy on Mallorca, largest of the Balearic Islands. Two solar plants will generate and distribute more than 300 tonnes of green hydrogen per year, driving decarbonisation efforts across the island.

Implications for hydrogen integration into the ME energy industry

Forbes said this month that the capital cost to build up hydrogen production to required demand levels in 2050 will be around $1 trillion. Clearly, achieving this reality represents both a huge undertaking as well as a unique opportunity. The early years of the 2020s will be pivotal for determining the shape of future global hydrogen production, transportation and consumption. For the Middle East, these are crucial years to take advantage of its natural advantages around renewables while increasing competitiveness by strengthening supply chains and transport infrastructure at both the national and regional levels.

However, while uncertainty remains in the air regarding the practicalities and cost factors around the rapidly swelling project pipelines, more bullish predictions about the future of green hydrogen are emerging. The recently released report “2050: The hydrogen possibility” highlights how the development of this nascent market is likely to move faster than any previous predictions, as demand heats up even more. To be at the forefront of this emerging market, the Middle East must be ready to capitalise on what it already has, while looking to proactively build upon it.