Hydrogen: the UAE’s Strategic Albeit Long-term Priority

UAE

Energy Policy

Commentary

Dr. Sergey Sukhankin

The Fall of 2021 marked two crucial developments that gave substance to the United Arab Emirates’ (UAE) strategic course on improving its green energy production capabilities. First, the UAE publicly committed to reaching net-zero carbon emissions by 2050, making it the first country in the Persian Gulf to have done so. Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai, stated that this commitment would be boosted by a $163 billion investment in renewable energy. Secondly, the UAE officially unveiled its Hydrogen Leadership Roadmap during the October 31 – November 13 COP26 Climate Change Conference in Glasgow. Sheikh Mohammed bin Rashid outlined a set of practical steps intended to facilitate the implementation of the Hydrogen Strategy adopted earlier. In a related statement, Emirati Minister of Climate Change and Environment Mariam Al Mheiri explained, “[T]he world is witnessing a growing interest in hydrogen, and the UAE is at the crest of the wave […] The country has the natural resources, technological expertise and the political will needed to become a key player in the global hydrogen supply chain.”

Together, these developments suggest that the UAE’s previously declared target to produce a quarter of the world’s hydrogen, thereby becoming one of the world’s leading players in the realm of green energy, remains the UAE’s strategic priority. At the same time, reaching this goal does not mean an immediate departure from non-renewable energy exports that continue to play a pivotal role in the UAE’s economy.

The Roadmap

The unveiling of the Hydrogen Leadership Roadmap was followed by the publication of a statement by Suhail bin Mohammed Al Mazrouei, Minister of Energy and Infrastructure. Al Mazrouei underlined that a “key enabler in line with UAE leadership’s enduring tradition to contribute progressive solutions to global climate challenges with the announcement of UAE’s Net-Zero by 2050 Strategic Initiative.” He added that, while “the UAE is well positioned to be a leader in low carbon hydrogen with natural competitive advantages for both blue and green hydrogen.” “Blue” hydrogen, i.e. hydrogen produced from non-renewable sources, is likely to become the country’s short-to-mid-term priority. The development of “green” hydrogen (produced from renewable sources) is likely to become the backbone of the UAE’s 2050 Strategy.

The Roadmap contains two sections of critical importance. Specifically, it outlines objectives through which the UAE’s strategic goal is to be accomplished and the pace and direction of transformation. In terms of the former, the document outlines a set of ways through which the UAE’s hydrogen opportunities are to be expanded. The document calls for new sources of value creation to be unlocked, particularly through exports of low-carbon hydrogen and its derivatives and products. It has pushed for the creation of new hydrogen derivative opportunities through low-carbon steel, and the development of sustainable kerosene (jet fuel) among other high-priority industries.

The Roadmap mentions five key focal points: the establishment of a clear regulatory framework, the development of best-in-class technology through value-add partnerships, amplification of access to existing and new intergovernmental relationships, capitalization on the four traditional factors of production (land, labor, capital, and entrepreneurship) with an emphasis on land, and an emphasis on green financing for the projects.

The Foreign Factor

UAE-produced hydrogen – both from current production and from potential future development – has already sparked international attention, with the world’s key economies (including Japan, South Korea, Germany, France, and India) already expressing their interest in this soon-to-become-strategic commodity. According to Nawal Al-Hosany, the UAE’s permanent representative to the International Renewable Energy Agency (IRENA), the UAE is primarily focusing on establishing and expanding ties with Japan, South Korea, and India.

However, Asia-Pacific markets are not the only destination for the UAE-produced hydrogen. Energy-hungry Europe is yet another strategic customer, particularly Germany, Europe’s largest economy, which is now positioning itself as the party most interested in developing hydrogen-premised ties with the UAE. Berlin, which launched the H2Global initiative, has manifested both its strategic interest in reducing its dependency on non-renewable energy as well as ambitions to emerge as one of the leaders in the global hydrogen-related supply chain ties. In this respect, as noted by Andreas Feicht, State Secretary of the German Ministry of Economy and Energy, “[T]he UAE [has] great potential for renewable energies and [is] therefore a very good partner for cooperation in the field of hydrogen and hydrogen technologies.” Peter Altmaier, German Minister of Economy and Energy, argued that Berlin’s goal was “to promote a rapid market ramp-up for green hydrogen and its downstream products.”

Germany is not the only European player interested in UAE-produced hydrogen. France, Europe’s second-largest economy, has perceived hydrogen as yet another pillar in boosting economic and political ties with the UAE. French Finance Minister Bruno Le Maire has argued that Paris sees the UAE as its “natural partner in the energy transition,” where “projects ranging from renewables to hydrogen” should play a central role. It could well be the case that France will be using hydrogen-related collaboration to increase its overall economic ties with the UAE and bring them to a qualitatively new level.

Through massive investments and commercial partnerships, the UAE has displayed its determination to become one of the world’s leading players in the hydrogen industry. The Emirati leadership sees the process of transitioning away from petroleum and toward hydrogen as an evolutionary one. While gradually shifting its attention to renewable energy, the UAE is by no means ready to break with conventional hydrocarbons, one of the key pillars of its current prosperity. As clearly stated by Dr. Sultan Ahmed Al Jaber, Emirati Minister of Industry and Advanced Technology and Managing Director and Group CEO of ADNOC during the Abu Dhabi International Petroleum Exhibition & Conference (ADIPEC), while renewable energy is rapidly becoming a dominant trend, the UAE is determined to continue its investments in developing its non-renewable energy sources. Thus, as he added, the UAE is strategically interested in “bringing in new investors and partners in exploration and extraction of both traditional and non-traditional energy deposits.”

Although climate change concerns remain over these investments, Abu Dhabi’s commitment to decarbonization and emissions neutrality by 2050 give it breathing room to continue optimal extraction of fossil fuels while they remain economically relevant. As Al Mheiri noted, the UAE “can’t just switch off the [oil] tap” – but can ensure that oil production is carried out as efficiently and sustainably as possible. The UAE appears determined to play a leading role in the production of hydrogen as another alternative to fossil fuels in the decarbonization of the world’s environment.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.