Green Hydrogen: Saudi Arabia, UAE, Oman, and Egypt Lead the Way

A mobile hydrogen-powered unit at Techno Valley Science Park in Dhahran, Saudi Arabia. (Reuters)
A mobile hydrogen-powered unit at Techno Valley Science Park in Dhahran, Saudi Arabia. (Reuters)
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Green Hydrogen: Saudi Arabia, UAE, Oman, and Egypt Lead the Way

A mobile hydrogen-powered unit at Techno Valley Science Park in Dhahran, Saudi Arabia. (Reuters)
A mobile hydrogen-powered unit at Techno Valley Science Park in Dhahran, Saudi Arabia. (Reuters)

The Arab Gulf and Egypt have joined the global race to secure a share of the green hydrogen industry, either through production or through long-term contracts to ensure abundant supplies, amidst worldwide energy sector upheavals.

This aligns with their ongoing efforts to transition their economies to be more environmentally friendly.

Green hydrogen is currently seen as a significant investment magnet, with its market expected to reach a value of $1.4 trillion annually by 2050, according to a report by Deloitte.

The EU has allocated billions of dollars to produce hydrogen both within and outside its member states.

The bloc anticipates an annual need of approximately 20 million tons; of which, it will produce 10 million. The remainder will be imported from abroad, including sources like Egypt and Mozambique.

Similarly, Japan is heavily investing in green hydrogen. It has committed to spending over $100 billion over the next fifteen years to augment supply by securing domestic and foreign sources.

By 2030, Japan anticipates needing three million tons annually, an increase from the current two million. This demand is projected to leap to 12 million by 2040.

Moreover, hydrogen has the potential to play a pivotal role in helping Gulf Cooperation Council (GCC) countries achieve their net-zero objectives.

According to PwC, the swift transition to green hydrogen offers GCC nations the opportunity to pioneer in this emerging industry. Green hydrogen could serve as a versatile and primary energy source in a carbon-free future.

PwC suggests that the GCC states have a competitive edge in green hydrogen production due to the abundance of low-cost solar energy. Additionally, the availability of land and port infrastructure within their special economic zones further enhances these natural advantages.

For GCC countries, developing a hydrogen supply chain is of paramount importance, especially since the majority of projects are export-oriented.

Saudi Arabia is constructing the world’s largest green hydrogen production facility in the future mega-city NEOM, located in the Kingdom’s northwest.

With an anticipated cost of $500 billion, the initiative is poised to position the Kingdom prominently on the global map for clean energy transition.

In July, Saudi Arabia announced its intention to join the Global Hydrogen Trade Forum, set to be launched by the Clean Energy Ministerial (CEM). The group is an international coalition formed to advocate for clean energy policies. The forum aims to bring together hydrogen importing and exporting countries to discuss international trade of this fuel.

Also in July, the UAE, which is set to host the UN Climate Change Conference (COP 28) later this year, approved a hydrogen strategy that aims to produce 1.4 million metric tons of hydrogen annually by 2031, positioning the country among the world’s top ten hydrogen-producers.

Oman is also making steadfast strides toward entering the green hydrogen market. The sultanate aims to diversify its energy sources by relying on hydrogen and increase the renewable energy contribution to its national electricity mix to 30% by 2030, with plans to raise this to about 39% by 2040 as part of its carbon neutrality goals.

Egypt, meanwhile, is targeting a production of 5.8 million tons annually by 2024. Out of this, 3.8 million tons are earmarked for export each year, representing 5% of the global green hydrogen market.



Dollar Rises as Traders Mull Ukraine Peace Talks, Trump Tariffs

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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Dollar Rises as Traders Mull Ukraine Peace Talks, Trump Tariffs

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

The dollar strengthened against a range of currencies but slipped against the yen on Wednesday, as traders focused on talks over a Ukraine ceasefire and digested the latest round of tariff threats from US President Donald Trump.

The pound, meanwhile, got a short-lived boost from a stronger-than-expected UK inflation print.

The dollar index last stood at 107.2, up 0.19% after dropping 1.2% last week. The yen was stronger against the dollar , up 0.1% at 151.855.

Trump's administration said on Tuesday it had agreed to hold more talks with Russia on ending the war in Ukraine after an initial meeting that excluded Kyiv, a departure from Washington's previous approach that rallied US allies to isolate Russian President Vladimir Putin.

Francesco Pesole, foreign exchange strategist at ING, pointed to the market's base case that a peace deal in Ukraine might be reached at some point. Meanwhile, the European Union's exclusion from the table at peace talks is seen as spurring safe-haven demand into the yen and out of the euro, he said.

The euro was down 0.4% against the yen at 158.25, and down 0.2% against the dollar at $1.0426, Reuters reported.

Pesole highlighted the latest raft of tariff threats from Trump, but said the market was more focused on news around a potential Ukraine peace deal in the short-term.

"There is a residual sort of reluctance in markets to see whether Trump will indeed go ahead with tariffs on trade partners," he said.

Trump said on Tuesday he intends to impose auto tariffs "in the neighborhood of 25%" and similar duties on semiconductors and pharmaceutical imports, the latest in a series of measures threatening to upend international trade.

"Amid all this chaotic, childish back and forth of the presidential tariff announcements, let's not lose sight of what will ultimately come out of it: probably fewer tariffs than expected when he took office, but still substantial ones," Commerzbank forex analysts and strategists said in a note.

The euro was little moved by remarks from European Central Bank board member Isabel Schnabel, who on Wednesday told the Financial Times the central bank was edging closer to pausing rate cuts.

In the UK, official data showed inflation speeding up by more than expected to hit a 10-month high of 3.0% in January and is likely to rise further soon, testing the Bank of England's confidence that price pressures will ease over the longer term.

Sterling was down 0.27% at $1.25790, coming off a two-month high hit immediately after the data.

Against the euro, the pound was virtually unchanged at 82.86 pence. Pesole said the relatively safe position of the UK on trade and the latest inflation figures made the pound more attractive than the euro.

Elsewhere, the Reserve Bank of New Zealand reduced its benchmark rate by 50 basis points to 3.75% on Wednesday as widely expected and signalled future moves would likely be smaller, leaving the currency up 0.2% on the day at $0.5714 .