Adnoc plans to develop a 'hydrogen ecosystem' in its latest spending push

Hydrogen is being trialled as a promising alternative to fossil fuels, particularly in transportation

DUBAI, UNITED ARAB EMIRATES - OCT 11:

The Middle East region's first hydrogen refilling station was unveiled today at Toyota's showroom in Al Badia, in partnership with France's Air Liquide.

The initiative is in line with the UAE Vision 2021, aimed to raise the country's contribution to the world's clean energy drive and reduce dependence on fossil fuel.

(Photo by Reem Mohammed/The National)

Reporter: LeAnne Graves / Adam Workman
Section: NA & BZ
Hydrogen: Market potential

Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.

"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.

Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.

The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.

Abu Dhabi National Oil Company plans to establish a ‘hydrogen ecosystem’ as it looks to meet growing global demand for the lighter and cleaner gas that is emerging as an alternative to fossil fuels.

Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed, who is vice chairman of the emirate’s Supreme Petroleum Council, directed the state oil company to "explore and pursue potential opportunities in the field of hydrogen projects” and “enhance” the UAE’s position in the field, the company said in a statement on Sunday as it detailed its investment plan for the next five years.

Adnoc’s plan to ramp up production of hydrogen, which is already used in its downstream sector, will help meet “emerging global demand” for the gas and for ammonia derived from it.

“Adnoc is well placed to lead the development of international value chains and establish a hydrogen ecosystem for the UAE in partnership with other Abu Dhabi entities,” the company said.

Adnoc has “many advantages” that would allow it to benefit from growth opportunities in the global market for the fuel. The state oil company will rely on existing modern and integrated infrastructure facilities as well as its rich reserves of natural gas to develop its hydrogen potential.

Saudi Arabia, the world's largest oil exporter, is also putting together a strategy to develop hydrogen production capabilities as it looks for alternative fuels to diversify its energy mix, according to the country's energy minister.

Hydrogen is being trialled as a promising alternative to fossil fuels, particularly in transportation. Clean hydrogen can slash green house gas emissions from the hydrocarbons sector by 34 per cent, according to BloombergNEF. The growth of hydrogen can fuel a €120 billion ($142.3bn) industry in Europe by 2050, according to Aurora Energy Research. Meanwhile, McKinsey estimates that the development of a hydrogen economy could generate $140bn in annual revenue by 2030 and help support 700,000 jobs in the US.

Earlier this month, Adnoc said it was exploring the potential for hydrogen as part of broader plans to lower its carbon intensity.

“We all have a role to play and we as an industry can do more on climate change,” Dr Sultan Al Jaber, Adnoc group chief executive and Minister for Industry and Advanced Technology told an online energy event.

“Adnoc is already one of the least carbon intensive producers in the world ... and [over] the next 10 years, we will reduce our greenhouse gas intensity by ... 25 per cent,” he added.

Hydrogen has become increasingly important as a viable alternative fuel in many global economies as they evaluate its potential as an alternative to hydrocarbons. Proponents and producers of hydrogen are also looking at ways to lower the element's carbon intensity since it is currently manufactured using large volumes of fossil fuel.

Several economies have made green hydrogen a key part of their renewable energy transition plans. Dubai plans to trial a hydrogen fuel cell-powered fleet of cars during next year's Expo event.

Hydrogen: Market potential

Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.

"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.

Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.

The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.

EDITOR'S PICKS
NEWSLETTERS