It is important to consider the growing energy market in the Arab region, which consists of all the activities involved in the production, transformation, utilization, and export of the natural energy resources, including the hydrocarbon and renewable industries. In order to meet the objectives of reducing the greenhouse gas emissions of the region in line with the international climate agreement, there is a substantial need to reconsider the energy systems based on sectorial approach and diversified energy mix, mainly for the electricity production and transportation segments.
In this regard, it is more than a necessity to start introducing cleaner practices and to prioritize more expansion of the renewable electricity share, as well as to explore the potential of greening the fuels (mainly the green hydrogen or its synthetic derivatives), as well as to enhance sector coupling. Thus, creating a solid market basis for the current PtX momentum in the Arab region require supporting policies, effective regulations, practical guidelines, financial instruments as well as tailored capacity building activities.
Expanding hydrogen production is likely to be one of the major achievements in the coming years, notably in the MENA region, which is a very promising area of energy production and exchange, and geo-strategic hub of energy export to neighbour regions.
One of the biggest tasks in the coming decades is to develop the green hydrogen industry, especially given that the global market forecasts show that at the horizon of 2028, the total investments that will be dedicated to the H2 molecules coming from renewable energy will worth 9.8 billion USD.
In the MENA region, several efforts and actions are being planned and implemented to
play the expected role of the larger green hydrogen supplier as a region.
Currently, the region has seen a significant market trend in green and blue hydrogen projects from 11% in 2020 to 89% in 2021.
The market is led by the UAE with more than 29% share of announced export-oriented low carbon hydrogen projects, followed by Egypt and Morocco at 19.35 % each. Oman accounts for 12.90 % share while Tunisia and Saudi Arabia account for 6.45 % each. Also, Algeria and Bahrain have a 3.23 % share each in the projects announced.
As per the green hydrogen potentialities, different assessments and studies are being conducted to evaluate the market volume, define the needs, analyse the gap, and recommend appropriate pathways to unlock the hydrogen potential from renewables either at a national or regional scales.
Morocco took the initiative – since 2018 – and launched two important studies about the domestic market potential, PtX applications and the export opportunities. Thus, both studies led to establish a national committee which managed the conception of the first national hydrogen roadmap in the MENA region and Africa for the horizon of 2050.
In Algeria, the existing infrastructure in the oil and gas sector, the industrial gas sector, along with the exceptional potential in wind and solar energy and the country proximity to European markets, make it a potential supplier of green hydrogen or other valuable gases. A domestic production of green hydrogen would represent for Algeria an interesting opportunity to diversify its traditional markets, in line with the government’s diversification strategy.
Egypt, one of the leading economic actors in Africa and the region, especially when it comes to clean resources scale of production, is on the pinnacle of the strategic discussions, and intended to play a considerable role in the hydrogen production and exchange. Plenty of MoU’s have been concluded by the government with leading international technology providers to start exploring the potential of production and export in the industrial zone of Suez.
For Jordan, it was highlighted by the Ministry of energy and mineral resources that the green hydrogen component will be incorporated in the kingdom energy strategy 2020 – 2030. This will be followed by a of supportive and stable policy framework to encourage and attract foreign investments, overcome the initial resistance, and reach a minimum threshold of market penetration.
In this context, it is essential to keep in mind that the countries’ visions aim toward diversifying their energy mixes and decarbonizing their economy sectors especially the hard to abate sectors. Taking into consideration the significant opportunities and supporting factors (renewables potential, geostrategic positioning, proximity to Europe…) and the restraining challenges (energy exchange infrastructure, technologies gaps, international energy crisis, human capacities…), the current market trends make the time very adequate to start regional discussions. These discussions must be held between the decision makers in the region’s countries, with the aim of defining the most important rooms of cooperation, develop synergies and create a level playing field for the private local/ foreign investments in the PtX fields.
The preliminary insights show a need to conduct an in-depth screening of the hydrogen market from demand perspective in the promising countries (Morocco, Algeria, Egypt, and Mauritania), considering the national industrial model, with a special focus on the heavy demanding industries, such as steel, iron and fertilizers producers.
This assessment will be essential to horizontally analyse the countries potentialities from different economic and environmental perspectives; but most importantly, to carry out sector specific deep dives along the whole green hydrogen value chain. In doing so, it will enable us to be able to come up with clear and consolidated findings on the national markets readiness and generate consistent policy and economy recommendations on the common needs and opportunities of all targeted countries in line with the climate neutrality objectives by 2050.
Khalid Salmi
Expert – Sustainable Energy Management
Regional Center for Renewable Energy and Energy Efficiency (RCREEE)
