The UAE could produce blue hydrogen for as little as $1.3/kg based on IEA estimates for gas prices, according to a report from consultancy Qamar Energy.

This is at the low end of the range calculated by thinktank the Energy Transitions Committee of the possible costs of producing blue hydrogen today. The range is $1.3-2.9/kg depending on the cost of natural gas and carbon capture and storage infrastructure. The Hydrogen Council estimates the cost of producing blue hydrogen in Europe at $2.1/kg today, falling to about $1.8/kg by 2030.

The UAE has access to cheap natural gas, and the report notes that its CO₂ storage costs are likely to be lower than most locations.

“Storage sites are formed by giant, well-characterised and high-quality reservoirs, with very effective overlying seals, in shallow water or open desert, and in close proximity to the sites of CO₂ production,” says the report, titled The UAE’s Role in the Global Hydrogen Economy.

“Storage sites are formed by giant, well-characterised and high-quality reservoirs” Qamar Energy report

The UAE should pursue green and blue hydrogen projects to develop a competitive advantage in both technologies, it adds, noting blue hydrogen will be easier to scale up initially.

Emirati NOC Adnoc announced plans in May to build a blue ammonia project in Abu Dhabi, and has signed agreements to explore export opportunities with Japanese and South Korean firms.

The firm has also announced plans to build a green ammonia project in Abu Dhabi powered by an 800MW solar power plant.

National hydrogen strategy

Abu Dhabi’s Supreme Petroleum Council—which is in charge of energy policy—has mandated Adnoc to become a ‘hydrogen leader’. The UAE government is working on a national hydrogen strategy, which is still in the initial stages.

As a first step to scaling up, a guaranteed level of domestic demand needs to be created, according to the Qamar Energy report. 

“The most promising existing blue hydrogen opportunities in the UAE are for steel, direct-reduced iron, oil refining and fertilisers,” it says, adding that production can be located in clusters near to these sources of industry demand.

In green hydrogen, low renewable costs also make the region an attractive area for green hydrogen production. The 2GW Al-Dhafra photovoltaic plant agreed a power-purchase agreement in 2020 at 1.35¢/kWh—one of the lowest rates anywhere in the world. The report expects around at least 50GW of renewable capacity to be added between now and 2035.

The UAE’s established status as an energy and international business hub also makes it a good candidate for the development of hydrogen infrastructure, the report notes.

UAE firms have signed five major collaboration deals this year, including a recent UK-UAE deal to develop 2GW of blue hydrogen.

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Author: Tom Young