Hydrogen: The path to decarbonisation

The Middle East is key to unlocking the true potential of hydrogen in the global energy mix

With a staggering estimate of $42bnworth of green hydrogen-related projects being planned across the Middle East and North Africa (MENA), there is increasing confidence in the region’s ability to utilise hydrogen as a clean energy alternative. While the element’s rise as an energy source comes on the heels of a wider global shift to a low-carbon economy, the opportunity for hydrogen production in the Middle East is already vast, given the region’s strategic location for potential green hydrogen exports and convenience of renewable energy resources.

In 2021, Saudi Arabia announced its ambition to become the world’s top exporter of hydrogen. The UAE is also drawing up a hydrogen roadmap and is looking to add the fuel to its clean energy mix by 2050. Similarly, last year, Egypt also added green hydrogen to the country’s Energy Strategy 2035, with a distinct focus on clean fuel generation and use across sectors.

However, traditional methods of producing hydrogen generate large volumes of CO2, and while clean hydrogen technologies are available, the cost of production remains a factor to consider. Green hydrogen production costs have fallen by 40 per cent since 2015 and are expected to fall further, with projections showing that production costs could decline to $1.4 to $2.3 per kg by 2030.

Technology risks combined with significant capital costs, that currently cannot compete with fossil fuel prices and evolving regulatory development, pose challenges to accessing finance. The Energy Transitions Commission (ETC) – an international think tank focusing on economic growth and climate change mitigation, recently announced that decarbonising energy and other industries globally using hydrogen could require investments of up to almost $15 trillion between now and 2050.

A GROWING BUSINESS CASE

Annual revenues from green hydrogen in the GCC are expected to grow up to $200bn by 2050, according to Dubai-based consultancy Dii and Roland Berger. Energy players are building a business case for first mover projects of industrial scale. The key technology components for hydrogen production and utilisation are available across the globe today. It now needs to be brought up to commercial scale with implementation across sectors that present the most attractive business case – covering key factors such as indirect value creation, local job creation and grid stabilisation.

Over the last few years, the versatility of hydrogen has also attracted stronger interest from governments across the region. Saudi Arabia aims to sell hydrogen that will be transported by pipeline to Europe. Simultaneously, oil producers, who are prioritising the gas for export, are looking at possible domestic uses such as in steelmaking. From 115 million tonnes currently, hydrogen use is forecast to grow up to 500800 million tonnes by 2050 – if all potential use cases materialize. It is anticipated to account for 15-20 per cent of total final energy demand.

The development of the hydrogen economy and potential localisation of value chain activities will also represent new employment opportunities across

GREEN HYDROGEN PRODUCTION COSTS HAVE FALLEN BY 40%

a wide range of positions and skills. The MENA region emerging as a leading player in the hydrogen ecosystem could result in the creation of up to 900,000 direct and indirect jobs in the region by 2050.

EVOLVING HYDROGEN TECHNOLOGIES

Research and development is crucial to making hydrogen production cost-competitive with conventional fuels, while minimising the environmental impacts of the process. Realising this opportunity, over the past few years, global spend on hydrogen energy research by national governments and leading energy companies has risen.

The main challenge to achieving mass-scale hydrogen demand is the high production cost. Part of our journey to a net-zero carbon future requires investment in technological innovation to make clean energy sources like hydrogen more affordable and widely adopted. This will put us one step closer to creating a strong production and storage chain of hydrogen in the energy industry.

For hydrogen technologies to achieve the scale needed for net-zero, the industry needs solid backing from policy makers. A key aspect to develop decarbonisation technologies is a conducive regulatory framework for blue hydrogen including carbon capture and storage (CCS)/carbon capture, utilisation, and storage (CCUS), as well as green hydrogen and its storage.

The successes of solar PV, wind, batteries, and electric vehicles have demonstrated that technology innovation supported by decisive public policy has the power to drive global clean energy industries. The Gulf region, particularly, has been led by the hydrocarbons industry; today, national oil companies in the Middle East are the primary movers when it comes to research, development, and adoption of hydrogen.

The UAE’s $160bn Energy Strategy is focused on ensuring that 44 per cent of energy consumed in the country is from renewable sources by 2050, with a further 38 per cent from natural gas. The hydrogen projects that we are seeing in the UAE aim to help achieve these goals.

The cross-market collaboration approach adopted by the UAE – with the recent MoU signing with Japan to jointly consider developing an international hydrogen supply chain, and the MENA Hydrogen Alliance, to offer a platform that builds dialogue and helps formulate joint studies – showcases the nation’s strong emphasis on the transfer of knowledge and experience. However, it will be crucial to promote collaboration at-scale as part of these efforts.

Saudi Arabia is also developing the world’s largest green hydrogen project. A joint venture between NEOM, Air Products and ACWA Power will integrate four gigawatts of renewable power from solar, wind and storage into the production of 650 tonnes of hydrogen per day by electrolysis, as well as nitrogen by air separation, and 1.2 million tonnes of green ammonia per year. The project is scheduled to be onstream in 2025.

