On 18 January 2021, Mubadala Investment Company ("Mubadala") and Siemens Energy ("Siemens") signed a Memorandum of Understanding ("MoU") to explore and investigate commercial opportunities in clean energy and green hydrogen. The stated aim of the MoU and the alliance is to establish Abu Dhabi as a global hub for low-carbon fuels.
The MoU has two, specific, strategic aims:
- to boost Abu Dhabi's green hydrogen capabilities, as the United Arab Emirates ("UAE") pursues its targets for carbon reduction and development of a hydrogen economy. Once the technology is established the hope is that it can be sold to international markets; and
- channel investment into the development of advanced technology for the manufacturing of equipment and synthetic fuel production.
It is anticipated that the Emirate of Abu Dhabi will provide a suitable venue for the production and sale of synthetic fuels and green hydrogen. Once the business case for production is established, the hope is that the project will attract investment to develop additional facilities and fund further research. Once the technology is proven, green hydrogen will be supplied/sold to global markets.
Certainly, financial projections in respect of green hydrogen are encouraging. Aurora Energy Research suggests that the hydrogen market could be a US $140bn industry in Europe by 2050. McKinsey estimates that the hydrogen market will reach this value in the United States by 2030 and approximately 700,000 American jobs could be supported by the hydrogen industry.
Developing green hydrogen technology
The first step in the UAE will be to construct a demonstration plant at Masdar City. Masdar, the renewable energy company, is already working to complete Abu Dhabi's solar energy farm at Al-Dhafra.
In order to construct the demonstration plant at Masdar City, and develop the necessary hydrogen technology, Masdar will initially work with the Abu Dhabi Department of Energy, Etihad and Lufthansa Group airlines, the Khalifa University of Science and Technology, Siemens Energy of Germany and Japan's Marubeni Corporation. This consortium will aim to develop green hydrogen, sustainable fuels and e-kerosene. All of which will support Abu Dhabi's transport, shipping and aviation industries.
The initial phase of the project will focus on producing green hydrogen for passenger cars and public buses in Masdar City. A kerosene synthesis plant will also be constructed to convert green hydrogen into sustainable aviation fuel. In a second phase, the consortium will explore fuel production for the shipping industry.
Once these objectives are complete, the consortium will hope that it can capitalise on the technology and export green hydrogen around the world.
Supporting the UAE's clean energy and carbon emissions commitments
There is no doubt that the UAE will aim to deliver on its clean energy commitments by tackling the issue of where it sources its energy supply. International Energy Agency statistics show that, in 2018, the UAE's total energy supply was (approximately) sourced 88% from natural gas, 8% from oil, 3% from coal and 0.3% from renewable sources such as wind and solar.
The UAE has targeted a 25% cut in its carbon emissions by 2030. In addition, the UAE's Energy Strategy 2050, sets out ambitious plans to derive 44% of its energy from clean sources (mainly solar power), 35% from gas, 12% from 'clean' coal and 6% from nuclear by 2050.
In pursuit of these targets, the UAE already boasts 79% of the region's installed solar power generation capacity. Noor Solar Park in Abu Dhabi is the largest in the world and produces 1.2 GWh of energy. Abu Dhabi is set to complete the Al-Dhafra Solar Park in 2022, which will produce 3.2 GWh of energy, and, in Dubai, the Mohammed Bin Rashid Al Maktoum Solar Park will be complete in 2030. When finished, the latter will be the largest solar park in the world, producing 5 GWh of energy and supplying approximately 25% of the Emirate of Dubai's power needs.
Further, Shiekh Mohammed bin Rashid al Maktoum (the Vice President of the UAE and Ruler of Dubai), has publicly stated the importance of the UAE developing a 'green economy'. he called for a green economy so that the UAE preserves its natural resources, reinforces its biodiversity, creates food diversity and achieves high levels of productivity. Developments such as high-yield crops that can withstand hot and dry conditions are a specific element to the overall strategy.
Clearly, the UAE's plans for improving its green credentials are impressive. Nonetheless, the nation faces a significant challenge in delivering on promises to reduce reliance on fossil fuels and create its green economy. The MoU, and stated intent to develop green hydrogen power, is of potentially huge significance for the UAE in its drive toward meeting the requirements of its Energy Strategy 2050.
There is no doubt that the UAE, and the world, needs to develop additional sources of clean fuel if environmental targets, such as the UAE's Energy Strategy 2050, are to be met. Whilst there is, clearly, a significant technological challenge to developing green hydrogen as a viable source of energy there also appears to be little doubt that green hydrogen has huge potential if the technology is proven.
It appears that the UAE, by signing the MoU and building its consortium, has taken a very positive step toward overcoming barriers to supplying energy and fuel derived from green hydrogen. It does not seem likely that the lights will go out on the UAE's motivation to secure its environmental and economic future any time soon.