UAE to play leading role in emerging Global Hydrogen Market

According to a newly published paper titled ‘The United Arab Emirates’ Role in the Global Hydrogen Economy,’ the UAE has the foundations and competitive advantages to become one of the world’s largest and lowest-cost producers of low-carbon hydrogen.

The report, written by Dr. Julio Friedmann, Senior Research Scholar at Columbia University SIPA, and Robin Mills, CEO of Qamar Energy and non-resident fellow at the Arab Gulf States Institute in Washington D.C., details the importance of hydrogen as a potential future fuel and the UAE’s strong start in leveraging existing assets to position itself at the forefront of the market.

Hydrogen is predicted to play a crucial part in worldwide decarbonisation and sustainable development policies, as well as the global shift to lower-carbon energy sources. According to the Hydrogen Council, it is expected to account for up to 18% of global energy consumption by 2050, with over 30 nations having announced hydrogen roadmaps and more than 228 large-scale projects active across the hydrogen value chain. For global energy players, capitalising on this increasing demand provides a substantial potential.

In the UAE, ADNOC’s many statements on hydrogen and its carrier fuels show that progress is already being made. The firm recently announced the sale of three blue ammonia cargos to Japanese consumers, as well as plans to build a new one million tonne per year blue ammonia facility at TA’ZIZ in Ruwais. The UAE is adopting a balanced approach that includes both blue and green hydrogen, with blue hydrogen being more easily scaled-up and hence critical to supporting the expansion of the burgeoning worldwide market.

Blue hydrogen is created from natural gas, with the corresponding carbon collected and stored underground, whereas green hydrogen is produced from water electrolysis using renewable power and little CO2 emissions. Blue hydrogen is now less expensive and is seen as a key step toward the establishment of a low-carbon hydrogen economy; however, the cost of creating green hydrogen is predicted to decrease with time.

According to the analysis, in addition to its current infrastructure and manufacturing capacity for both forms of hydrogen, the UAE has significant natural advantages. The UAE’s competitive blue hydrogen production is facilitated by its abundant and competitive hydrocarbons, existing large-scale hydrogen and ammonia production facilities, and large-scale carbon capture and storage capacity, all of which ADNOC already has and is developing.

ADNOC already produces approximately 300,000 tonnes of hydrogen per year in its downstream facilities, which is mostly used for industrial reasons. The business intends to raise its hydrogen production capacity to 500,000 tonnes per year and is pursuing a variety of additional development prospects, notably in blue ammonia. This involves the construction of a new world-scale blue ammonia factory at TA’ZIZ in Ruwais, as well as the selling of the first blue ammonia trial cargos to Japanese clients.

The UAE’s attempts to produce green hydrogen stand to profit from the country’s outstanding solar generating conditions and low levelised cost of solar power. The Abu Dhabi Future Energy Company (Masdar) has launched a slew of green hydrogen initiatives, including the construction of a green hydrogen demonstrator plant in Masdar City in collaboration with Siemens Energy, Marubeni, Etihad Airways, Lufthansa Group, Khalifa University of Science and Technology (KU), and the Abu Dhabi Department of Energy (DoE).

According to Dr. Friedmann and Mills’ assessment, the generation of both forms of clean, low-carbon hydrogen is further helped by the UAE’s strong existing infrastructure and export facilities, strategic geographic location between important markets, and stable, business-friendly climate. Hydrogen is a new industry that faces substantial hurdles in technology, economics, and politics. A fledgling market must be formed to provide certainty to producers and consumers for the hydrogen economy to take shape in a sustainable manner. As project sizes and related finance requirements grow, costs must be decreased. This necessitates collaboration between governments, between corporations and research institutes, and between companies and end-users.

Fortunately, the UAE has a long history of public-private partnerships with local and foreign firms in the energy, infrastructure, and heavy industrial sectors. The creation of the Abu Dhabi Hydrogen Alliance by ADNOC, Mubadala Investment Company (Mubadala), ADQ, and the UAE Ministry of Energy and Infrastructure (MoEI) was a significant milestone in what has evolved into a concerted effort to create the nation’s hydrogen economy. Dr. Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and ADNOC Managing Director and Group CEO, expressed optimism earlier this year during a High-Level Ministerial Session at a virtual Hydrogen Roundtable that ADNOC, with its existing infrastructure and commercial-scale carbon capture, utilisation, and storage (CCUS) capabilities, can become a major player in developing the blue hydrogen market.

He added that ADNOC was working on a strategy to build a hydrogen ecosystem that would serve both the UAE and the worldwide market. “We are collaborating with our partners, customers, and other stakeholders to build the value chains required to jump-start the global hydrogen industry.”

Khaldoon Khalifa Al Mubarak, Managing Director and Group CEO of Mubadala Investment Company, said of Mubadala’s efforts to drive the UAE’s energy transition, ” “As a responsible investor, we are actively participating in a number of new energy investments that will contribute to more efficient and lower-emission energy solutions. In this aspect, hydrogen has enormous potential, and with Masdar’s renewables knowledge and experience, we are well positioned to build leadership in the green hydrogen value chain.”

Dr. Friedmann and Mills concluded their report by stating that hydrogen has quickly become an essential component of every major energy producing and consuming company, and that the UAE has made a strong start in establishing itself as an early mover and leader in the emerging global hydrogen market.

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