Market Talk: Region eyes green hydrogen as future fuel

24 March 2021
Gulf countries may be able to export much of their green hydrogen while still having ample supply for domestic use

By Jesus Sancho, ACCIONA Middle East managing director


Deployment and investments in hydrogen have accelerated rapidly in response to government commitments to deep decarbonisation, establishing hydrogen as a key component in the ongoing energy transition. 

According to the European Union (EU), green hydrogen is an essential tool to decarbonise the industry and to cater for long-haul transport as Europe seeks to achieve a net-zero carbon economy by 2050.

By this year, the demand for green hydrogen worldwide will top 530 million tonnes, equivalent to around 7 per cent of the global primary energy consumption, displacing roughly 10 billion barrels of oil equivalent a year, approximately a third of the total production right now. 

More than 30 countries have hydrogen road maps, with 85 per cent located in Europe, Asia and Australia. If all projects come to fruition, total investment will reach over $300bn in spending by 2030. Governments worldwide have committed more than $70bn in public funding.

Scalable alternative 

In the Middle East, hydrogen is gradually gaining awareness. Good examples are the announcements made by ADQ, Mubadala and Adnoc in the UAE and the megaproject at Neom in Saudi Arabia.

Green hydrogen production could potentially be more cost-competitive than in other regions due to available low-cost renewables in the GCC. It has begun gaining momentum as a scalable alternative to fossil fuels over the past two years.

Besides, the GCC relies on desalinated water and certain electrolysis can run on saline water. Currently, water electrolysis is the only feasible method for large-scale hydrogen production without any carbon dioxide emissions. 

The annual global export market for hydrogen is projected at $300bn by 2050. With the GCC’s high export potential, given its strategic location, high solar radiation and very low cost of renewable energy among others, Gulf countries may be able to export much of their green hydrogen while still having ample, low-cost volumes for domestic use. 

Spain is hosting two of the EU’s strategic green hydrogen projects. The first pilot project in Spain is ‘Power to Green Hydrogen Mallorca’ – in joint venture with Enagas – where the hydrogen will be used in the city’s gas network and for public transport.

The plant will produce 300 tonnes of renewable hydrogen from 14MW of photovoltaic energy originating from two plants in Mallorca. The project is part of the ‘Hydrogen Road Map: a commitment to renewable hydrogen’ approved by the Spanish government and supported by the Balearic government and EU. It will position Spain as a technological reference in the production and usage of renewable hydrogen.

The second project is ‘Ocean H2’, which pioneers a stand-alone offshore generation facility on a gravity-based structure. Both projects are led by ACCIONA.

We believe that local governments must take decisive action in order to capitalise on the market, or they risk losing ground to hydrogen producers and exporters in other markets.

ACCIONA's Power to Green Hydrogen Mallorca pilot project will produce 300 tonnes of renewable hydrogen


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