The global energy transition is not just about producing clean energy on site – it’s a matter of storing, transporting and delivering energy worldwide. With abundant renewables, geographical convenience and vast ongoing investments in logistical infrastructure, the Middle East is primed to lead the global green hydrogen market. Not only does it possess the potential for scalable green hydrogen production, but also its worldwide exportation to satisfy burgeoning global demand.
Smooth Transition – The Middle East can become the World’s Green Hydrogen Hub
Getting “GH from A to B” is a $600 billion investment opportunity
Low-carbon hydrogen (blue and green) demand is poised to skyrocket in the coming years, pushed by its inherent virtues of being a flexible, stable and sustainable source of clean energy storage and transition. Wood Mackenzie forecasts that demand will more than double from 100 megatonnes in 2022 to 223 Mt by 2050. As green hydrogen costs continue to dive, this amounts to a $600 billion investment opportunity in the making.
The Middle East is one of the better positioned regions to take advantage of the winning combination of rising global demand, cost reductions via innovation, and pre-existing conditions suitable for production and transportation of green hydrogen.
Leading the Change – Saudi Arabia seeks to secure world’s lowest green hydrogen production costs
While the costs of producing hydrogen range between $2 and $7 per kg globally, Saudi Arabia manages to routinely stick to the lowest part of this range. This goes for the creation of green hydrogen – a feat not easily matched elsewhere for comparable costs. The King Abdullah Petroleum Studies and Research Center (KAPSARC) predicted this month that in the long term, rates of $1 per kg should be reliably attainable in Saudi Arabia, making them easily the cheapest in the world.
Back in March, we reported on the start of construction work at the NEOM $5bn green hydrogen project. With production slated to start in 2026, its initial daily capacity of 650 tonnes of carbon-free hydrogen should reinforce the seriousness of Saudi Arabia’s ambitions to lead the way in an already enthusiastic ME green hydrogen market.
Scaling up – Green Hydrogen investments to top $100 billion in Middle East
While Saudi Arabia may be able to produce the cheapest green hydrogen, there are plenty of other contenders nearby in the form of other Middle Eastern nations with similar advantages and backed by an equally strong political will to harness their newest source of competitive advantage to the fullest.
Reports vary to the exact size of the current investments and the number of planned projects occurring in the Middle East, but they all point towards a significant ramping up of ambitions and financial backing. In August, Siemens identified 46 viable green hydrogen projects in the MEA region, accounting for a combined worth of $92 billion. This month, MEED calculated that the roughly 50+ projects in the region added up to over $150 billion in investments.
The MEED report went on to state that while Saudi Arabia and the UAE had projects worth $10.5 billion and $10.28 billion respectively, Egypt has staked more than six times either of these efforts, currently investing $63.8 billion. Oman is not far behind with projects worth $48.9 billion.
Clearly Egypt, with its excellent access to wind and solar, and an ongoing multi-billion-dollar port upgrade plan, is determined to be a key player in both the regional competition to secure green hydrogen supplier status and the development of the wider global market. With other regional nations following suit, the race is on to discover who stands to gain prominence in the green hydrogen market’s next phase of development.
Any port in a storm? Rising green hydrogen demand calls for greater maritime coordination
As hydrogen production gets cheaper and cleaner, the transport and distribution networks designed to facilitate its global use must keep pace. Not only does this mean that the MENA region needs more ports, with larger and more advanced facilities, it necessitates a more collaborative approach to truly unlock the regional potential of green hydrogen.
Accordingly, we’re already seeing wheels turning towards larger maritime cooperative projects and strategic partnerships. This year the UAE announced its support for the Global Ports Hydrogen Coalition aims to enhance policy dialogue and collaboration related to scaling up the production and use of green hydrogen. The coalition’s work may prove crucial in setting various forms of standardisation for the processes of sending, receiving and handling low-carbon hydrogen forms from all manner of suitable vessels. This will be a prerequisite for the kind of “green hydro hubs” that are envisaged by the biggest proponents of hydrogen.
Green hydrogen’s role is growing, can the Middle East capitalise quickly enough?
Much of the Middle East enjoys optimal conditions for producing and exporting green hydrogen but, as with so many emerging technologies and resources, there’s more to securing market leadership. What will secure the region an early lead is a successful shift from proof-of-concept facilities to fully scalable, sustainable green hydrogen production facilities, supported by tailormade logistical setups from plant to ship.
Prospects remain bright in this regard, as dozens of Middle East green hydrogen projects in the pipeline are ambitious enough to help power the development of this pioneering renewable energy source. The remaining months of 2022 will be crucial in setting the pace for a nascent industry that could realistically help usher in the desperately needed global energy transitions in time to avert climate catastrophe.