After years of being hyped as a possible game-changer and touted as the fuel of the future, green hydrogen is now recognized as a crucial component of any realistic net-zero economy in the long term by both governments and investors. While energy transition plans were slowly taking shape, particularly in Europe, recent events have created a golden opportunity for a more rapid rollout of green hydrogen. The ongoing Ukraine-Russia conflict and its implications for energy dependence have forced European nations to rethink their priorities and sparked a frenetic race to secure new energy alternatives other than Russian-controlled gas supplies. In fact, it didn’t take long for these opportunities to materialize. As part of the RepowerEU strategy, the EU set a target of 10 million mt/year of green hydrogen imports by 2030, in addition to its domestic hydrogen production target of 10 million mt/year. With this massive import opportunity, Africa seems poised to realize its green hydrogen potential. Green hydrogen, fueled by renewable energy, now accounts for 4% of total world hydrogen production. It can be used in several sectors and industries, including refineries, to produce ammonia. Automobile manufacturers have also set their sights on this kind of energy. The market for hydrogen fuel cell electric vehicles is booming, with stiff competition to get enough range for the end user. An overview of Africa Africa stands out as the region with the greatest potential for green hydrogen. Not only is the continent in desperate need of energy infrastructure investment, of which renewables and green hydrogen could represent the lion’s share, but many African countries present unique competitive advantages and environmental characteristics for cheap and reliable energy production. According to H2 Atlas-Africa, wind and solar energy in West Africa could generate up to 165,000 TWh of green hydrogen per year, of which 120,000 can already be produced for less than €2.50. To put this figure into perspective, green hydrogen in Germany currently costs around €7 to €10 per kilogram. Therefore, Africa has been presented with a tremendous opportunity to fulfil its energy needs and requirements, reduce its emissions in line with the current international standards, become a net exporter of energy, and decarbonize its industry, which allows an easier entry into the EU market. Realizing the potential, a few African countries have already started positioning themselves and have taken the lead in establishing a green hydrogen industry powered by their renewable energy capabilities. Egypt, Morocco, and South Africa stand out as great examples of countries taking the opportunity seriously and advancing their plans to transform fiction into reality: Focus on the projects Egypt Egyptian policymakers have taken green hydrogen more seriously in the last year, holding talks with a number of multinational corporations about developing a local sector that has the potential to become an important component of the country's energy mix. Egypt's first green hydrogen generating plant, with a capacity of 100MW, will be operational in November 2022, making it the world’s largest by a factor of five. The output will be used as a supplemental feedstock by the Egyptian Basic Industries Corporation to generate 90,000 tonnes of green ammonia per year. TAQA Power has also signed a Memorandum of Understanding (MoU) with MAN Energy Solutions, a German business, for a pilot project to produce green hydrogen locally in Egypt to power tourist buses with clean fuel. Siemens Energy and the Egyptian Electricity Holding Company have signed a MoU to collaboratively create a hydrogen-based industry in Egypt with export capabilities. They will co-develop a pilot project with a 100 to 200 MW electrolyzer capacity as a first step, which will help drive early technology deployment, start a partner landscape, establish and test regulatory environment and certification, setup off-take relations, and define logistic concepts. Eni, GE, and ThyssenKrupp have all submitted bids to build hydrogen facilities in Egypt. The proposals, which total $2 billion, are for facilities that would create both green and blue hydrogen. Several proposals from European institutions such as the German development bank KfW, the European Investment Bank, and the International Finance Corporation (IFC) were accompanied by financing offers. South Africa Further South on the continent, South Africa has already had a go at green with The National Hydrogen Fuel Cell Technology (HFCT) Research, Development, and Innovation strategy-also known as the Hydrogen South Africa strategy (HySA). The mining sector has also been leading the way in hydrogen technology within the country. Anglo Platinum, for instance, is setting up a 75 MW solar PV-powered plant with plans to further increase the capacity to 320 MW, with the surplus of electricity generation being directed to produce green hydrogen. In May 2021, the German development bank KfW announced a €200 million scheme to help South Africa establish green hydrogen projects. A feasibility assessment issued by the government and private-sector partners in October 2021 found three green hydrogen hubs in the eastern region that had the potential to develop a hydrogen valley. Sasol and the Industrial Development Corporation (IDC) have agreed to work together to advocate for enabling policy frameworks, develop pilot and commercial-scale hydrogen projects, access local and international financing options, and go after strategic projects that will help the country attain its energy transition and economic development goals. Sasol revealed a few months later that it planned to begin manufacturing green hydrogen as early as 2023. Morocco Considered a leader along