Hydrogen has a key role to play in helping the world to meet its net-zero targets. Its primary uses are for power generation, energy storage and transportation, including sustainable aviation fuel (SAF). It is also seen as a means to decarbonise the world’s heavily polluting industries such as steel, aluminium and cement.
The National Hydrogen Strategy seeks to produce 1.4m tonnes per annum (tpa) by 2031, consisting of 1m tpa of green hydrogen – produced via renewables – and 400,000 tpa of blue hydrogen, which relies on carbon capture and storage (CCS) to remove emissions from grey hydrogen – produced via fossil fuels and methane.
Local demand is forecast to exceed these figures in the same time frame, but output is set to be scaled up to 7.5m tpa by 2040, and 15m tpa by 2050, opening space for the country to become an exporter. Indeed, the UAE aims to corner one-quarter of the global hydrogen market in the decades to come.
Abu Dhabi is central to these plans, as evidenced by the announcement in January 2021 to create the Abu Dhabi Hydrogen Alliance, under which its sovereign wealth fund Mubadala Investment Company, ADNOC, and sovereign investment vehicle ADQ are partnering to advance the emirate as a trusted leader of low-carbon green and blue hydrogen in international markets.
Hydrogen Oases
The UAE plans to establish two hydrogen oases by 2031, with one situated at Abu Dhabi’s Ruwais. Three more oases are planned by 2050, and a hydrogen research base promises to provide plentiful opportunities for international partnerships with related institutions. An existing consortium consisting of Germany’s Siemens Energy and Lufthansa Group, France’s TotalEnergies, Japan’s Marubeni Corporation, the Department of Energy (DoE), Etihad Airways, Khalifa University, and Masdar – Mubadala’s clean energy arm – is developing a demonstration project for the production of green hydrogen and SAF.
State of Play
ADNOC already produces around 300,000 tpa of hydrogen for its downstream operations, with plans to expand to more than 500,000 tonnes. The firm is well placed to expand on its position as a major natural gas reserves holder and producer – hence the location of a hydrogen oasis at Ruwais, which hosts a large industrial base and natural gas-processing facilities. The latter is undergoing a $3.6bn upgrade.
DoE has issued its own framework for hydrogen, aiming for local production to reach 1m tpa by 2030. The emirate plans to become one of the world’s most cost-effective producers of blue hydrogen by expanding CCS capacity five-fold from 800,000 tpa to 5m tpa. In August 2023 ADNOC announced it was pioneering a 1.5m-tpa CCS project at its Habshan gas-processing plant, tripling its CCS capacity. ADNOC Gas will operate the facility, which will comprise a network of wells fed by closed-loop CO capture and reinjection technology.
In November 2022 the UAE reached an agreement with the US to invest $100bn in domestic clean energy projects by 2035, including CCS technologies. ADNOC is also exploring high-speed hydrogen refuelling with Japan’s Toyota and Al-Futtaim Motors.
ADNOC is consequently exploring blue hydrogen supply chains and looking to Japan, a leading buyer of UAE natural gas, for support. In 2022 ADNOC signed an agreement with Japan’s ENEOS and Mitsui & Co to jointly evaluate the development of a 200,000-tpa clean hydrogen supply chain between the two countries. The project aims to export blue hydrogen from Ruwais to Japan in the form of methylcyclohexane as a carrier.
ADNOC already sells blue ammonia to Japanese buyers and is developing a 1m-tpa blue ammonia plant at Ruwais. Japan views ammonia as a CO zero-emission fuel as it aims to cut its greenhouse gas emissions by 46% before 2030-31 from 2013-14 levels, and achieve carbon neutrality by 2050. South Korea is another Asian country that is seeking to use blue or green ammonia within its power stations and industries. Abu Dhabi can rely on its established gas infrastructure and expanding CCS know-how to secure similar supply chain deals.
Penetrating Europe, which along with the US is expected to be a world-leading hydrogen market, may be more difficult. UK-based analysis firm Aurora Energy Research has put the cost of shipping hydrogen to the continent in the form of ammonia at about €5.36 per kg, far higher than the cost of green alternatives from Australia, Chile and Morocco.
Green Potential
That being said, Abu Dhabi also has abundant green hydrogen potential. The emirate hosts the world’s largest single-site solar power plant, the 1-GW Noor Abu Dhabi, and will soon see the 1. 5-GW Al Dhafra Solar photovoltaic (PV) project surpass Noor as the world’s top solar operation. A third project, matching Al Dhafra Solar PV in scale, is planned at Al Ajban. Solar capacity is projected to increase in the UAE by more than 600% to 7.3 GW by 2030.
Masdar is the primary vehicle through which Abu Dhabi will realise its green hydrogen ambitions. In December 2022 Mubadala sold stakes in Masdar to both ADNOC and Abu Dhabi National Energy Company (TAQA), positioning the clean energy company as a national champion with significant financial resources.
Masdar currently operates approximately $20bn worth of projects across 40 countries, and ADNOC is a steering member of the global Hydrogen Council, which aims to accelerate development within the hydrogen sector. The two companies target 30 GW of renewables projects across their portfolios by 2030.
The shuffle also saw Masdar spin off a dedicated green hydrogen unit, which is pursuing related projects with a combined capacity of more than 10 GW. The company aims to raise capacity to 100 GW by 2030, when global green hydrogen demand is projected to reach 30m tpa, and rising to 610m tpa by 2050.
For the time being, Masdar is working with French energy major ENGIE to build a 200-MW green hydrogen production facility at Ruwais, next to ADNOC’s existing chemicals production facilities. ENGIE and Masdar formed a $5bn partnership in December to explore green hydrogen development in the UAE, aiming for at least 2 GW of production capacity prior to 2030.
Foreign Partners
In January 2023 Masdar signed a memorandum of understanding with four Dutch companies – the Port of Amsterdam, SkyNRG, Evos Amsterdam and Zenith Energy – to develop a green hydrogen supply chain through Amsterdam in the Netherlands. Exported green hydrogen will be delivered to European providers of SAF, steel and bunkering for shipping, as well as new, emerging European offtakers via pipeline, lorry and barge.
It should be noted that while Masdar will operate green hydrogen facilities in Abu Dhabi, its green hydrogen investments are global. For example, Masdar in 2022 signed agreements with Egyptian government-backed organisations to cooperate on the development of green hydrogen plants in the country, targeting an electrolyser capacity of 4 GW by 2030 and output of up to 480,000 tonnes of the fuel per year.
Masdar has also struck renewable power deals with a combined generation capacity of 5 GW across Angola (2 GW), Uganda (1 GW) and Zambia (2 GW). This strategic focus prompted International Finance Corporation, the World Bank institution focused on private sector growth in developing markets, to explore partnering on a green hydrogen platform for Africa, seeking breakthroughs in sectors such as renewable energy, green hydrogen and green finance.
Meanwhile, Masdar, BP and ADNOC, along with Etihad Airways and Abu Dhabi Waste Management Company, have agreed to explore the production of SAFs in the UAE using solar-to-green hydrogen and waste gasification. The three companies are also jointly invested in a blue hydrogen project, the 1000-MW H2Teesside, in the UK. Finally, the clean energy unit is developing a 2000-MW integrated offshore wind and green hydrogen project in Azerbaijan, as part of a 4000-MW project with Azerbaijan’s Ministry of Energy.
Whether Abu Dhabi and its energy companies can succeed in their hydrogen market aspirations will largely come down to cost, its ability to sustain its sources of natural gas feedstock, and whether the price of its blue hydrogen is viewed as too steep for European markets.
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