Gulf Arab states, they are now embracing the potential of "green" hydrogen to reshape their economies and address global climate crisis #greenhydrogen
After decades of relying on a fossil fuel boom to drive their economies, the Gulf Arab states are now setting their sights on the potential of "green" hydrogen as they seek to transform their financial landscapes and address the pressing climate crisis.
Leading oil producers in the region, including Saudi Arabia, the United Arab Emirates (UAE), and Oman, are redirecting significant investments towards environmentally friendly fuels, aiming to diversify their revenue sources beyond crude oil and natural gas.
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Green hydrogen, generated through the process of water electrolysis using renewable energy sources like wind, solar, and hydropower, presents a promising solution to several challenges. Unlike conventional hydrogen production methods that heavily rely on polluting fossil fuels, green hydrogen production emits only water vapor, contributing to a reduction in harmful greenhouse gas emissions.
Furthermore, this clean energy source boasts diverse potential applications, spanning industries such as transportation, shipping, and steel production, making it a lucrative avenue for economic growth while simultaneously addressing environmental concerns.
While the potential benefits of green hydrogen are undeniable, the current reality is that it comprises less than one percent of total hydrogen production globally and remains commercially non-viable. For green hydrogen to make a significant impact, it requires a substantial scaling-up of renewable energy infrastructure, a complex process that could take several years to achieve.
Despite these challenges, Gulf states perceive an opportunity to maintain their positions as influential players in the energy sector, even as demand for fossil fuels wanes.
Karim Elgendy, an associate fellow at Britain's Chatham House think tank, emphasized the Gulf states' aspirations to lead the global hydrogen market, viewing green hydrogen as a crucial factor in retaining their status as energy powerhouses amid the ongoing shift away from fossil fuels.
The quest to secure this leadership role is not limited to Saudi Arabia, the UAE, and Oman alone; other countries in the Gulf region are also making strides.
Saudi Arabia, endowed with substantial financial resources due to its oil wealth, is constructing the world's largest green hydrogen plant within its NEOM megacity project on the Red Sea coast. This $8.4 billion initiative, anticipated to be operational by the end of 2026, will integrate solar and wind energy to produce an impressive 600 tons of green hydrogen daily.
The UAE, on the other hand, with its forthcoming hosting of the United Nations' COP28 climate conference, has approved a hydrogen strategy that aims to position it as a top-ten hydrogen producer by 2031, signaling its commitment to the global energy transition.
Interestingly, it is Oman that emerges as a potential leader in the clean hydrogen race, despite lagging behind Saudi Arabia and the UAE in traditional fossil fuel production. The International Energy Agency predicts that Oman is on track to become the Middle East's largest green hydrogen exporter by the end of the decade.
The nation's ambitious goals include producing up to one million tonnes of green hydrogen annually by 2030 and a staggering 8.5 million tonnes by 2050, potentially exceeding current hydrogen demand in Europe.
Nevertheless, experts emphasize that the road to a green hydrogen-dominated energy landscape is not without obstacles.
Despite substantial investments, oil and gas industries in the Gulf region continue to expand, reflecting the prolonged timeline needed for green hydrogen to become cost-competitive with fossil fuels. Aisha al-Sarihi, a research fellow at the National University of Singapore's Middle East Institute, suggests that Gulf countries are likely to prioritize hydrocarbon sales until green hydrogen technology matures and costs decrease.
While the transition to green hydrogen presents challenges, it also holds immense potential, particularly in Asia where import-dependent nations such as Japan and South Korea are looking to integrate it into their decarbonization strategies. Despite existing hurdles, the vision of a greener, hydrogen-powered future remains an attractive proposition for the Gulf Arab states, as they strive to ensure their continued relevance and influence on the global energy stage.
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