with South Africa, Morocco is also working to create its own green hydrogen industry. In 2020, the Moroccan government engaged in a partnership with Germany to build the first standalone green hydrogen plant on the continent. The following year, the government signed an agreement on green hydrogen development with Portugal, laying the groundwork for clean energy collaboration between the different economic actors in both countries. Morocco has also inked a strategic collaboration with Irena in June 2021, with the goal of becoming a major green hydrogen producer and exporter. The two parties will work together to conduct green hydrogen studies and examine policy options for incorporating businesses into the green hydrogen economy on a national scale. A joint venture between Greece's Consolidated Contractors Company (CCC) and Ireland's Fusion Fuel aims to build a green hydrogen-powered ammonia facility in Morocco as of 2022, which will be the country's largest green hydrogen project to date. The plant will have the capacity to produce 31,000 tonnes of renewable hydrogen per year and generate 183,000 tonnes of green ammonia by 2026. Finally, in early December 2021, the country saw the establishment of "Green H2A", a technology platform dedicated to research and innovation in green hydrogen. The first of its kind in Africa, it aspires to play a key role in Morocco's industrial deployment of green hydrogen and its uses. One of Green H2A's first initiatives is a pre-industrial pilot project to produce 4 tonnes of green ammonia per day with a 4MW electrolysis capacity. Given both the advancements on the ground and in legislation, and the intense interest by Germany, one of the leaders in green H2 technology, Morocco, Egypt, and South Africa are poised to become the leaders in the field for the coming decades, developing a "decarbonized fuel" made from renewable energy for export to Europe. In this sense, The Africa Green Hydrogen Alliance was officially launched at the first-ever Green Hydrogen Global Assembly in Spain on May 2022, with the goal of developing a strong green hydrogen ecosystem. Egypt, Kenya, Mauritania, Morocco, Namibia, and South Africa are among the founding partners. The energy ministers of 14 Arab nations, including Morocco, have proposed an ambitious plan to create an Arab Common Market for power, with green hydrogen being an important link in the chain. On July 27, 2020, the final versions of two international treaties connected to this project were completed. It is undeniable that green hydrogen shows strong potential on the continent, with several countries taking the lead due to the foresight and available opportunities. In the coming years, we are likely to witness a marked acceleration in the rollout of hydrogen projects and the concretization of decarbonisation plans. However, despite the winds setting the sails on a clear course in the coming years, many African nations have yet to live up to their potential and geographic resources. Sources: African Business - Green hydrogen – implications and prospects for Africa - June 2022 Africa News – Positioning Africa as a green hydrogen leader African Business - South Africa eyes future as green hydrogen hub– October 2021 Atlas of green hydrogen generation potentials in Africa - H2 Atlas Tool Federal Ministry of Education and Research - West Africa can become the climate-friendly energy powerhouse of the world - May 2021 Arab News - Egypt to open its first green hydrogen plant in November 2022 – December 2021 Recharge - World's largest green hydrogen project – with 100MW electrolyser – set to be built in Egypt – November 2021 Siemens Energy - Siemens Energy supports Egypt to develop Green Hydrogen Industry – August 2021 Enterprise - Big global players eye hydrogen investment in Egypt – November 2021 Cliffe Dekker Hofmeyr - Moving towards a green hydrogen energy future – April 2021 Baker McKenzie - South Africa: Green hydrogen policy - a rapidly growing timeline of important developments – November 2021 South Africa’s Department of Science and Innovation – South Africa hydrogen valley final report – October 2021 African Business - Green light for a green hydrogen economy in Africa – November 2021 Le360 – Hydrogène vert: le Maroc et le Portugal main dans la main pour booster la filière – December 2021 Al Jazeera - Green Hydrogen: The new scramble for North Africa – November 2021 Energy & Utilities - Fusion Fuel and CCC to develop $850m Morocco green hydrogen project – July 2021 Le360 – Hydrogène vert: une plateforme technologique pour développer la filière, une première en Afrique – December 2021  The second one, Air Liquid’s 20MW plant, is in Canada.
Energy use and CO2 emissions from transportation The transportation sector accounts for around 30% of global final energy consumption. Given that most of our energy is still derived from fossil fuels, despite the growing share of renewable energy generation and the announced carbon neutrality ambitions by 2050, transportation is already at the top of a list of sectors to decarbonize. What’s more, transport has the highest level of reliance on fossil fuels of any other sector. According to the International Energy Agency, road transportation alone accounts for approximately 15% of global energy-related GHG emissions. During the last few years, the public debate on reducing road transport emissions has been dominated by battery electric vehicles (BEVs), which represent a promising path towards decarbonizing the sector. However, despite significant advances in cost and economic competitiveness—EVs are already competitive with internal combustion engine (ICE) vehicles on a total cost of ownership (TCO)1 basis—a few challenges have hampered market development, most notably in terms of