The use of hydrogen as an energy source has gained a lot of attention in recent years. Up to a few years ago, little was known or debated about hydrogen energy and its economic and environmental impact on society. I myself had little knowledge of the hydrogen energy market until recently.
The hydrogen energy market is one that is still taking shape with many divided views among experts, lobbyists, and environment advocates on how friendly some types of hydrogen are to the environment and how the substance is used to improve the image of energy producers.
As a quick background, hydrogen energy is produced from, obviously, hydrogen, the most abundant chemical element in the universe. It can be produced as a gas or liquid, or made part of other materials. It has many uses such as fuel for transport or heating, a way to store electricity, or a raw material in industrial processes.
There are many types of hydrogen, including blue and green. Green hydrogen is the cleaner version and is produced through electrolysis, a process of separating water into hydrogen and oxygen using electricity produced from renewable sources, leaving no damage to the environment.
On the other hand, blue hydrogen is produced by splitting natural gas into hydrogen and CO2, but the latter is captured and then stored. Blue hydrogen production is friendly to the environment as the greenhouse gases are captured, mitigating the environmental impact on the planet.
Saudi Arabia is growing its production of both green and blue hydrogen. The Kingdom’s large natural gas reserves and the huge associated gas it produces along with crude oil enable it to produce blue hydrogen. This is about a form of the fuel that is made when gas is reformed and the carbon dioxide byproduct is captured.
The first green hydrogen plant in Saudi Arabia with an estimated cost of SR19 billion ($5 billion) will be jointly owned by Air Products and ACWA Power, a Riyadh-based power developer 50 percent owned by the Kingdom’s sovereign wealth fund.
The plant will be based in NEOM, the new giga-city along the borders of Egypt and Jordan. The plant will be powered by 4 gigawatts of wind and solar power while production is due to begin in 2025.
But Saudi Aramco is also considering producing green hydrogen, thus competing with NEOM and increasing the Saudi market share of this important energy source.
Aramco is looking into synergies between the two types of hydrogen, according to its chief technology officer Ahmed Al-Khowaiter.
In an interview with Bloomberg, he emphasized that costs for producing blue hydrogen were probably around one-fifth of those of green hydrogen, at least at today’s solar and wind prices. That would not be an issue in the future as many analysts expect green hydrogen to become as cheap in 10 years time.
Saudi Arabia will be a major player in the hydrogen market as it is one of the few G20 economies or OPEC members investing heavily in green and renewable energy. NEOM, with its unique profile of sun and wind to convert water to hydrogen, aims to generate a clean source of energy on a massive scale.
To quantify its impact, this first hydrogen plant will save the world over 3 million tons of CO2 emissions annually and eliminate smog-forming emissions and other pollutants from the equivalent of almost 1 million cars. And this is just the start.
• Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.
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