Middle East Poised to Drive Global Green Hydrogen Trade Growth
Key Ideas
- The Middle East is set to play a significant role in the global green hydrogen and ammonia trade, with multiple projects in development and substantial export potential.
- The region's access to low-cost renewable energy sources like wind and solar, along with existing gas production, positions it as a competitive supplier of low-carbon hydrogen to global markets.
- Key milestones such as successful trial shipments, project financing closures, and agreements with international partners highlight the momentum and investment interest in green hydrogen production in the Middle East.
- Strategic initiatives like the EU's rules for renewable hydrogen production and the Azeri UN Climate Change Conference's COP29 Hydrogen Declaration indicate growing efforts to standardize and promote the adoption of green energy carriers globally.
The Middle East is on the path to becoming a vital player in the global green hydrogen and ammonia trade, with a multitude of projects in the pipeline and the potential for substantial export growth. With 67 low-carbon or renewable hydrogen and ammonia projects currently in development in the region, industry experts anticipate fierce competition for tenders across Asia and Europe, leveraging successful trial shipments and significant production capacity underway.
The region's advantage lies in its access to low-cost renewable power generation from wind and solar, combined with existing gas production, which positions the Middle East favorably as a source of affordable low-carbon hydrogen for the international market. While doubts linger about the volumes available for export due to increasing domestic demand allocations, recent initiatives like H2Global awarding a hydrogen derivative import tender to Fertiglobe from Egypt to Europe and Abu Dhabi National Oil Company's ammonia exports to Japan signify growing trade opportunities.
Furthermore, with the upcoming Japanese Contracts for Difference scheme and South Korean auction supporting low-carbon hydrogen supply, efforts to bridge the price gap with conventional fuels are underway. The Middle East's emergence as a cluster of low-carbon hydrogen production, with 40% of global capacity under construction, indicates a promising future for the region's role in the green energy market.
Global efforts to establish clean hydrogen specifications and promote its uptake are evident through initiatives like the EU's rules for renewable hydrogen production and the COP29 Hydrogen Declaration. As the Middle East prepares to capitalize on its production capacities, forecasts predict the region to be a major producer of clean hydrogen by 2040, exporting significant volumes to key markets. Project milestones like the Neom green hydrogen megaproject and ACME's renewable ammonia project in Oman demonstrate the region's progress towards sustainable energy production and trade.