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Hydrogen in MENA - Potential and ambition

  • Article
  • MENA has many potential advantages when it comes to producing green hydrogen…
  • …with high ambitions among policymakers, and export projects taking shape…
  • …but the further development of global demand is vital for exports to thrive

Renewable advantages. The countries of the Middle East and North Africa (MENA) have several advantages when it comes to renewable energy. Intense and reliable sunlight, large tracts of empty, flat land, and strong winds in some coastal areas mean that renewable power costs are among the lowest in the world.

10 of the top 15
Countries with the world’s best solar potential are in MENA (World Bank)
3,500 hours/year
Average sunlight in Dubai, among the highest globally (UN/WMO)

Export potential. One way of exporting spare renewable energy is by converting water into hydrogen using electrolysers. Hydrogen fuel made using renewables is often called “green” as its production leads to no carbon emissions. It can be transported to other countries, then used in cells to power engines, or burnt to generate electricity, with water as the main by-product. It can also be used to help decarbonise sectors such as steel and cement by replacing fossil fuels in the high-temperature combustion that those industries need.

Leadership ambitions. MENA countries have the potential to become key players in green hydrogen and export it around the world. While it is possible to make other forms of hydrogen – including “blue” produced using natural gas, and “pink” using nuclear power – the export market is expected to be dominated by green, as key importers such as Europe show a strong preference for it.

Testing targets. Policymakers across the region have announced targets to support the development of hydrogen production. Saudi Arabia and the UAE have ambitious production goals, while Egypt is currently ahead in terms of the number of announced projects, according to BloombergNEF.

4m tonnes/year
2030 target for hydrogen production, Saudi Arabia
1.4m tonnes/year
2030 target for hydrogen production, UAE

Projects taking shape. Only three hydrogen export projects in the world have reached the final investment decision stage, according to the International Energy Agency. One is in the US and the other two are in MENA. Oman’s Green Hydrogen and Chemicals Project aims to produce 38,000 tonnes of hydrogen per year. Saudi Arabia’s NEOM is the key project to watch, however, with its aim of producing 237,000 tonnes of green hydrogen per year.

Overseas competition. MENA countries are not the only ones to see long-term potential in hydrogen exports. Australia is among the competitors vying for market share. It has more physical space than the Middle East, as well as government funding support for hydrogen. The International Energy Agency currently expects Australia to dominate the export market until at least 2040.

Market development. For exports to thrive at all, however, the global hydrogen market needs to develop quickly. The challenge is “scaling up supply, demand and infrastructure at the same time”, as Adrian Odenweller of the Potsdam Institute for Climate Impact Research Institute put it. In our view, a boost in demand-side policies to match those supporting supply will be key.

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