More countries developing hydrogen strategies in net-zero push, GHD says

The low-carbon fuel is expected to play a critical role as economies and industries transition to a decarbonised world

A green hydrogen plant built by Spanish company Iberdrola in Puertollano, Spain. AFP
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A growing number of countries are looking at building their own hydrogen capabilities and strategies to meet net-zero goals, according to an executive from GHD.

The engineering and environmental consultancy is currently working on hydrogen feasibility studies in Oman, Morocco, and Azerbaijan, with the prospect of similar early-stage studies starting in Spain. Thomas Evans, executive adviser at GHD, told The National that countries are attempting to evaluate the costs and required infrastructure for hydrogen projects.

“Every country with a decarbonisation target needs to [make space] for hydrogen in their energy mix. If you are interested in net zero, you are, by default, interested in hydrogen … I think we will see more demand for hydrogen-related services and strategies,” Mr Evans said.

Hydrogen, which can be produced from renewable energy and natural gas, is expected to become a critical fuel as economies and industries transition to a low-carbon world.

It 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 molecules through electrolysis.

French investment bank Natixis estimates that investment in hydrogen will exceed $300 billion by 2030.

The Middle East and North Africa region is already betting big on the low-cost fuel, with several countries announcing multibillion-dollar projects over the past few years.

Last September, the UAE signed an agreement with GHD in partnership with Fraunhofer-Gesellschaft to develop its strategy for hydrogen.

The Emirates aims to produce 1.4 million metric tonnes of hydrogen annually by 2031. It will increase the production to 15 million metric tonnes annually in 2050.

“The UAE has very competitively priced natural gas for blue hydrogen, so the mix of blue [and] green hydrogen plus all the natural resources, make it a promising opportunity,” Mr Evans said.

“Every single refinery in the UAE is already making grey hydrogen … to help refine oil, so you add an element of carbon capture to that, and you've got blue hydrogen,” he added.

Refineries use hydrogen to lower the sulphur content of diesel fuel.

Electrolysers, which use electricity to split water into hydrogen and oxygen, are critical to ramp up fuel production.

In June, Abu Dhabi-based energy company Adnoc signed an agreement with Strata and industrial machines manufacturer John Cockerill to manufacture electrolysers in the UAE for local use and export.

“It's so important to attract the right OEMs (original equipment manufacturers) to the [Middle East] region to provide that resilience in the supply chain,” Mr Evans said.

“One of the Middle East’s real strengths is they've got the capital to invest. They know how to attract international businesses into the region and it's stable politically and economically,” Mr Evans said.

While most countries are exploring the export potential of hydrogen, it is important to establish domestic demand for the fuel first, Mr Evans said.

“That de-risks the projects for the investors, whereas the whole export ecosystem is a very big question mark at the moment,” he said.

Despite hydrogen’s growing potential, critics within the energy industry have pointed to its high cost of production and the absence of a well-established market.

“Currently, green hydrogen is very expensive to manufacture [and] it's not going to reach cost parity with natural gas in the next five years,” Mr Evans said.

He added that hydrogen is the “only” option to decarbonise sectors such as steel manufacturing, shipping, and long-distance transport.

The cost of green hydrogen manufacturing is expected to fall to $1.54 per kilogram by 2030 from about $3.70 per kilogram, according to Rethink Energy, a research firm.

It is also seen as a “vector” for energy storage, with renewable energy taking a larger share of the electricity mix in many countries, Mr Evans said.

Instead of building large battery farms that are expensive and resource-intensive, excess energy from solar and wind can be used to produce green hydrogen, which can either be stored or turned back into electricity.

“Any emerging technology starts expensive and as supply chain grows, demand grows [and] supply grows, the economics catch up,” Mr Evans said.

Updated: August 31, 2023, 12:34 PM