Deals signed by Abu Dhabi’s state-owned renewables company Masdar with two French energy firms in late January reflect the twin strands of the emirate’s burgeoning hydrogen ambitions: to find a substitute export commodity for its long-dominant oil and gas sales, and to prepare its non-oil sectors to thrive in a decarbonising world.

Masdar’s green hydrogen partnership with French utility Engie has yielded an agreement to work together to produce carbon-free ammonia for export at the Ruwais fertiliser complex of Fertiglobe—a partnership between fertiliser supplier OCI and the UAE’s Adnoc.

Separately, French major TotalEnergies’ wide-ranging interests in Abu Dhabi’s energy sector took a fresh turn in mid-January when it joined a project to develop a demonstration plant at the Masdar City hub using green hydrogen in the production of sustainable aviation fuel. The UAE has a special interest in participating in moves to future-proof the aviation sector as it owns two major airlines and Dubai’s international airport is the world’s busiest.

The authorities are aware blue hydrogen will likely be undercut by green by the end of this decade, even for producers such as the UAE with access to plentiful low-cost gas reserves

When Abu Dhabi’s hydrogen strategy began emerging early last year, the initial focus appeared to be on exports and on blue hydrogen and ammonia. This strategy was signalled by various actual or pledged collaborations with prospective Asian consumers on creating a supply chain for the fuel and by the dispatch of the initial test cargos.

The first grassroots production project to be launched, led by Adnoc, called for the manufacture of blue ammonia—a natural fit with the firm’s expanding gas output and expertise in carbon capture and storage (CCS) —with Japan’s Mitsui and South Korea’s GS Energy signed-up as shareholders and offtakers in November.

Green priority

However, the authorities are aware blue hydrogen will likely be undercut by green by the end of this decade, even for producers such as the UAE with access to plentiful low-cost gas reserves.

Adnoc announced plans late last year to double LNG capacity. But all of the large-scale hydrogen projects subsequently launched in Abu Dhabi seek instead to tap its solar resources to produce green hydrogen.

The new tie-up with Fertiglobe serves both main strands of the emirate’s hydrogen strategy, allowing the firm to decarbonise its existing ammonia production in Abu Dhabi, whether for traditional use in fertilisers or in the material’s emerging role as an international clean energy carrier.

Masdar and Engie, which in December formed a “strategic alliance” intended to create a 2GW green hydrogen hub in Abu Dhabi by 2030, will develop a 200MW plant at Ruwais, with output sold entirely to Fertiglobe, which operates a 1.2mn t/yr ammonia and urea complex nearby. Startup is scheduled for 2025.

With barriers to entry in the green hydrogen sector relatively low, the UAE and its fellow petrostates with similar ambitions are unlikely ever to be able to dominate the market in the manner to which they have become accustomed during the oil age.

But the UAE’s economy is already substantially more diversified than those of its Mideast Gulf peers, with less than a third of GDP derived from oil, chiefly the result of Dubai’s tourism and trading prowess and Abu Dhabi’s industrial might.

However, many of its strengths lie in sectors—notably steel and international transport—that are notoriously carbon-heavy. Taking the lead in ‘greening’ them has thus become a priority. The federal government’s Hydrogen Leadership Roadmap, unveiled in November shortly after its 2050 net-zero pledge, cites the goal “to support domestic, low-carbon industries” ahead of exports.

The fertiliser industry is one of the easiest to decarbonise, but Abu Dhabi is also in the early stages of taking on more challenging sectors. In August, state-owned Taqa signed an agreement to develop a plant producing green hydrogen for use by steel manufacturer Emirates Steel.

The emirate has reason to claim leadership in reducing the sector’s carbon footprint, having commissioned what remains the industry’s only fully commercial CCS facility back in 2016, sequestering CO₂ from the steelmaker’s Mussafah plant for use by Adnoc in enhanced oil recovery. Now it has joined the global quest to take carbon profitably out of the production process itself.

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Author: Clare Dunkley