practicality, limited autonomy2, and long refueling times of BEVs. The Hydrogen Fuel Case The use of hydrogen as a fuel, particularly green (hydrogen produced from water electrolysis3) or blue hydrogen (produced from natural gas and supported by CCS4), could be the key to decarbonizing road transportation. This is because not only can fuel cell electric vehicles (FCEVs) already, similar to conventional ICE vehicles, refuel in less than 4 minutes and have a driving range of over 450km5 but also, just like BEVs, they produce no harmful tailpipe emissions. From a cost perspective, because the level and type of performance required vary from one vehicle segment to another, it’s important to make a distinction between light and heavy-duty vehicles. For the sake of illustration, we consider the 3 main vehicle segments: passenger cars, HDT, and off-road, and compare the FCEV options to the BEV and ICE versions by the total cost of ownership (TCO). Passenger Cars: Based on a TCO analysis by energy consultancy Element Energy, FCEVs are quite a long way from being cost competitive with electric and conventional passenger cars, especially for first-time owners. And although the TCO of FCEVs in the segment is expected to drop significantly over the next decade due to falling fuel cell costs, BEVs are expected to remain a much more attractive option in comparison, except for larger passenger cars, SUVs, and vans with longer-range requirements and heavier use cycles (e.g., for taxis and ride-sharing) where FCEVs become a reasonable alternative. Heavy-Duty Vehicles/Trucking (HDT): According to a report by the Hydrogen Council and McKinsey, on-demand HDT FCEV is expected to become the cheapest option in terms of TCO by 2030, assuming a hydrogen price at the dispenser of about $4/kg in 2030. The analysis suggests that HDT FCEV should achieve break-even with BEVs by around 2025 and with ICE HDTs by 2028, driven primarily by a drop in hydrogen fuel costs and equipment costs. It’s worth noting that, in a context where targeted subsidies such as Switzerland’s toll exemption policy or other support mechanisms exist, the described timeline could be even shorter. Off-Road Equipment/Vehicles: Due to the specific performance requirements of off-road equipment, fuel cell powertrains are potentially the only alternative to GHG-emitting equipment. In the context of achieving net zero targets, decarbonizing the off-road vehicle segment is of particular importance. That’s because mining rare earth metals is critical for green technology manufacturing (including fuel cells), and off-road equipment (such as excavators and wheel loaders) is heavily used in mining operations. Regarding the cost, the latest estimates from the US DoE and the Journal of Hydrogen suggest that fuel cells are already the lower-cost option for compact tractors/wheel loaders and standard/full excavators. Developing the hydrogen sector Hydrogen-fueled cars have been commercially available for almost a decade. Despite that, due to the lack of infrastructure, their sales remain dwarfed by those of BEVs. Mindful of the sector’s potential, governments have started over the past few years drafting strategies and creating policies in support of hydrogen, including investment incentives for the construction of hydrogen production and refueling facilities to enable the deployment of FCEVs. Below are some examples: Japan: In 2017, the Japanese government issued the Basic Hydrogen Strategy and became the first to adopt a national hydrogen framework. Through a series of legislation and plans, it aims to expand its hydrogen economy and production to 20 million tonnes by 2050. United States: At the federal level: the Emergency Economic Stabilization Act of 2008 introduced incentives in the form of tax credits to help minimize the cost of hydrogen and fuel cell projects. Since then, the tax credit policy has been extended and its scope enlarged to include refueling equipment and energy storage system facilities. A wealth of other incentives has been introduced, most notably through the Biden Administration’s Build Back Better Act. At the state level: energy authorities have taken similar steps. In 2020, the California Energy Commission (CEC) committed to investing up to $115 million to significantly increase the number of Hydrogen Refueling Stations (HRSs) in the state. California is on track to achieve its target of deploying 200 HRSs by 2025. Germany: In June 2020, Germany presented its National Hydrogen Strategy. The strategy document identified several goals that need to be achieved for green hydrogen to become an effective tool in reaching emissions neutrality by 2050, including the scale-up of H2 production and transport capacity, as well as the introduction of support schemes and public funding. Germany committed to providing public funding amounting to €7 billion for the market ramp-up of hydrogen technology in the country. Chile: In addition to their National Electromobility Strategy published in 2017, which includes goals on green hydrogen and fuel cells applications, Chile announced its National Green Hydrogen Strategy in 2020, and the goal to be carbon neutral by 2050. Figure 1: HRS by region, 2021 [caption id="attachment_8368" align="aligncenter" width="486"] source: IEA, 2022[/caption] On the private sector front, energy companies are already competing for market shares of Hydrogen Refueling Stations (HRSs). Today, the fast-growing HRS market is dominated by a few Oil & Gas and hydrogen companies, namely Air Products, Linde, Air Liquid, and Nel. To enter the market, some companies chose to combine their investment efforts through JVs, such as the German H2 Mobility JV, which operates a global network of 200+ HRS. Concerning car manufacturing, major OEMs are offering