Saudi Arabia, UAE see economic merits of going green

Industry leaders urge realism in green hydrogen push

Industry leaders urge realism in green hydrogen push

Dubai, 28 April (Argus) — Hydrogen and its derivatives will have a critically important role to play in accelerating the energy transition but policymakers need to be more realistic given that many of the technologies are still in their infancy, energy industry leaders from the Middle East and Europe said Sunday at a special meeting of the World Economic Forum in the Saudi capital Riyadh. "The market is a challenge," UAE energy minister Suhail al-Mazrouei said. "There is development of the market, but are we there yet? No. At the same time, are we serious about our production? I would say yes. It's between planning something, and getting the result you are aiming for." The UAE is planning to produce 1.4mn t/yr of hydrogen by 2031, more than 70pc of which will be green hydrogen, al-Mazrouei said. In the longer term the country aims to build its hydrogen capacity to 15mn t/yr by 2050. "Clean energy is something we decided to venture into 17 years ago when we began investing in the likes of [UAE state-owned renewables firm] Masdar and started thinking about what would happen after we export the last barrel of oil," UAE energy minister Suhail al-Mazrouei said. "What we did first is regulate and put a strategy of how much to produce." Al-Mazrouei's Saudi counterpart, Prince Abdulaziz bin Salman, voiced similar concerns. "We don't mind partnering with everybody… With the Koreans, the Japanese, our friends the UAE… but there are challenges," he said. "There is a lack of clarity on the policies, a lack of clarity on the receiving or consumer end, a lack of clarity on the incentives and a lack of clarity around what it takes to develop these technologies." Arguably more prohibitive is the "economics" of new energies such as hydrogen, he said. The cost of green hydrogen today is "between roughly $250-300/bl of oil equivalent," Prince Abdulaziz said. "What kind of a business acumen would choose to buy at $250-300/bl?" Al-Mazrouei agreed that costs are too high. "We cannot just treat the consumers as if they are ready to just pay double or triple the price [of conventional energies today]." Let's be serious The EU has set ambitious targets on renewable hydrogen. In 2022, the bloc doubled its 2030 production target to 10mn t/yr, from 5.6mn t/yr previously, and it is also working towards a separate pledge to import another 10mn t/yr by the same date. The production target is an unrealistic goal, according to the Saudi energy minister. "Those projects that have crossed the finishing line only come to 400,000t ꟷ around 4pc of the target," Prince Abdulaziz said. "How is it conceivable that in 2024, only 4pc has been achieved? How can people imagine that 10mn t/yr can be achieved?" TotalEnergies chief executive Patrick Pouyanne, who was speaking on the same panel, was even more blunt in his assessment, describing the EU's target as "impossible" and "not in reality". "Let us recognise that we are still at the infancy stage, and stop speaking about 10mn t, 20mn t, just to the media. It makes no sense," Pouyanne said. "Let's just be serious about it and find the right roadmap. Yes, we probably won't reach our target by 2030, but that's not a problem. It's more important to take steps and spend the money economically, to give them affordable and clean energy." By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.