When the world’s leaders assemble in Glasgow for the UN Climate Change Conference (Cop26) this year, we can expect hydrogen to be right at the top of the agenda. And for good reason.
In parallel to more states raising their hands and pledging to achieve zero carbon emissions by 2050, green hydrogen’s potential to decarbonise vital, heavy industries has seen its star rise fast. In recent times, few topics have been as prominent in energy discussions as the role of hydrogen in future energy systems.
Indeed, last week, hydrogen was at the top of the agenda of the International Renewable Energy Agency's (Irena) Collaborative Framework on Geopolitics, which was co-hosted by the UAE and Germany. The more hype that’s been generated around it, the higher the expectations have grown. Across developed and developing nations alike, the race to produce green hydrogen is on. And the UAE is right in the mix.
The excitement is unsurprising. If the renewable energy community can find a way to produce, capture and store green hydrogen in a cost-effective manner, industries such as aviation, shipping and freight could see their emissions dramatically slashed. As such, companies around the world have begun investing huge sums into the research and development of what’s being touted by some as “the ultimate clean energy source”.
As with all emerging solutions and technologies, an explanation is needed to arrive at an understanding of exactly why we’re pursuing green hydrogen with such fervour. The production of grey hydrogen has been under way for many years already. This involves splitting natural gas into hydrogen and CO2 and storing the hydrogen, but the CO2 is not captured. Blue hydrogen follows the same process of splitting, but carbon-capture technologies prevent the harmful CO2 from being released into the atmosphere.
Though this by-production of carbon is a challenge, we should note that both blue and grey hydrogen production are considered a transitional phase as we narrow in on the green stuff. Green hydrogen is produced by splitting water by electrolysis, which generates oxygen and hydrogen. The process to make green hydrogen is powered by renewable sources, such as wind or solar. And the oxygen can be released into the atmosphere without any detrimental impact on the environment, making green hydrogen the cleanest option available.
Globally, hydrogen has an estimated market potential of $11 trillion, according to Bank of America Securities. It's expected to generate $2.5tn in direct revenues and $11tn of associated infrastructure by 2050 as its production is set to increase six-fold. Clearly, the potential of hydrogen fuel both in industry and the economy at large is massive. The sticking point, at present, is the cost of production.
At the moment, green hydrogen costs around three times as much as natural gas and it is more expensive to produce than grey hydrogen because of the process of electrolysis required in the manufacturing stage.
However, according to a recent report from Irena, hydrogen produced with renewable electricity could compete on costs with traditional energies as early as 2030. This is due, the report claims, to a combination of falling costs for solar and wind power, improved performance as well as economies of scale for electrolysers. These systems could see cost reduction of upto 40 per cent in the short term and 80 per cent in the long term.
This analysis is encouraging. Perhaps more encouraging for UAE residents is the possibility that the country could leadthe way to a hydrogen-powered future given its strong fundamentals, including abundant natural resources, technological expertise and economic stability.
Already, Adnoc produces around 300,000 tonnes of hydrogen a year, and plans to reach more than 500,000 tonnes in the near future. The UAE government has pledged to build more hydrogen production sites across the country to provide energy for key industrial sectors.
Earlier this year, Mubadala Investment Company, together with Adnoc and ADQ Holding Company, established the Abu Dhabi Hydrogen Alliance, a clear statement of the emirate’s intent to invest in the fuel.
In March, Mubadala signed a deal with European energy infrastructure operator Snam to collaborate on hydrogen investment and development initiatives in the UAE and globally. The aim is to build a significant hydrogen economy for the UAE and turn the state into a reliable exporter of green and blue hydrogen.
By investing in green hydrogen now, the UAE is putting itself in a strong position to diversify its energy production chain, its industrial capabilities and meet the goals laid out by the leadership in the 2050 Energy Strategy.
The UAE is also the first country in the Middle East to draw up regulations for hydrogen-powered transport, in keeping with the nation’s healthy habit of thinking far into the future.
At the heart of the rationale for all of these developments is that hydrogen is a versatile energy carrier that can store renewable-generated power and be transported in different forms to meet demand at different times of day, across the year. It is set to play a vital role in the global energy transformation – altering energy demand, supply and trade dynamics.
The UAE is acutely aware of this. And, by being an early adopter of green hydrogen – and related advanced technology infrastructure that will be critical to enabling its success – the country is on course to not only secure the economic benefits it will bring, but crucially, play a leading role on the international stage of pushing through the global energy transition at a time when the world needs visionary leaders.
Dr Nawal Al-Hosany is a permanent representative of the UAE to the International Renewable Energy Agency
