Several countries in the Arabian Gulf and North Africa are emerging as some of the world’s biggest players in the rapidly expanding green hydrogen market, as developed countries seek alternatives to fossil fuels. Consultants at PwC think global demand for green hydrogen will accelerate as costs decline, broader industrial use grows, investment rises, and modern transport develops and expands.
In July 2023, fellow consultancy Deloitte estimated that “between 15% and 30% of future energy needs are likely to be satisfied by hydrogen,” adding that North Africa “has the potential to export $110bn worth of green hydrogen” to Europe annually. More recent studies indicate that the global hydrogen market could be worth $227bn by 2030. It was valued at around $1.1bn in 2023
Carbon-free green hydrogen is a lightweight, highly reactive fuel that can be extracted through the electrochemical process that separates hydrogen from oxygen using water. It is already here, and examples of its development are plentiful. Big car manufacturers like Toyota, BYD and BMW are designing electric vehicles to run on hydrogen fuel cells. In India and Germany, hydrogen-powered trains are being used. In Austria, there is funding for a green hydrogen electrolyser plant. In Japan, a contract has been signed to build a giant liquefied hydrogen vessel.
Cost and opportunity
Africa, and North Africa in particular, is riding the wave. For example, a 100-MW green hydrogen project in Egypt has just begun exports to Europe. The energy is being developed within the Suez Canal Economic Zone through a consortium comprising a Norwegian renewables developer, Egypt’s sovereign fund, Egyptian engineer and construction giant Orascom, and the UAE’s Fertiglobe, which focuses on nitrogen fertilisers and low-carbon energy.
The green hydrogen market is expected to benefit from an estimated 50% reduction in production costs, enhancing its competitiveness compared with other fuels. Its application is expected across transport, including aviation, road, maritime, and rail, as well as in manufacturing, chemicals, oil refining, and cement production.
Hydrogen is abundant in nature but is difficult to extract as it is usually bound to carbon or oxygen. Separation technologies are required to break these bonds, such as by electrolysing water to release the hydrogen gas. This is done using electricity from renewable sources, such as solar or wind, to ensure the fuel is clean. As such, green hydrogen is a central pillar of the energy transition.
Read more: Green hydrogen could be a win-win for North Africa and Europe
The green hydrogen market is still small, and the large-scale investment is, for now, keeping the fuel’s development concentrated in the hands of a small number of big companies with deep pockets. But countries like Saudi Arabia and Morocco are expected to be among the countries that can produce green hydrogen at a lower cost. According to Asharq Business, in collaboration with Bloomberg, the cost of producing green hydrogen in Morocco ranges from $1.16 to $ 1.45/kg.
Riding the wave
Countries like Chile, Australia, Brazil, Saudi Arabia, Morocco, Egypt, Oman, Mauritania, Algeria, and Tunisia are well-placed to lead the future green hydrogen and ammonia industry, alongside China, the United States, and India, owing to their physical and geographic characteristics. European countries are more keen to enter partnerships with Arab and African states to secure supplies from their neighbours.
According to the US-based Energy Research Unit, more than 127 green hydrogen and ammonia projects have been tracked in the Arab region since 2021. Saudi Arabia is one of the world’s biggest investors. The NEOM Green Hydrogen Company (NGHC) is building the world’s largest green hydrogen plant at a cost of $8.4bn. It will integrate up to 4-GW of solar and wind energy to produce up to 600 tonnes per day of carbon-free hydrogen by the end of 2026.
Saudi investment in renewables is estimated at around $266bn over the medium-term. Saudi Aramco is a leader in hydrogen production, alongside the British-Dutch energy giant Shell, the Irish industrial gases and engineering company Linde, and the French industrial gases company Air Liquide, among others. Aramco is planning to produce around 11 million tonnes of blue ammonia per year by 2030 and to develop green hydrogen using electrolysis technologies.
