Kingdoms bold move to realize Saudi-made hydrogen industry

Saudi Arabia signed last week eight deals with a number of local entities to implement hydrogen transport projects as part of Vision 2030.

The deals will promote in-Kingdom development of fuel cell-based cars, buses and trains, transportation applications and sustainable jet fuel production in cities and sites around the Kingdom.

Production locations will include NEOM, the Red Sea, Princess Nora University, and the Royal Commission for Jubail and Yanbu.

Prince Abdulaziz bin Salman, Saudi minister of energy said: This is a real booster to Saudi endeavors to achieve the Vision 2030 objective to diversify the Kingdoms energy sources and become a global leader in all areas of energy.

The fuel cell vehicle market will support Saudi plans to increase renewable energy and meet its carbon emissions target. It will also meet Saudi Vision 2030s aim to diversify exports, increase local production and develop new industrial sectors.

The Kingdom is planning to become a global supplier of hydrogen as part of plans to meet 50 percent of power generation through renewable energy by 2030.

Saudi authorities have set a hydrogen production target of 3 million tons per year by 2030 and 4 million tons per year by 2035, with an emphasis on blue hydrogen, which is produced from renewable sources. Hydrogen can also be produced through diverse domestic resources, including fossil fuels, biomass and water electrolysis.

Several plans have been put in place following the new deals. NEOM is planning to produce its first supplies of hydrogen by 2025. Saudi Aramco inaugurated in 2019 the first Saudi hydrogen fueling station in Dhahran. In 2020, the company also began production and shipment of blue ammonia to Japan the worlds first blue ammonia supply-chain demonstration which marked a significant milestone for the Kingdom.

The current cost of producing a kilogram of hydrogen is a little under $5, according to the International Renewable Energy Agency. However, the Kingdom possesses a significant competitive advantage and its costs will likely be among the lowest globally, reaching just $1.50 per kilogram by 2030.

The Kingdom is also one of the cheapest producers of gas, making it capable of producing green hydrogen economically. Prince Abdulaziz said: We will have a field day with blue hydrogen because again, were the cheapest cost producer of gas.

Were doing a huge investment in shale gas in Saudi Arabia and we will be dedicated to have that gas be used for producing blue hydrogen. However, there are several key challenges for the industry to overcome.

The primary challenge for hydrogen production is reducing the cost of the necessary technologies to make the energy source cost competitive with conventional fuels.

Other challenges include difficulties in transporting the highly combustible element, but research is being conducted to increase efficiency in supply chains.

At present, hydrogen is most often used as an energy source nearby production facilities, cutting out the need for significant transportation. Building fueling stations to fuel cell electric vehicles will be key moving forward. The initial rollout in the Kingdom for vehicles and stations focuses on building large distribution networks.

Saudi Aramcos foray into hydrogen fuel stations, along with the separate deals to build hydrogen cars, buses and trains in the Kingdom, is key for the success of the deployment of hydrogen in Saudi Arabia.

Demand for the fuel source is likely to surge in Europe and East Asia, and the Kingdom is well placed geographically to export hydrogen through ships or pipelines.

Additionally, hydrogen energy deployment in Saudi can create new jobs for Saudi youth in the production of renewable energy and electrolysers, and can support industries such as fertiliser production.

Crown Prince Mohammed bin Salman said during the Saudi Green Initiative Forum last year that the Kingdom aims to reach net-zero emissions by 2060 through the Carbon Circular Economy approach, in line with development plans and enabling economic diversification.

Hydrogen is set to play a key role in the Kingdoms Carbon Circular Economy and energy transition plans.

Fuad Al-Zayer is an independent energy consultant. He is former head of Data Services Division at OPEC and a former head of the JODI Global Initiative at the IEF.