The Al Dhafra Solar Photovoltaic (PV) Independent Power Producer (IPP) project in Abu Dhabi. AFP

After riding a fossil-fuel boom for decades, Arabian Gulf countries are eyeing “green” hydrogen as they try to transition their economies and ease the climate crisis at a stroke.

Oil producers UAE, Saudi Arabia, and Oman are investing heavily in the climate-friendly fuel in a search for alternative revenues to crude and gas.

Green hydrogen, which is the hydrogen created when renewable energy electrolyses water, appears to solve many problems: it is low-polluting and has widespread potential uses, which could make it lucrative and planet-saving at the same time.

But the fuel, which currently makes up less than one per cent of total hydrogen production, is not yet commercially viable and needs a major scaling-up of renewable energy sources – a process that could take years.

Despite this, the Gulf nations sense an opportunity to remain major players in energy markets.

“Gulf states aim to lead the global hydrogen market,” said Karim Elgendy, associate fellow at Britain’s Chatham House think tank.

“They see green hydrogen as critical to remain major energy powers, allowing them to continue their influence as fossil fuel demand declines.”

Most hydrogen is produced from polluting fossil fuels, but green hydrogen is extracted from water using renewable energy such as wind, solar and hydropower.

While fossil fuels create harmful greenhouse gases when they burn, hydrogen emits only water vapour. It is touted for potential use in high-polluting industries such as transport, shipping and steel.

‘EXPORT LEADERS’: In July the UAE, which will host the United Nations’ COP28 climate conference this year, approved a hydrogen strategy that aims to make it one of the top 10 producers by 2031.

“Hydrogen will be a critical fuel for the energy transition,” said Hanan Balalaa, a senior official at the UAE’s oil firm ADNOC, calling it a “natural extension” for the company.

“We believe hydrogen and its carrier fuels have great potential as new, low carbon fuels, that the UAE is well placed to capitalise” on, Balalaa told AFP.

Wielding its massive investment capital, Saudi Arabia is constructing the world’s largest green hydrogen plant at NEOM, the $500 billion futuristic megacity being built on the Red Sea.

The $8.4-billion plant will integrate solar and wind energy to produce up to 600 tonnes of green hydrogen a day by the end of 2026, officials say.

But it is Oman, which lags behind Saudi Arabia and the UAE in fossil fuel production, that looks poised to lead the Gulf’s clean hydrogen race.

The sultanate is on track to become the sixth-largest exporter globally and the biggest in the Middle East by the end of the decade, the International Energy Agency said in a June report.

Oman aims to produce at least one million tonnes of green hydrogen a year by 2030, and up to 8.5 million tonnes by 2050, “which would be greater than total hydrogen demand in Europe today”, the IEA said.

According to auditing firm Deloitte, Middle Eastern countries, primarily the Gulf, will lead global clean hydrogen trade in the short-term, exporting around half of their domestic production by 2030.

By 2050, North Africa and Australia are projected to have the greatest potential, although Gulf states will remain “export leaders”, the company said in a June report.

Recently, Suhail Bin Mohammed Al Mazrouei, Minister of Energy and Infrastructure, concluded a three-day visit to Goa, India, where he participated in multiple high-level events that aimed to drive the global energy transition agenda in line with the objectives of the Paris Agreement.

Al Mazrouei participated in a closed-door Roundtable on Green Hydrogen that aimed to identify near- and long-term goals and actions to scale up the contribution of green hydrogen in the transition to net-zero emissions and set strategies to augment supply and demand for green hydrogen.