The adoption of green hydrogen is gaining popularity across the world. According to its proponents, it might be crucial to the decarbonization process. However, some critics have doubts about its efficacy and safety. The goal of Saudi Arabia is to become a leading hydrogen producer. An ambitious project to build a futuristic city called Neom beside the Red Sea is underway in the Saudi Arabian desert. A million people are expected to live in the city of a $500 billion investment, which will also have flying vehicles and robotic housekeepers. What will serve as a power source for this city and a commercial product for the world? The Saudi government is utilizing green hydrogen for this project.
To generate employment and restructure its heavy dependence on oil and natural gas, Saudi Arabia intends to invest its resources in the production of hydrogen. As fossil fuel demand shifts, Saudi Arabia needs to diversify its income sources as the kingdom relied on oil for 60% of its budget in 2021.
Hydrogen’s Potential Market Will Reach $600 Billion, Creating Fierce Competition
Hydrogen has long been praised as a viable substitute for fossil fuels with the potential to provide up to 12% of global energy demands by 2050. Hydrogen has a vast range of applications such as cars, industries, and even home heating and powering can all run on hydrogen. The least carbon-intensive green hydrogen can make the competition hard if the industry grows as quickly as predicted, pegged at $600 billion by 2050. Saudis believe green hydrogen is the future of the energy sector. A green hydrogen craze is currently taking place throughout the globe. Investors, businesses, and environmentalists are praising it as a renewable energy source that has the potential to reduce the dominance of carbon fuels and moderate global warming.
Blue And Green Hydrogen Are Saudi Arabia’s Heavy Bets
Gray hydrogen might be replaced with hydrogen-based fuels resulting in an increased export potential for Saudi Arabia. Green hydrogen uses renewable energy sources whereas blue hydrogen uses carbon capture. KSA believes that both green and blue hydrogen, whose production prices are steadily declining, have enormous potential. In addition to Saudi Arabia’s huge natural gas production, the country has a closed natural gas market that gives blue hydrogen a competitive advantage. KSA continues to offer natural gas at a reasonable price; it is now $1.25/MBtu. By 2030, the cost to produce blue hydrogen might drop from its current $1.34 per kilogram to just $1.13.
Strategic Plan For The Hydrogen Industry In Saudi Arabia
The main reason Saudi Arabia is willing to get involved in hydrogen production is to protect its economy. The world’s largest crude oil exporter may use hydrogen to achieve some of the goals outlined in the Saudi Vision 2030. KSA aspires to dominate the global hydrogen supply chain which will be supported by its strategic plan. At Neom in Saudi Arabia, work is about to start on a $5 billion project to develop green hydrogen. Upon completion in 2026, the plant will produce hydrogen from renewable sources faster than any other plant in the world.
