UAE’s Masdar Seeks Early Mover Advantage In Emerging Market For Green Hydrogen
Over the past decade and a half, Abu Dhabi’s Masdar has built itself into one of the world’s biggest developers of renewable energy projects. Now, as the United Arab Emirates prepares to host the next UN climate summit, COP28 at the end of the year, it is branching out into an entirely new business area – green hydrogen.
Hydrogen is seen as crucial to reaching global net zero targets. It can be used for a wide range of applications, including power generation, energy storage, transportation (particularly heavy transportation such as shipping and trucking). It can also be used to make sustainable aviation fuel (SAF), and, most crucially, it offers a way to decarbonize “hard-to-abate” industries such as steel, aluminium and cement, where using renewable energy alone is not possible, as well as other high-carbon industries such as fertilizer.
“Certain industries require ‘green molecules’ to decarbonise (rather than green electricity)” said Dr Faye Al Hersh, strategy technology specialist at Masdar, speaking during Abu Dhabi Sustainability Week, which the company hosted. For steel and cement, CO2 is part of the production process rather than just a product of the energy used but it is possible to decarbonise production by using hydrogen instead.
While current methods of production (known as grey hydrogen), which remove the hydrogen from methane gas, are hugely carbon-intensive, it is possible to produce low-carbon hydrogen, either by capturing the carbon and storing it (blue hydrogen) or by using renewable electricity and an electrolyser to produce the gas, which is known as green hydrogen.
In the wake of an injection of capital from Taqa, Abu Dhabi’s national energy company, the Mubadala Investment Company and ADNOC, the Abu Dhabi National Oil Company, it is this sector that Masdar is hoping to help create.
According to Al Hersh, Masdar is hoping both to export hydrogen from the UAE and to build facilities in other markets. By 2030, it plans to be producing 1 million tonnes a year, alongside its target of 100GW of renewable energy capacity by the same date. The biggest markets for green hydrogen are expected to be Europe, because it is encouraging the production of green hydrogen rather than blue, and the US, as a result of the incentives for hydrogen production in the recently-passed Inflation Reduction Act. Meanwhile, markets in Asia including South Korea and Japan, are looking to use green ammonia in power stations and industry.
In terms of sectors, both aviation and the maritime sector are set to be subject to decarbonisation regulations that will significantly increase their demand for cleaner fuels. Hydrogen can be used in aircraft in its pure form as well as making SAF, which can be used as a ‘drop-in’ fuel to replace conventional jet fuel.
Yet there are still many issues to be worked out all along the value chain, including the best way to transport hydrogen. In its pure form, hydrogen is difficult to store and to transport. But it can be converted to other derivatives, for example, being combined with nitrogen to make ammonia, which can be used as a fuel in power stations, or made into methanol, which can be used as a shipping fuel. “It is best to produce hydrogen in the form that the offtaker wants to use it because there are complexities in reconverting back into hydrogen,” says Al Hersh.
At the moment, because the market is so nascent, most projects require an offtaker prepared to pay a premium for green hydrogen. The main cost for green hydrogen is the energy required to produce it, so a source of cheap renewable energy is key to make projects commercially viable.
Another issue that is not yet settled is the technology that will be used in the electrolysers. The two main technologies are PEM (proton exchange membrane) and alkaline, with solid oxide a possible option in the future but less mature than the other two. Nel Hydrogen says that PEM electrolysers are likely to be preferred for smaller and decentralised projects, while alkaline devices are likely to be used for larger-scale industrial projects. The costs of electrolysers are set to fall dramatically in the next few years, thanks to a combination of technological improvements and economies of scale.
Masdar has announced a number of early-stage projects, including a partnership with Fertiglobe and Engie to build a 200MW green hydrogen plant in the UAE; a project to produce hydrogen and SAF with Siemens, TotalEnergies, airlines Etihad and Lufthansa, Marubeni and Khalifa University. The company is also developing projects in the UK, Egypt and Azerbaijan.
“We aim to leverage our footprint in existing projects and markets,” says Mohamed El Ramahi, executive director for green hydrogen at the company. “We want to target a market share of at least 15% of green hydrogen derivatives. We believe we can reduce the cost of hydrogen from $4 to $2 by 2030.”
Read More: UAE’s Masdar Seeks Early Mover Advantage In Emerging Market For Green Hydrogen