Dubai-based Emirates National Oil Company has signed an initial agreement with Japanese heavy-industry manufacturer IHI Corporation to explore setting up a low-carbon hydrogen and ammonia plant in the UAE, supporting the Emirates' energy transition efforts.
The fuel produced will be exported to Japan and supplied within the UAE as well as the broader region for bunkering and other purposes, the Dubai Media Office said in a statement on Thursday.
The move, which is a part of Dubai's strategy to become a sustainable global hub for green economy, is aligned with the UAE’s overall energy transition efforts.
“We continue to explore partnerships that safeguard the future for generations to come," said Saif Al Falasi, group chief executive of Enoc.
"Our collaboration with IHI Corporation demonstrates our commitment to supporting the UAE’s energy transition efforts whilst advancing Dubai’s Clean Energy Strategy 2050."
This makes Enoc the latest UAE company to foray into the booming hydrogen industry, which is expected to reach a valuation of $183 billion by 2023, according to Fitch Solutions.
Hydrogen, which can be produced from both renewable energy and natural gas, is expected to play a key role in the coming years as economies and industries transition to a low-carbon world to mitigate climate change.
Low-carbon ammonia, which is made from nitrogen and clean hydrogen, is the most promising at-scale hydrogen carrier and potential clean fuel for a wide range of applications, including transportation, power generation and fertiliser production.
The UAE's energy strategy seeks to double the contribution of clean energy in the total energy mix to 50 per cent by 2050 and reduce carbon footprint of power generation by 70 per cent.
The Emirates, which aims to achieve net-zero emissions by 2050, is looking to invest Dh600bn ($163.37bn) over the next three decades to meet growing energy demand and ensure a sustainable growth for the country’s economy.
Enoc and IHI will conduct pre-feasibility and feasibility studies for a “full-scale” production plant, the statement read.
“The UAE is well positioned to produce and export green ammonia with its abundant renewable energy and robust maritime trade infrastructure, which cements its place as a critical hub for global shipping,” said Jun Kobayashi, executive officer at IHI Corporation.
The Abu Dhabi National Oil Company, which produces most of the UAE’s crude oil, is already a major producer of hydrogen and ammonia, with more than 300,000 tonnes of hydrogen produced a year at its Ruwais Industrial Complex.
Two weeks ago, Germany took formal delivery of its first batch of hydrogen-based ammonia from the UAE.
In August last year, Adnoc sold its first shipment of blue ammonia to Japanese trading house Itochu, followed by similar deals with Japan's Idemitsu and Inpex.
Hydrogen comes in various forms, including blue, green and grey. Blue and grey hydrogen are produced from natural gas, while green is derived from splitting water by electrolysis.
Japan, one of the world’s largest buyers of liquefied natural gas, has been limiting its use of natural gas as prices soared following Russia’s military offensive in Ukraine.
The current strains on gas supply have led to energy shortages in several parts of the developing world that rely on imported gas, notably Pakistan and Bangladesh.
Meanwhile, major growth markets for gas, such as India and China, have sharply reduced their LNG imports in 2022.