Internal corporate consolidation within the Emirates has been reflected in the emergence of the Abu Dhabi Hydrogen Alliance – a conglomeration of the UAE’s state-owned giants, such as Abu Dhabi National Oil Company (ADNOC), Mubadala Investment Co., and Emirati industrial holding company ADQ, which have each signed an agreement pledging to focus on green and blue hydrogen projects.
On May 19, Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Dubai Supreme Council of Energy, inaugurated the Green Hydrogen project at the Mohammed bin Rashid Al Maktoum Solar Park. This initiative is the first one of its kind in the Middle East and North Africa, where production of so-called “green hydrogen” will be conducted through the use of renewable energy. This step is a powerful statement that demonstrates the United Arab Emirates’ interest in a special role in the rapidly forming global hydrogen market, whose strategic importance, both economic and geopolitical, will significantly grow in the post-oil era.
So far, seventeen countries have articulated their hydrogen ambitions – reflected in roadmaps, strategies, visions, or concepts – and the UAE is said, according to various sources, to have the potential to occupy a special place in the rank of global hydrogen producers. In general, some experts argue that the Gulf region and the Middle East could become the world’s powerhouse in terms of hydrogen production, with a potential to form a $200 billion green hydrogen industry toward 2050 and generating up to one million jobs.
The UAE’s Vision
While the UAE does not have a formal hydrogen strategy, it does have a vision of how to pursue its entry into the “club” of hydrogen producers. This vision is premised on three main pillars.
First, the United Arab Emirates’ Energy Strategy 2050, first published in 2017, allocates a special strategic role to renewable energy. Specifically, the Strategy sets the ambitious goal of having renewable energy sources compose 44 percent of the UAE’s energy consumption by 2050. The report concludes that hydrogen-related projects and initiatives should play a decisive role in the transformation of the UAE’s non-renewable energy-dependent economy.
Second, the energy partnership formed between the UAE and Germany, also inaugurated in 2017, aims to “promote dialogue and research on the transition to renewables and provide a framework for collaboration on individual elements of sustainable energy.” Recently, the work of this initiative has taken an overt hydrogen-related course, clearly reflected in a January 2021 study document entitled “The Role of Hydrogen for the Energy Transition in the UAE and Germany”. Notably, this partnership has already yielded practical results. Abu Dhabi Future Energy Co. (Masdar) has entered into an agreement with Siemens Energy AG that is set to result in the construction of a hydrogen demonstration plant at the Mohammed bin Rashid Al Maktoum Solar Park.
Third, internal corporate consolidation within the Emirates has been reflected in the emergence of the Abu Dhabi Hydrogen Alliance – a conglomeration of the UAE’s state-owned giants, such as Abu Dhabi National Oil Company (ADNOC), Mubadala Investment Co., and Emirati industrial holding company ADQ, which have each signed an agreement pledging to focus on green and blue hydrogen projects. According to Mohamed Hassan Alsuwaidi, chief executive of ADQ, the alliance will “deepen the hydrogen energy economy in the UAE allowing it to meet the rapidly growing global demand for hydrogen worldwide”.
Reflecting on the UAE’s competitive advantages, experts usually concentrate on three key elements. First, hydrogen has vast export potential. According to the Energy Strategy 2050, the lion’s share of UAE’s domestically consumed “green energy” will be solar, meaning that hydrogen will primarily be seen as an export commodity. Incidentally, some of the world’s largest energy consumers, such as South Korea, have already showcased an interest in UAE-produced hydrogen. However, it is Japan with whom Abu Dhabi is seemingly moving toward a special partnership: now the two countries are closely working together to create an international supply chain. The second aspect is the UAE’s advantageous geographic location, which will enable it to serve both Eastern and Western trade routes. Third, the UAE boasts a highly developed intellectual and physical infrastructure, indispensable for a qualitative shift in developing its hydrogen-related potential.
Foreign Cooperation and Competition
The UAE is not the only nation aspiring to acquire a prominent place in the emerging global hydrogen market. Among the UAE’s many foreign competitors, two actors deserve special attention – Saudi Arabia (KSA) and Russia. These two nations stand out for two interdependent reasons. First, while both actors are heavily dependent on export of energy, recent anti-fossil fuel energy strategies in both the EU and the Asia-Pacific region will cause Moscow and Riyadh to introduce changes to their hydrocarbons-related export strategy. Secondly, both actors have extremely ambitious and far-reaching plans, aspiring to form the vanguard of the world’s largest hydrogen producers.
However, the positions of the KSA and Russia with regard to the UAE are somewhat different. According to some sources, Emirati initiatives in the realm of hydrogen are said to have irritated Riyadh, which views hydrogen as a potential additional theater of rivalry between the two players. From the words and deeds of Aramco officials, it appears that the Saudis see themselves as the Gulf’s leading player in the realm of hydrogen production and its commercial exploitation, and it is only a matter of time before Saudi and Emirati interests collide.
Russia has also firmly indicated its ambitions to become one of the world’s leading producers and exporters of hydrogen. Unlike Riyadh, though, Moscow has seemingly opted for cooperation with Abu Dhabi. In February 2021, Russia reached out to the UAE, establishing contacts during the IDEX-2021 forum with an active participation of Denis Manturov, Russia’s Minister of Industry and Trade. Subsequently, both parties agreed to create a joint working group with regard to cooperation in the realm of hydrogen, and both parties have pledged to “develop bilateral ties and expand cooperation” in this area.
Russia’s logic in cooperation with the UAE is clear: while the UAE is prospectively bound to primarily rely on production and export of green hydrogen (employing electrolysis to split water into hydrogen and oxygen), Russia will relay on production of both green and blue hydrogen (its production requires the use of natural gas), allowing it to continue using its vast natural gas resources and nuclear power for the production of hydrogen, two approaches to hydrogen production which are not in competition with one another. This is why Russia vests special hopes on Gazprom (natural gas giant) and Rosatom (the State Atomic Energy Corporation) as two prospective locomotives of the domestic hydrogen industry.
The United Arab Emirates clearly has large potential in production and export capabilities of hydrogen dubbed as “the oil of the future.” Two obstacles, however, might appear down the road. First, it is likely that Saudi Arabia will become UAE’s strongest regional competitor for Asian and potentially European markets. – areas that have been designated by Al Jaber as UAE’s priorities. Nor is Riyadh the only competitor that the UAE will encounter; Oman and Egypt have already announced their plans with regard to hydrogen production and developing export potential. While for now their interests do not clash, in the future this situation might change. Secondly, while Russia now appears to be developing close ties with the UAE in the hydrogen-related domain, some changes might occur in the future. Specifically, the recently adopted concept for hydrogen energy development clearly indicates Russia’s interest in developing capabilities in the area of low-carbon hydrogen – apparently with the consideration of the European Union’s Carbon Border Tax – which could lead to conflict between Russian and Emirati interests in the future.
Dr. Sergey Sukhankin is a Fellow at the Jamestown Foundation, and an Advisor at Gulf State Analytics (Washington, D.C.). He received his PhD from the Autonomous University of Barcelona.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.