a limited but growing number of FCEVs to the public in certain markets, in line with what the developing infrastructure can support. It is estimated that around 52 thousand FCEVs are currently in circulation, with the majority of them concentrated in the United States (38%) and Korea (24%). Figure 2: FCEVs by region, 2021 [caption id="attachment_8369" align="aligncenter" width="458"] source: IEA, 2022[/caption] The net zero emissions by 2050 scenario requires transport sector emissions to fall by 20% by 2030. To achieve this goal, new sales of PHEVs, BEVs, and FCEVs need to represent 64% and 30% of total passenger car sales and HDT sales, respectively, by 2030. The TCO data summarized in this article shows that, rather than competing against BEVs, hydrogen-fueled vehicles can help achieve this objective by taking up the baton where BEV technology fails to deliver, in particular in the HDT segment. Notes: 1: The total cost of ownership includes both purchase cost and running cost, i.e., fuel and maintenance costs, over the lifetime of the vehicle. 2: Based on EPA data, the median range for 2021 model EVs was 234 miles (source) 3: Water electrolysis uses an electrical current to separate the hydrogen from the oxygen in water. If this electricity is obtained from renewable sources, hydrogen will therefore be produced without emitting carbon dioxide into the atmosphere. 4: CCS stands for Carbon Capture and Storage. In the case of blue hydrogen production, the CO2 generated during the manufacturing process is captured and stored permanently underground. The result is low-carbon hydrogen that produces no CO2 5: 300 miles based on US DoE estimates –converted to km and rounded for the sake of convenience (Source) Oussama El Baz Sources: IEA, Key World Energy Statistics 2021 IEA, World Energy Outlook, 2021 IRENA, Green hydrogen cost reduction, 2020 IEA, Global EV Outlook 2022 US DoE Alternative Fuels Data Center European Parliament – What if hydrogen could help decarbonize transport? European Commission, Biofuels in the European Union, A vision for 2030 and beyond Element Limited, Electric Cars: Calculating the Total Cost of Ownership for Consumers, 2021 US Department of Energy, Hydrogen and Fuel Cell Technologies Office, 2022 Hydrogen Council, A perspective on hydrogen investment, market development and cost competitiveness, 2021 Cleantech Group, Decarbonizing off-road vehicles, 2022 US DoE, Hydrogen Fuel Cell Technologies Office, 2022 Journal of Hydrogen, Performance, and cost of fuel cells for off-road heavy-duty vehicles, 2022 International Partnership for Hydrogen and Fuel Cells in the Economy Marca Chile, Electromobility: Chile is leading the way in Latin America with ambitious goals, 2021 Watson Farley & Williams, The German Hydrogen Strategy, 2021 Baker McKenzie, How Proposed New US Hydrogen Tax Incentives Should Spur Investment, 2021 US DOE, Financial Incentives for Hydrogen and Fuel Cell Projects JD Supra, Clean Energy Tax Proposals in Biden’s New “Build Back Better” Framework, 2021 California Energy Commission, 2020 Exxon Mobil – What is blue Hydrogen Iberdrola – Green hydrogen: an alternative that reduces emissions and cares for our planet
In recent times, inflation has been a topic of discussion for economists, politicians, and citizens alike. The pandemic has brought an end to a period that was marked with low-to-moderate inflation rates with even deflation plaguing countries such Thailand, Qatar, and Malaysia before the COVID outbreak. There has been a noticeable spike in the number of advanced economies with an inflation rate of above 5%. The number of emerging markets seeing higher inflation has also increased with 78 out of 109 Emerging market & Developing countries having an inflation rate of 5% or more. This leap is the first of its kind in a 20-year period. [caption id="attachment_8040" align="aligncenter" width="541"] Source: Project-Syndicate[/caption] Pandemic-related factors brought the annual inflation rate in the US to 7% in the last month of 2021, a fresh high since June of 1982. The U.K. and Canada had a whopping 30-year high inflation rate reaching 5.4% and 4.8% respectively. [caption id="attachment_8042" align="aligncenter" width="459"] Source: oecd.org[/caption] One of the major problems with inflation is that the lower social classes are the ones hit the hardest. According to the IMF, inflation has particularly negative consequences for households in low-income countries, where about 40% of consumer spending is on food. The reason inflation does not affect higher-income individuals and households is because they can afford to spend more money on basic goods contrary to their lower-income counterparts. A study conducted by Ipsos of 20,000 people from 30 different countries found that over 50% of participants reported an increase in the prices of clothing and shoes, housing, healthcare, and entertainment. Over 40% expect these costs to keep rising for several months to come. The UN noted that the FAO, Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, reached a 10-year high in 2021, despite a small December decline. [caption id="attachment_8043" align="aligncenter" width="457"] Source: FAO.org[/caption] Reasons for the increase Many reasons contributed to prices rising at a substantial rate. Most of these reasons relate to the COVID-19 pandemic including supply constraints, economies reopening, fiscal stimulation, increased liquidity, higher energy prices, lower inflation in past years, higher unemployment, conflict between countries, and labor shortage. Supply constraints The fast spread of the virus in 2020 caused the shutdown of many industries around the world and with that, consumer demand also dampened, which in turn reduced industrial activity. After vaccines became