The visit of German Vice Chancellor Robert Habeck to the UAE
on March 21 marked the start of a new partnership between two emerging
heavyweights in the business of hydrogen. But more importantly, it underscored
the role that this “future fuel” could play in curbing climate change and
freeing countries from current geopolitical bottlenecks.
اضافة اعلان
Hydrogen offers three key attractions over traditional
fossil fuels: it is versatile; it burns clean, is non-toxic and emits zero
carbon dioxide; and it has diverse potential sources. It can replace natural
gas in power, industry and chemical manufacture, and oil in long-distance
transport. As Russia’s war on Ukraine drags on, and European and Asian natural
gas prices reach record highs, hydrogen gains in attractiveness.
The widespread use of hydrogen is at a very early stage, so
projections of its potential vary widely. But scenarios from bodies such as the
International Energy Agency, the International Renewable Energy Agency, the
Hydrogen Council, and Bank of America suggest it could meet up to 22 percent of
global energy demand — and 25 percent of all oil demand — by 2050.
Hydrogen makes up more than nine-tenths of the atoms in the
universe but does not occur on Earth in its pure form in large quantities.
Rather, it must be manufactured from other hydrogen-containing substances, such
as water, or hydrocarbons like gas and oil.
In use, hydrogen is all the same, but is classified by
production method into a variety of “colors”. The most common types are “gray”
(derived from natural gas without carbon capture and storage, so with high
carbon intensity), “blue” (from gas with carbon capture and storage, which
removes 90 percent or more of the associated carbon dioxide emissions during
production), and “green” (from splitting water using electrolysis, with
electricity derived from renewable or other low-carbon sources).
Currently, nearly all hydrogen is “gray” — made from oil,
gas, and coal without carbon capture and storage. It is barely traded
internationally and most is produced and used within an industrial plant’s own
operations. Moreover, it is difficult to transport over long distances because
it has low density, condenses to a liquid only at very cold temperatures, and
consists of very small molecules that could easily escape from containment
systems.
Hydrogen makes up more than nine-tenths of the atoms in the universe but does not occur on Earth in its pure form in large quantities. Rather, it must be manufactured from other hydrogen-containing substances, such as water, or hydrocarbons like gas and oil.
It is also expensive. Green hydrogen costs between $20 and
$50 per million British thermal units (MBtu). Blue hydrogen has the lower price
tag, averaging between $11 and $15 per MBtu. For comparison, natural gas in
Japan and Europe has averaged between $7 and $11 since 2005, while gas produced
in the US has been much cheaper, around $4 per MBtu.
However, international gas prices have surged recently due
to a demand rebound after the pandemic, a lack of investment in new production,
and reduced Russian supplies in Europe. With European and Asian natural gas
prices now at about $35 per MBtu, even expensive hydrogen begins to look more
attractive.
If hydrogen is to achieve its potential, production must
scale up enormously — by eight times or more by mid-century, according to some
estimates — requiring investments of up to $15 trillion. New hydrogen would
also need to be low-carbon – blue and green — and reliably certified as such.
In these formative years of the industry, an entire commercial value chain will
need to be created, similar to the global liquefied natural gas (LNG) industry
that developed from the 1960s onwards.
Additionally, production costs must drop significantly,
which can be accomplished by greatly expanding the manufacturing of
electrolyzers — systems that break water into hydrogen and oxygen — improving
their performance, and by advancing carbon capture storage for blue hydrogen.
The raw materials for some electrolyzers include precious metals such as
palladium and platinum, which will have to be mined in large quantities or
replaced with alternatives.
And long-range transport options from production sites to
markets are needed. These can include pipelines, as for natural gas, over
moderate distances. But most international trade will be by ship, possibly as
liquefied hydrogen, though more likely in a combined form such as liquid
organic hydrogen carriers (LOHC), ammonia, or methanol. Countries can also use
hydrogen to make certified low-carbon materials for export, such as steel,
creating a local value chain and industrial ecosystem.
Russia, the world’s largest holder of natural gas resources,
was beginning to develop a hydrogen strategy before its invasion of Ukraine.
Now those plans have evaporated, opening the door for other players to step in.
Europe hopes to generate much of its hydrogen itself, particularly from
offshore wind farms. But inevitably, European countries — as well as Japan,
South Korea, and many others — will have to import. For mostly ideological
reasons, Germany prefers green hydrogen, with Japan, Britain, and others being
open to green or blue.
Major hydrogen exporters will be countries with low-cost gas
resources — Gulf states and perhaps the US — and those with abundant cheap
renewable energy (wind, solar, or hydropower), coastal access, and
business-friendly systems. Saudi Arabia, the UAE, Oman, North African
countries, Australia, and Chile have all emerged as front-runners in green
hydrogen production. Saudi Arabia’s giant green hydrogen project at Neom, its
planned city in the kingdom’s northwest, is probably the most advanced large
new venture.
This explains Germany’s keen interest in working with the
UAE and other Gulf countries on hydrogen production and transport.
Habeck will not be the last senior politician to appear in
the Middle East seeking hydrogen. As net-zero carbon and energy security
imperatives become even more critical, hydrogen has rapidly emerged as a
tremendous opportunity for the region to add a new sustainable industry to its
hydrocarbon wealth.
The writer is CEO of Qamar Energy, and author of “The Myth
of the Oil Crisis”.
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