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 tend to have different types of impact on the environment. Blue hydrogen is created when natural gas undergoes a steam reforming process. Although this process also produces CO , a significant share 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 0.1% of hydrogen produced globally.
Grey hydrogen is the most common form, created through a steam reforming process similar to that of blue hydrogen. However, 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.
Hydrogen demand accounted for roughly 2.5% of global final energy consumption in 2021, according to the International Energy Agency, and the International Renewable Energy Agency’s 2022 outlook estimated that its share of the energy mix would be 12% by 2050.
Taking 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. Oman aims to invest as much as $140bn to produce 1m tonnes of green hydrogen per year by 2030 and upwards of 8m tonnes per year by 2050. Oman’s 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 a deal with Ireland’s Fusion Fuel Green to develop plants across the Gulf, namely in the sultanate, Kuwait and Qatar. Indeed, governments and companies have outlined various uses for hydrogen, such as fuelling public transport vehicles and freight ships.
Challenges
While hydrogen fuel offers considerable benefits, there are hurdles to overcome to fulfil its potential. 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.” 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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