widely available and many countries deemed their vaccination campaigns successful, economies reopened and suddenly, supply chains were faced with tremendous pressure. The supply of goods, once systematic and free-flowing pre-pandemic, was forced to a halt post-pandemic which damaged all the systems that were in place originally. Supply chain systems are not easy to implement as it requires coordination between a multitude of different parties. The surge in demand necessitated these systems to switch on and be fully functional in a short period, which is not feasible. [caption id="attachment_8044" align="aligncenter" width="454"] Source: BEA, BLS[/caption] A major culprit in price increases coming from the supply constraints is the semiconductor industry. Chips are increasingly present in most of the products we use, ranging from cars to remote controls to smart lights and a variety of different items that are used today. High Energy Prices [caption id="attachment_8045" align="aligncenter" width="443"] Source: U.S. Bureau of Labor Statistics[/caption] Oil prices have reached their highest level since 2008. Brent Crude, which represents the global oil benchmark, has increased to $130 per barrel. The spike has been driven primarily by fears of supply-side disruptions. The attack by Yemen’s Houthis on fuel trucks in Abu Dhabi, in which three people were killed played a part but the main reason has to do with the tensions between Russia, the world’s second-largest oil producer, and Ukraine. Energy prices in households are rising dramatically and their effects are directly being felt by consumers. Further, the key oil-producing countries have kept supply on a gradually increasing schedule despite the sharp increase in global crude prices. The OPEC countries decided to increase overall daily production by only 400,000 barrels in February, even though its own prediction is for demand to rise by 4.15 million barrels per day in 2022. 2022 Outlook According to the World Bank, Global inflation is expected to remain elevated throughout 2022. Supply bottlenecks and labor shortages are assumed to gradually dissipate through 2022, while inflation and commodity prices are assumed to gradually decline in the second half of the year. In the U.S. the central bank is under pressure to raise interest and tighten the economy further to combat inflation. However, the country is at a crossroads where raising rates might trigger a fresh global debt crisis, as its emerged poor-country repayments to creditors are already running at their highest level in two decades. The IMF warned that a quantitative tightening from the U.S. Federal Reserve could have a ripple effect on emerging markets by leading to capital outflows and currency depreciation. Emerging markets that borrowed most from the U.S. dollars are going to be hit the hardest by an increase in Interest Rates leading to potential country defaults. In the MENA region, the Economist Intelligence Unit has pointed out that the CPI is expected to remain high in 2021-2022 at an annual average of 14% due to the rise in international food and energy prices. Inflation will continue to be aggravated with Supply Chain bottlenecks and the post-pandemic increased demand in Middle Eastern countries. [caption id="attachment_8046" align="aligncenter" width="471"] Source: The Economist Intelligence Unit[/caption] There are also expectations that inflation will greatly impact low-income non-oil exporting countries within the MENA region such as North African countries. The effects of higher inflation will be less impactful in wealthier GCC and Asia-Pacific Economies. Regarding food, shortages might arise in low-income non-oil exporting countries due to dry spells and lower crop yields. Sharply depreciating currencies in countries such as Lebanon will further aggravate inflation in 2021/22, driving up the cost of imported goods. In a more distant future, inflation is expected to slow down toward the end of 2022 and the beginning of 2023, as Supply chain disruptions start to dissipate and the labor markets around the world are back to their healthy state. Conclusion Inflation seems to be quite a persistent rather than a transitory threat. The escalation of the conflict between Russia and Ukraine will most definitely not help ease inflation but rather further aggravate the matter since Russia is one of the biggest producers of raw materials such as oil, wheat, and a variety of different metals. Gasoline prices will further increase with the cost for food and goods such as smartphones most likely to follow suit. However, with supply chains recovering to their original efficiency, inflation will eventually slow down to settle at a fair rate. Author: Othmane Zidane Sources https://www.project-syndicate.org/commentary/return-of-global-inflation-by-carmen-reinhart-and-clemens-graf-von-luckner-2022-02?a_la=english&a_d=62067728a72fe630c0cb5cc7&a_m=&a_a=click&a_s=&a_p=homepage&a_li=return-of-global-inflation-by-carmen-reinhart-and-clemens-graf-von-luckner-2022-02&a_pa=curated&a_ps=&a_ms=&a_r= https://data.oecd.org/price/inflation-cpi.htm https://www.weforum.org/agenda/2021/12/rising-prices-inflation-ipsos-survey/ https://www.eiu.com/n/threat-from-inflation-in-the-mena/ https://www.theguardian.com/business/2022/jan/23/fears-grow-that-us-action-on-inflation-will-trigger-debt-crisis https://globalnews.ca/news/8523037/inflation-canada-jan-2022-record/ https://www.naturalgasintel.com/oil-natural-gas-prices-drive-sustained-surge-in-inflation/ https://research.stlouisfed.org/publications/economic-synopses/2021/12/16/supply-chain-bottlenecks-and-inflation-the-role-of-semiconductors#:~:text=Along%20with%20unprecedented%20labor%20market,to%20shortages%20of%20key%20inputs. https://www.ecb.europa.eu/ecb/educational/explainers/tell-me-more/html/high_inflation.en.html https://www.imf.org/external/pubs/ft/fandd/basics/30-inflation.htm https://www.fao.org/worldfoodsituation/foodpricesindex/en/ https://blogs.worldbank.org/voices/global-economic-outlook-five-charts-1 https://www.morganstanley.com/ideas/global-macro-economy-outlook-2022#:~:text=The%20surge%20in%20global%20inflation,global%20GDP%20growth%20in%202022.
