With hydrocarbons-rich countries in the Gulf increasingly looking to reduce their carbon emissions, some in the region are turning to multi-coloured hydrogen as a more environmentally sustainable solution. Along with renewable sources like solar and wind, hydrogen is regarded as a potential low-carbon or zero-carbon fuel that is key to the transition away from fossil fuels.
However, different types of hydrogen have different impacts on the environment. Blue hydrogen is created when natural gas undergoes a steam reforming process. Although this process also produces CO vast majority of it is captured and stored, thereby producing a low-carbon fuel. The most environmentally friendly form is green hydrogen, which is created by splitting water through a process called electrolysis, producing pure hydrogen and oxygen. Powered by renewable sources such as solar and wind, green hydrogen is considered the most effective fuel for the future, although at present it accounts for just 0.1% of hydrogen produced globally. Grey hydrogen is the most common form of the fuel and has been produced for many years. It is created through a steam reforming process similar to that of blue hydrogen, although the CO by-product is not captured, leading to a more significant environmental impact. Similar to green hydrogen, pink hydrogen is also produced by electrolysis, although the process is powered by nuclear rather than renewable energy.
Although hydrogen accounted for 4% of global energy consumption in 2019, according to the International Energy Agency, some estimates suggest that it could reach as high as 18% by 2050.
Gulf takes Charge
Hydrogen has the potential to transform the global energy industry, with particular benefits for countries in the Gulf. “For green hydrogen, the two main components to look at are renewable electricity and electrolysers. The region has a competitive advantage when it comes to generating low-cost renewable electricity,” Ahmed Ali Attiga, CEO of Arab Petroleum Investment, told OBG. In light of this, some countries have taken significant steps to develop their capabilities. Alongside projects in the UAE and Saudi Arabia, in Oman the government-owned oil firm OQ is heading up a consortium to develop a solar- and wind-powered project capable of producing millions of tonnes of green hydrogen per year. In May 2021 Greece-headquartered Consolidated Contractors Company (CCC) announced it had struck a deal with Ireland’s Fusion Fuel Green to develop green hydrogen plants across the Gulf, namely in Oman, Kuwait and Qatar. Indeed, governments and companies alike have outlined various uses for hydrogen, such as fuelling public transport vehicles and freight ships.
While hydrogen fuel offers considerable benefits in the transition away from fossil fuels, the industry has some hurdles to overcome to fulfil its potential. Despite its promise, many analysts see hydrogen playing a minor role in the Middle East’s energy mix over the coming decades, as hydrogen production and export projects are likely to cost billions of dollars, requiring significant commitment from investors.
“Irrespective of the colour, the key obstacle to developing the hydrogen economy is logistics. Hydrogen must be stored and transferred to the consumer in a cost-efficient manner. However, setting up the necessary infrastructure will be relatively expensive,” Oussama El Jerbi, managing director for Qatar at CCC, told OBG. “For the investment to be economically viable and generate a timely and adequate return on investment, the hydrogen volumes to be transferred should be large enough. Therefore, in the early days of the hydrogen industry, the challenge is to scale up production and make the process commercially sustainable.” Underlining these concerns, in 2021 international media reported that hydrogen-producing countries in the Gulf were seeking investors to purchase equity stakes in hydrogen export facilities as well as sign long-term supply contracts before moving ahead with projects.
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