Green hydrogen may be “a fuel of the future” for everything from vehicles to manufacturing, but a long road lies ahead to realise its domestic and industrial uses – current hurdles include a lack of policy and regulation and ways to minimise storage and transportation costs.
Estimates vary, but by 2050, the green hydrogen market could be worth between $300 billion and $700bn; one September 2021 report from Qamar Energy suggests the “addressable market” is $2.5 trillion.
Hydrogen demand, by 2025, meanwhile, is set to skyrocket to 650 million tons annually from 72 tons per year currently, the Organisation of Arab Petroleum Exporting Countries has predicted.
To produce green hydrogen competitively – a fuel with effectively no negative environmental impact – two things are needed: an abundance of renewable energy and cheap electricity.
The International Renewable Energy Agency (IRENA) outlines the production cost for green hydrogen as being determined by the renewable electricity price, the investment cost of the electrolyser and its operating hours.
“The UAE is one of the few countries around the world that has the potential to produce cost-competitive green hydrogen due to the very low cost of solar energy, which accounts for around 60 percent of the cost of green hydrogen production,” Dr Faye Al Hersh, technology specialist, strategy at Masdar told Arabian Business.
The sunny desert country has a plethora of raw solar power potential and has over the last few years developed its solar parks and technology.
“We are in a region where solar can be particularly powerful and the cost of generating power using solar is quite low, and we already have infrastructure in place that can help with the transportation and storage of hydrogen, thanks to existing oil and gas facilities. As such, it certainly has potential for growth in the UAE and in the GCC, and we’ve seen major entities investing heavily to turn the nation into a hydrogen hub,” Carla Sertin (pictured below), special energy correspondent for Arabian Business said.
In arid regions that have to rely on desalinisation, that process incurs an extra cost, but Dr. Al Hersh said the cost associated with the water supply in the overall cost of green hydrogen production is “insignificant.”
Like market size, estimates for green hydrogen production costs vary widely. IRENA sets the cost to produce green hydrogen between $0.8/kg and $1.6/kg by 2050. Siemens puts it between $1 and $1.50/kg in the same time frame. For the UAE, Bloomberg LEF has guessed the country can produce the clean fuel for $0.7/kg to $0.8/kg by 2050.
Fuel of the future
The Gulf country has said it intends to reduce greenhouse gas (GHG) emissions 23.5 percent below business-as-usual projections by 2030 (a cut of about 73mtonnes), as committed in its December 2020 update of its Nationally Determined Contribution (NDC) under the Paris Agreement.
“The green hydrogen market at this point is very small, but we expect it to grow significantly in the next 10 years,” Dr Al Hersh said.
The UAE is looking to hydrogen, which it calls “a fuel of the future” in its NDC, to help reduce greenhouse emissions.
Individuals’ increasing environmental concerns are driving the shift on one front – especially as they look to consume more consciously.
“Public opinion is driving [the change]. Society at large, is driving the change, and that means the first verticals or use cases is in consumer products,” said Thorbjorn Fors (pictured below), executive vice president of industrial applications at Siemens Energy.
“[Car makers] are looking at their carbon footprint for manufacturing a certain vehicle. Today it’s all about the emissions out of the gas, and tomorrow it’s going to be about the steel,” Fors said. Steel production is carbon intensive, and incentives are beginning to roll out to change production methods, like carbon taxes.
But already, car makers are working to make hydrogen-fuelled cars a reality. For its green hydrogen passenger cars, Masdar is set to ensure all components of the project are designed, installed, tested, operated, and maintained by the last quarter of 2024. The company has started to assess its green hydrogen demonstrator project as part of an alliance of state-backed entities.
“The main aim of the demonstration project would be to produce green hydrogen that will be converted to sustainable aviation fuel (SAF) to be utilised by our participating partner airlines,” Dr Al Hersh said. “A small portion of the green hydrogen produced will also be used to demonstrate ground mobility applications with a number of cars and buses operating in Masdar City (pictured below) and its vicinity. A dedicated hydrogen refuelling station will be built in Masdar City.”
On another front, companies are starting to wake up to environmental concerns, moving slightly away from the traditional business model of boosting bottom lines as a top priority.
And while that shift is beginning, caring about the environment isn’t enough to convince producers to make the switch.
Ultimately, green hydrogen has to be produced cost competitively – meaning it’s cheaper than its grey and blue hydrogen competitors – before it’s viewed as viable.
The colours of hydrogen
Green hydrogen is currently two-to-three times more expensive to produce than blue hydrogen, which is produced from fossil fuels with the carbon dioxide by-product captured and stored. Grey hydrogen, currently the cheapest to produce, is the most polluting and is produced from fossil fuels.
“We need to find ways to accelerate the hydrogen society, and the way to do that is to focus more on blue and build the network and assets, pipelines, background and laws to build the momentum around hydrogen, and then over time you switch the colour of the molecule,” Fors said.
The technicalities are complex, and the debate rages on about how to store hydrogen and how to transport it. To retrofit existing infrastructure or create new pipelines is the question. Restructuring existing infrastructure is cheaper than creating new infrastructure, but each has its drawbacks.
But what’s ultimately needed is policy and incentives.
“There needs to be an incentive for businesses, not only to invest in technology, not only in research and development, but actually scaling it in a commercial environment. To build that foundation, you need to have policies and stimulus to drive behaviours,” Fors said.
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