Hydrogen to play a big part in UAE’s energy strategy going forward

Thomas Evans, the Executive Advisor at GHD, spoke to Julian Walker about the company’s part in helping shaping the UAE's National Hydrogen Strategy and why hydrogen is set to be so important for the UAE energy strategy going forward.

How did you become involved in shaping the UAE's National Hydrogen Strategy?

In 2020 GHD developed a strategy framework that was underpinned by 10 key enablers that provide the foundations for a hydrogen economy. GHD applied this framework in collaboration with the UAE’s Ministry of Energy and Infrastructure (MoEI) highlighting the key steps towards pulling a strategy together. Using this internationally benchmarked evidenced based approach, the MoEI were able to understand their current state and what steps they needed to take to realise their 2031 ambitions. In 2022 we started working on the National Hydrogen Strategy in collaboration with the Fraunhofer Society, the leading German applied research organisation.

What data is the strategy based on?

The strategy is based on a number of data sources including, stakeholder input, net zero strategy modelling, Fraunhofer’s CINES system model and other national metrics. We also used third party data such as from the International Energy Agency (IEA) to incorporate data from authoritative sources.

Why is hydrogen set to be so important for the UAE energy strategy going forward?

The UAE has committed to achieving net zero by 2050. Without hydrogen hard to abate and hard to electrify sectors currently have little to no decarbonisation pathways (steel and other industrial heat applications, shipping, aviation, heavy goods transport etc). Hydrogen is important to the UAE from both a domestic decarbonisation standpoint but also in the longer term as an export commodity.

Hydrogen also has a key role to play from an energy storage perspective, it will act as a vector to address the intermittency of renewable energy sources such as solar, ensuring a stable energy supply. Its adaptability as a feedstock enhances the efficiency and sustainability of the UAE's energy mix.

Beyond technological advancement, the strategic adoption of hydrogen positions the UAE as a leader in fostering innovation and growth. Moving forward, incorporating hydrogen into the UAE Energy Strategy will underline the nation’s decarbonisation commitments, boost ICV, promote economic growth, and establish itself as a leader in the future global hydrogen market.

What are the founding pillars of the UAE's new national hydrogen strategy?

The UAE hydrogen strategy is aligned to the UAE’s Centennial 2071 ambition which is underpinned by four key pillars:

1. A future focussed government
2. Excellent education
3. A diversified knowledge economy
4. A happy and cohesive society

It is evident how the advent of a robust hydrogen economy is complementary to supporting these four national pillars. More specifically, in our opinion there are some foundations that the UAE must have in place to ensure a successful hydrogen economy. Firstly, generating and supporting the domestic hydrogen offtake market will be key, the temptation is to focus on production but understanding your domestic demand should be a primary focus. Moreover, as the export of hydrogen in its true form is still in its infancy from a technological standpoint GHD are of the belief that successful and economically sustainable hydrogen economies will focus first on their domestic markets with a view to international export in the mid to long term. Secondly, the UAE national hydrogen strategy is currently based on the assumption that blue (from natural gas with CCUS), green (from renewables) and other hydrogen production technologies will need to be considered to achieve the ambitious targets. 

What are the main opportunities and challenges when it comes to the roadmap for the UAE hydrogen economy?

The UAE hydrogen economy navigates a landscape filled with both opportunities and challenges. Leveraging its geographical location, natural resources (both solar and gas), CCUS potential and national infrastructure, the UAE has the opportunity to be a global leader in low-carbon hydrogen production and innovation.

I see four key challenges and opportunities, which are summarised below, but this is by no means exhaustive:

1. Firstly, we need to consider the CAPEX and OPEX costs of low carbon hydrogen production. These are currently high, and without appropriate market mechanisms in place hydrogen cannot currently compete on price with natural gas and other fossil fuels.
2. We also need to assess the immature low carbon offtake market. The UAE’s opportunity is to become a leader in domestic hydrogen use and produce high value green products for both export and domestic use such as green steel. Globally we are experiencing an element of progress paralysis as there is a degree of uncertainty as to the rate of growth in the offtake market for hydrogen. Investors are looking to de-risk investments by seeking opportunities with a guaranteed offtake market, which is why developing domestic demand is critical in the short term.
3. The UAE’s hydrogen economy is also impacted by supply chain constraints, which acts as both an opportunity and a challenge. The UAE aims to attract the supporting supply chain SMEs to build resilience and capacity in the provision of key components. Currently the global supply chain is squeezed with long lead times and slower than anticipated technology learning rates.
4. Lastly, the UAE government will need to establish a clear governance framework to remove barriers and provide investment opportunities to accelerate the hydrogen economy. The UAE can learn some valuable lessons from the US Inflation Reduction Act, the UK Hydrogen Business Model and EU policies such as Fit for 55 and the European Hydrogen Bank in order to develop a world leading regulatory and policy framework to support the ambitions in the strategy, which we are hoping to see progress through 2023/24.

Whilst we can see some substantial challenges, our work with the MoEI demonstrates how GHD’s industry-leading expertise has supported the UAE to fulfil their hydrogen ambitions.