Skip to content Skip to Search
Skip navigation

Hello hydrogen: inside the GCC’s next mega-commodity

Abu-Dhabi based renewable energy company Masdar is buying a stake in HyGreen Teesside, which should produce up to 500MWe of hydrogen by 2030 BP
Abu-Dhabi based renewable energy company Masdar is buying a stake in HyGreen Teesside, which should produce up to 500mw of hydrogen by 2030
  • Up to one million hydrogen-related jobs in Gulf in next 30 years
  • UAE and UK partnership on Teesside developments
  • Global hydrogen production market valued at $130bn last year

With annual revenues from green hydrogen in the GCC estimated to grow to about $200 billion by 2050, the region is investing heavily as a means to continue using its oil resources, while supporting international partners in reducing carbon emissions.

Up to one million hydrogen-related jobs could be created in the Gulf within three decades, according to Dii Desert Energy and Roland Berger.

This is prompting experts to suggest the region is on the verge of a new era similar to the discovery of oil decades ago.

The UAE’s ambitions were clear to see in May when Abu Dhabi National Oil Company (ADNOC) and clean energy major Masdar partnered with BP on its planned blue and green hydrogen developments in Teesside in the north-east of England.

“The UK government has said it wants renewable energy to feature in free trade negotiations with the GCC,” said Freddie Neve, senior Middle East associate at Asia House, a London-based think tank.

“This chimes with recent net-zero targets we’ve seen from the UAE, Saudi Arabia and Bahrain, as well as the GCC’s growing interest in developing renewables and clean energy as a means of diversifying their economies away from fossil fuels.”

ADNOC, the UAE’s largest energy company, is investing in a 25 percent stake in the design stage of BP’s blue hydrogen project, H2Teesside, while Masdar has also signed a memorandum of understanding to acquire a stake in the proposed green hydrogen project, HyGreen Teesside.

H2Teesside is expected to kick-start the UK’s hydrogen economy at scale with the development of two 500mw hydrogen production units by 2030, with a target to start operations in 2027.

Meanwhile HyGreen is planned to produce 60mw of hydrogen at start-up in 2025, increasing to up to 500mw by 2030. 

Together, these two projects could deliver 15 percent of the UK government’s recently expanded 10gw target for hydrogen production in 2030.

Creative Commons
The partnership with BP could deliver 15 percent of the UK’s 10gw target for hydrogen production in 2030

It’s a deal that excites Bradley Jones, executive director of the UAE-UK Business Council, who said: “The UAE is pursuing a similar roadmap [to the UK], so it is natural that BP, ADNOC and Masdar are working together.

“I hope that when CoP28 is held in Dubai at the end of next year, we will have more such partnerships between the UK and the UAE to showcase.”

Nick Cochrane-Dyet MBE, chairman of the British Chamber of Commerce Abu Dhabi and also a former special advisor for BP, agreed, saying: “This is a win-win situation for companies in the UK and UAE. It’s just the beginning of a great journey for both countries.”

He added: “I’m excited because here we have two countries who have decided to stand up and take decisive action that will benefit the world.

“We need to scale up the ecosystem quickly. However, I’m confident we will ultimately succeed under the leadership of the likes of BP and ADNOC.”

We have two countries who are standing up and taking decisive action that will benefit the world

Nick Cochrane-Dyet, chairman of British Chamber of Commerce Abu Dhabi

The UAE-UK collaboration comes as Jane Toogood, chief executive of catalyst technologies at speciality chemicals and sustainable technologies firm Johnson Matthey, has been appointed as Britain’s first Hydrogen Champion.

This new role will see her play a vital role in bringing industry and government together.

Husain A Meer, director of global offshore wind and UK at Masdar, welcomed the appointment. He said: “We see [it] as a strong message from the UK government of its commitment to realising its green hydrogen ambitions – including the development of up to 10gw of hydrogen production capacity by 2030.  

“Along with BP, we look forward to working closely with Jane Toogood on our project in Teesside, which builds on Masdar’s position as an anchor investor in some of the UK’s largest offshore wind projects.”

Clare Jackson, the chief executive of Hydrogen UK, a trade association committed to the development and deployment of hydrogen solutions, also sees further UK-UAE collaboration in the future.

“International collaboration will be essential to delivering a global hydrogen economy, recognising that the broad range of innovation and expertise is required to get hydrogen projects off the ground,” she said.

“The UAE has ambitious plans in the hydrogen space and is well placed to play a key role in the global hydrogen market.”