The world is currently shifting its energy system away from hydrocarbons and towards low-carbon energy sources, with a view to eventually transitioning to a net-zero energy system. As a result, governments and energy companies alike are placing large wagers on hydrogen, in an effort to lower emissions. The GCC countries have long been concerned about the sustainability of their hydrocarbon revenues and have taken early steps to develop national hydrogen strategies. Saudi Arabia and the United Arab Emirates lead the way in this regard and have positioned themselves to become major hydrogen exporters. Japan, China, and South Korea, on the other hand, currently some of the top destinations for Saudi and Emirati crude oil, are set to emerge as major importers of hydrogen. The recent export by the Emirates’ state-owned oil company ADNOC, of its first blue hydrogen cargo to Japan, marks the first step toward solidifying this emerging relationship. Hydrogen Steadily Gaining Ground in the GCC The UAE joined the Global Hydrogen Council in July 2021, and developed its National Clean Energy Strategy 2050, under which ADNOC will produce 300,000 metric tonnes of hydrogen annually. In Saudi Arabia, a green hydrogen project is scheduled for completion by 2025, with a capacity of 650 metric tonnes of hydrogen, and 1.2 million tonnes of green ammonia, making it one of the largest such projects in the world. In Kuwait, meanwhile, the National Petroleum Company (KNPC) has completed work on a hydrocracker unit at a cost of $16 billion, that can produce 454,000 tonnes of clean fuel. Oman Oil Company, for its part, is implementing a project to produce 1.8 million tonnes of green hydrogen at a cost of $30 billion, using solar and wind energy. Factors favoring the production of Blue Hydrogen* in the GCC (*Hydrogen produced using carbon capture and storage technology to store the CO2 created as a byproduct of the process) The GCC is one of the largest and lowest-cost producers of natural gas globally, accounting for 20% of the world’s gas reserves. Qatar is the third-largest worldwide, with 24.7 trillion cubic meters (TCM) of proven natural gas reserves, while Saudi Arabia (6 TCM) and the UAE (5.9 TCM) hold the ninth and tenth spots, respectively. The availability of existing facilities in the GCC involved in the production of ammonia, fertilizers, methanol, steel, and hydrogen. These facilities are often already concentrated in clusters along with power and desalination plants, making ideal centers to expand the use of the carbon capture, use, and storage (CCUS) needed to create blue hydrogen. Examples include the facilities of SABIC in Saudi Arabia, FERTIL in the UAE, QAFCO in Qatar, PIC16 in Kuwait, OMIFCO in Oman, and Bahrain’s SULB. GCC hydrocarbon producers have significant CO2 storage capacity. Carbon capture, utilization, and storage (CCUS) enable the production of low-carbon hydrogen, and the voided spaces in oil and gas fields alone, within the GCC, accounting for a storage capacity of 33.4 GtCO2e, allowing for ample reservoirs for hydrogen producers. GCC producers have well-developed existing infrastructure, such as their natural gas grids, which could be modified for transporting hydrogen inland for domestic purposes. Factors favoring the production of Green Hydrogen* in the GCC: (*Hydrogen produced using electricity generated from renewables, such as wind or solar) The GCC is a high-potential region for renewables benefitting from some of the highest solar radiation levels in the world, as well as strong and regular winds in some areas. This makes the GCC region potentially one of the most cost-competitive for hydrogen production, with long-term costs potentially reaching USD 1.5 - 2 per kg, compared to USD 3.0 - 4+ per kg in Europe and parts of Asia. GCC countries enjoy sufficient funding availability for investment in hydrogen, having created significant financial reserves from their oil & gas economies. These reserves allow them to cover the cost of producing green hydrogen, which is high compared to that of producing blue hydrogen. The GCC already has a highly qualified workforce in the oil & gas sector. This represents a major opportunity for the development of the hydrogen economy in the region, due to the high transferability of their skills. GCC countries have advanced export infrastructure. The UAE’s Jebel Ali and Saudi Arabia's Jeddah ports, for instance, were among the top 40 ports in the world in 2019, according to the World Shipping Council. GCC countries are centrally located relative to energy demand markets, situated as they are between the potentially large European and East Asian markets. Potential Hydrogen Imports from High Demand Regions EU hydrogen imports from the GCC could reach 100 mMT by 2050, according to a recent report published by Dii & Roland Berger. In East Asia, meanwhile, imports from the GCC could reach approximately 85 mMT of ammonia by the same year, leaving GCC countries in a prime position to become major players in the hydrogen industry. Source: Vision Port of Rotterdam, Germany's National Hydrogen Strategy, EU Hydrogen Strategy, METI, Hydrogen Korea Team, Roland Berger, Dii Desert Energy. Potential Revenues from Hydrogen Exports Global hydrogen demand is expected to reach approximately 580 mMT by 2050. All indicators point to the potential for the GCC to replace its