The UAE and Saudi Arabia are moving rapidly towards building a substantial green hydrogen economy. This includes developing roadmaps to accelerate the region’s adoption and use of hydrogen in major sectors such as utilities, mobility, and industry, with the aim of positioning the region as a reliable and secure supplier of hydrogen.

Leveraging new technologies can seem daunting, but the potential payoffs are substantial. Converting hydrogen capabilities to existing power systems that are ready for it, can vastly reduce carbon intensity and increase efficiency, responsiveness, as well as the overall performance of power plants and the green energy ecosystem.

We are witnessing hydrogen technology being widely implemented across the globe; the end of this decade will continue to see an influx of hydrogen projects. Starting 2025 for first mover projects, followed by others from 2030 onwards, is a period that will notably be recognised as the decade of hydrogen, where it will be commoditised and rolled out on a large scale to truly achieve global decarbonisation.

“THE UAE’S $160BN ENERGY STRATEGY IS FOCUSED ON ENSURING THAT 44 PER CENT OF ENERGY CONSUMED IN THE COUNTRY IS FROM RENEWABLE SOURCES BY 2050, WITH A FURTHER 38 PER CENT FROM NATURAL GAS. THE HYDROGEN PROJECTS THAT WE ARE SEEING IN THE UAE AIM TO HELP ACHIEVE THESE GOALS”

After getting past the usual pleasantries, it was probably 10 minutes before my telephone caller came up for air and took a break. Liz was highly exercised by an infuriating incident that happened that day. She is a very capable project manager with an IT company and her boss Mike had just given her a new project to complete. With no respect for Liz’ experience, capabilities or commitment, Mike felt it was appropriate to micro-manage the situation. Not only did he brief her on the project, but he also ‘helped’ her to construct a detailed plan. That caused enormous frustration and feelings of disrespect in Liz. What a pity.

By coincidence, in the same week I had a coffee with an old pal that works in a company that has recently been acquired. George, the new CEO, is still getting to grips with the acquisition. With a hands-off style, he expects senior people to know what to do and to just get on with it. However, as operations manager, my pal Fred is now challenged with a new product stream and supply chain. He is struggling to get to grips with it and is deeply concerned about failing.

Clearly, both Mike and George got it wrong. But they’re not alone, as bosses the world over so often get it wrong. Leaders tend to have a primary or default style of management and fail to recognise that not all member of their teams are at the same stage of development. This is probably not surprising given that many leadership theories promote particular leadership traits. Thankfully the world has moved on from Taylorism of the early 1900s, that encouraged a leadership based primarily on the organisation’s needs.

Later theorists such as Kenneth Blanchard opened our eyes to the concept of situational leadership. In this model, Blanchard encourages leaders to adapt their leadership style based on the learner’s needs and development levels of competence and commitment. Liz, in my first example, needed to be left alone once briefed. Fred, on the other hand, needed more guidance on what is expected and how to deliver on those expectations in a new operation.

HOW TO ADAPT YOUR LEADERSHIP STYLE TO ANY SITUATION

The initial thing here is for leaders to embrace the concept of one-size does not fit all. Both Mike and George will get it right some of the time, for sure. But the risk of getting it wrong is just too great.

As leaders, we have to treat each and every task we set for our people as being different. Fred is a very competent operations manager. However he

is now presented with some new complexity and that needs to be learned. But it doesn’t mean that every other aspect of his job needs to be explained.

Hence, without over-complicating it, I’d like to encourage you as a leader to always consider the situation first.

1. Goals. Be very clear on the goals that you want your team member to deliver. Remember SMART goals? Here is a new version: S- Specific, measurable and timebound; M-Motivating; A-Achievable; R-Relevant; T-Trackable. Take time to align both parties on what is expected.

2. Diagnosis. Stand back, slow down a little and consider the learner’s stage of development. Is she/he competent and committed for this task? There are four possible scenarios; D-1: low competence/high commitment; D-2: low competence/low commitment; D-3: high competence/ variable commitment; D-4: high competence/ high commitment.

3. Matching. As a consequence of determining the learner’s level of development, we should therefore adapt our leadership style appropriately. A telling-directive leadership style is appropriate for D-1 level of development. A ‘coaching’ style is right for a D-2. A listening-supportive approach for D-3 and a delegating style for D-4. In other words, four different styles to match four different situations.

THE LAST WORD

You’ve heard it said that employees don’t leave organisations, they leave their bosses. I have seen this truth having witnessed it first-hand in the countless employee engagement surveys we have administered over the years.

We’re living in the strangest of times and the ‘great resignation’ is real. Never before as much as now, do leaders have to self-reflect on their own leadership style. What’s your primary or default style? How effective is your ability to flex your style to the situation and the individual that you’re leading?

THE INITIAL THING HERE IS FOR LEADERS TO EMBRACE THE CONCEPT OF ONE-SIZE DOES NOT FIT ALL