position as a global oil giant, with that of a global hydrogen hub, with potential green hydrogen revenues alone expected to reach USD 70-200 billion by 2050. Looking Forward The GCC is in an excellent position to become a leading green and blue hydrogen producer, which would allow the region to occupy an important place in the nascent hydrogen industry. By seizing this opportunity, GCC countries can ensure their continued prominence in the global energy market, all the while moving towards a decarbonized world. Author: Dina Amer References: MEI@75, Warming to a Multi-Colored Hydrogen Future? The GCC and Asia Pacific, 2021 https://www.mei.edu/publications/warming-multi-colored-hydrogen-future-gcc-and-asia-pacific Gulf News, Gulf economies are ready to take on clean energy and hydrogen projects, 2021 https://gulfnews.com/business/analysis/gulf-economies-are-ready-to-take-on-clean-energy-and-hydrogen-projects-1.1628060444446 Qamar Energy, Hydrogen in the GCC, a report for the regional business development team Gulf Region, 2020 https://www.rvo.nl/sites/default/files/2020/12/Hydrogen%20in%20the%20GCC.pdf Dii Desert Energy & Roland Berger, The Potential for Green Hydrogen in the GCC region, 2021 https://www.menaenergymeet.com/wp-content/uploads/the-potential-for-green-hydrogen-in-the-gcc-region.pdf Brookings, Economic diversification in the Gulf: Time to redouble efforts, 2021 https://www.brookings.edu/research/economic-diversification-in-the-gulf-time-to-redouble-efforts/ The IEA, The Future of Hydrogen; Seizing today’s opportunities, 2019 https://www.iea.org/reports/the-future-of-hydrogen The IEA, The Role of CO2 Storage, 2019 https://www.iea.org/reports/the-role-of-co2-storage KAPSARC, Opportunities for Natural Gas Trade and Infrastructure in the GCC, 2020 https://www.kapsarc.org/research/publications/opportunities-for-natural-gas-trade-and-infrastructure-in-the-gcc/
The 21st century has witnessed major efforts by industries all around the globe to seize new technological capabilities to improve personal lives, corporate dynamics, and industrial processes. In an era of severe climate change crises, new technologies and industrial philosophies are becoming more and more essential. In this context, green architecture emerged as a solution to conserve nature and initiated the transformation of the real estate industry. “At the turn of the 21st century, a building’s environmental integrity as seen in the way it was designed and how it operated, became an important factor in how it was evaluated.” What is Green Architecture Green architecture is an eco-conscious approach that advocates for the preservation of nature in designing, constructing, and operating buildings. In green architecture, the architect adopts a design philosophy that considers the environmental impact of all aspects of the project. A green building or community is one that takes into account the efficiency and sustainability of energy resources, the preservation of water and air resources, waste reduction, and the adaptability of materials to a changing environment. Green architecture does not only aim to limit or eliminate the negative impact that construction activity has on the environment, but to have a positive effect on the people and nature through environmentally conscious designs, practices, building materials, and the use of the latest technologies. Why Green Architecture? Construction harms the environment in several ways: high energy consumption, generation of waste, high direct CO2 emissions compounded by deforestation, and water and air pollution. From architectural design to operations, a construction project contributes to climate change, disrupts wildlife, and consumes a lot of resources. The United Nations Environment Program reported that the “buildings and construction sector accounted for 36% of final energy use and 39% of energy and process-related carbon dioxide (CO2) emissions in 2018, 11% of which resulted from manufacturing building materials and products such as steel, cement, and glass. And according to research and statistics, in 2018 the worldwide emissions from buildings rose to 9.7 gigatonnes of carbon dioxide (GtCO2).” The Rise of Green Architecture and Technologies The green architecture was founded in 1969 by Ian McHarg who theorized a holistic approach to transform the way buildings and communities are designed, built, and operated. His most important contribution are detailed in his book “Design with Nature” where he outlined the process of living harmonically with nature by applying a “landscape suitability analysis”. His principles of regional ecological planning explain the importance of assessing the health of a region, its ecological constraints, and accordingly where and how construction should take place to live in harmony with nature. In 1994, the U.S Green Building Council formalized McHarg’s principles establishing the Leadership in Energy and Environmental Design standards (LEED). The LEED standards were made to provide measurable guidance and framework for the design and construction of environmentally responsible, highly efficient, and cost-saving green architecture projects and green buildings. The standards mainly focus on sustainable site development, water savings, energy efficiency, material selection, and indoor environmental quality and are updated frequently. The Green Building Council also tackles awareness, education, innovation, and design of sustainable development. Green architecture was founded in 1969 by Ian McHarg who theorized a holistic approach to transform the way buildings and communities are designed, built, and operated. His most important contribution are detailed in his book “Design with Nature” where he outlined the process of living harmonically with nature by applying a “landscape suitability analysis”. His principles of regional ecological planning explain the importance of assessing the health of a region, its ecological constraints, and accordingly where and how construction should take place to live in harmony with nature. Simultaneously, the advancements in environmental technology and different fields of hydrogeology, geology, biochemistry, and nature-cybernetics have encouraged the goals of sustainable city planning and green architecture. Technology in the 21st century creates the opportunity for a different approach to architecture and design that embraces the environment. Green Architecture Technologies Green walls and vertical gardens along with green roofs are all hallmarks of green buildings that help minimize heating and cooling costs, prevent storm-water runoff, filter out pollutants, and accordingly reduce energy use and cost. Solar power, in addition to hydropower and wind power, is very often used as renewable energy resources for heat and electricity so that any residential or commercial building is able not only to fulfill its own needs but to generate and store electricity. Recycling and waste reduction are also features of major importance in green architecture. Recent smart city projects are trying to blend green infrastructure with internal smart home solutions and seize technological tools to improve sustainability. Smart appliances are being used to minimize energy consumption aiming at establishing net-zero energy in residential and commercial buildings. Net-zero energy buildings rely only on the energy produced onsite from renewable resources through a combination of energy efficiency and renewable energy generation. Green water technologies are also being used along with different irrigation technologies to enhance the quality of water for irrigation and the ecosystem overall. Other water technologies and techniques include dual plumbing systems, the re-use of water, and harvesting rainwater to minimize the consumption of traditional freshwater resources. Sustainable design is based on energy-minimizing strategies as designing windows that constantly reflect daylight, the use of low emitting materials, and the use of smart glass to save a lot on heating, ventilation, and air conditioning costs. In addition, the design also considers the materials used internally and externally to ensure the health and safety of people with regard to carcinogenic elements or toxic materials. Green Architecture around the Globe: Several countries have initiated green building investment projects around the world to meet the Paris Agreement and Sustainable Development Goals (SDGs) for 2030. As of 2015, several countries have already incorporated Green buildings in their master plans. Singapore is one of the earliest countries in Asia to incentivize and initiate green architecture projects. In 2009, the Singapore Green Building Council was established to encourage green architecture and to encourage private-public partnerships. “Singapore is the only country that makes it mandatory for any building of 5,000 square meters to achieve minimum standards as per the code for environmental sustainability,” says Mayank Kaushal, an architect, senior sustainability consultant, and researcher with Future Cities Laboratory. The Parkroyal on Pickering hotel in Singapore designed and completed in 2013 is a prime example of this philosophy in action featuring 161,459 square feet of sky gardens, waterfalls, and planter walls. The hotel incorporates different technologies including solar power grids, rain sensors, and water and light saving tools. The project was designed and completed by WOHA, and the project won Interior Design’s 2013 Best of Year Award for Hotel Common Space. Several countries around the globe have been either developing or planning on going green as well including Canada, Germany, Guatemala, U.S.A, Australia, China, Denmark, Italy, India, Japan, Mexico, Netherlands, U.K, U.A.E, Egypt, South Africa. However, each country may pursue green architecture and sustainable development differently according to its resources and climate. Challenges and Conclusions Green building practices are gaining more acceptance in the construction and real estate industries as a viable solution to becoming environmentally sustainable. Yet green architecture was founded more than 50 years ago, and its uptake hasn’t been progressing as one would expect. Adopting sustainable development and green architecture practices remains challenging for several reasons. Compared to conventional methods, the capital and additional costs needed constitute the major challenge to even consider going green especially for developing countries. The materials and equipment used in the construction of green buildings are expensive as are the technologies needed for energy efficiency and generation. But more recent research shows that: “investments can be recouped through operational cost savings and, with the right design features, create a more productive workplace.” However, the cost is not the sole challenge, other major obstacles include the lack of expertise and skilled manpower, the lack of awareness and environmental education, minimal adoption incentives, and the lack of laws and policies. More importantly, the lack of dedicated research and development is a major issue. And while the main purpose of adopting green architecture is nature-driven, the indirect effects this new approach can have on society is revolutionary. Adopting sustainable development in fact stimulates environmental awareness, technical and scientific research, new skills in the workforce, and efficient industrial practices. The future is ours to lose. 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