She added: “Partnerships between the UK and UAE could be beneficial to the development of hydrogen in both countries, as demonstrated by the recent collaboration in Teesside.

“Hydrogen UK expects to see more partnerships coming forward as both countries look to hydrogen as a key tool for tackling climate change.”

New energy superpowers

According to the World Bank, the global hydrogen production market was valued at $130 billion last year and is estimated to grow by up to 9.2 percent per year through 2030.

Hydrogen could account for up to 12 percent of global energy use by 2050, leading to the rise of new energy superpowers, according to a report from the International Renewable Energy Agency (IRENA).

So where does the GCC region fit into the global hydrogen equation?

Stuart Bolton, associate at Watson Farley & Williams (Middle East), an international law firm specialising in the energy sector, said: “The UAE will seek to play a similar role in hydrogen as it has established in oil and gas and will seek to capitalise on its strategic geography, mature energy infrastructure and established trading markets to be as influential in this sector.

“It sees hydrogen more as a means of economic diversification, rather than a central part of its domestic green energy transition plan, which will be primarily met by solar power.

“The UAE will play an important role in exporting hydrogen to energy-hungry countries that lack the space or infrastructure to develop industries substantial enough to meet their own needs.”

Bolton said that Germany and Japan fit this narrative, and were the two early movers to develop bilateral partnerships with the UAE. 

“It makes sense that the UK is increasingly active in reaching out to the GCC governments to lock in sources of hydrogen molecules before Japan hoovers them all up,” added James Thomas, a partner specialising in the oil and gas industry at PwC’s global strategy consulting team Strategy&. 

“While the world will likely continue to call on Middle Eastern hydrocarbons for likely decades to come, clearly, the Gulf countries also have huge renewable energy potential that could take over as a source of revenue as global environmental concerns and legislation continue to harden.”

Creative Commons
Hydrogen could account for up to 12 percent of global energy use by 2050

The UAE, Saudi Arabia and Qatar score strongly in Fitch’s Hydrogen Suitability Index.

Saudi Arabia has said it wants to become the world’s largest exporter of hydrogen by 2030, while Fitch is currently tracking six major commercial green and blue hydrogen and ammonia projects in the UAE. 

Fitch Solutions associate director of energy research, Thomas van Lanschot, said: “The MENA region exhibits robust overall potential for the development of hydrogen infrastructure in the long term, as growing global demand for low-carbon fuels begins to offer a strong basis for diversification to support non-oil economic activity in the region.”

“We believe that ADNOC’s strategic placement with BP and Masdar will open the way for cooperation in the UK’s hydrogen pipeline, as well as other markets such as the Netherlands and Egypt,” added Lanschot.

In November, the UAE announced the Hydrogen Leadership Roadmap, a national blueprint to support domestic, low-carbon industries to contribute to the country’s net-zero 2050 ambition and establish the country as a competitive exporter of hydrogen.

The country will target a 25 percent market share in key export markets, including Japan, South Korea, Germany, and India initially, along with additional high-potential markets in Europe and East Asia.

But the picture is not so clear across other GCC countries. Dr Dawud Ansari, a researcher at Stiftung Wissenschaft und Politik, the German Institute for International and Security Affairs, said: “The GCC governments’ strong interest in hydrogen is hardly intrinsic. Instead, it follows the goal of securing prosperity and the promise of foreign demand.

“Hydrogen provides the Gulf states with an opportunity to largely maintain economic and political power structures despite a global energy transition,” he added.

GCC countries are keen on hydrogen although not all to the same extent, Ansari explained.

While Saudi Arabia is initiating major undertakings with no formal framework, Oman is creating new structures and introducing various projects, Qatar is continuing to focus on LNG and blue hydrogen production abroad, and Kuwait and Bahrain remain cautious and are sticking to investments and feasibility studies.

“The eventual implementation of those projects remains to be seen. Big announcements without follow-ups are not unusual in the region,” Ansari added. 

There are also challenges for GCC countries regarding the export of hydrogen, with significant transportation costs to supply large markets in Europe and East Asia. 

Countries must connect their supply with demand. The market will be won in the supply chain

James Thomas, partner at Strategy&

“Unfortunately, energy is hard to transport over long distances,” said James Thomas of Strategy&.

“There’s no point generating a surplus volt of green energy in the middle of the desert in Saudi if the demand for that volt is to run a steel furnace in Tokyo, power a petchem plant in Frankfurt or operate a bus in Buenos Aires.

“So Gulf countries need to find a solution to connect their supply with consumer demand. For that reason, the green hydrogen market will be won in the supply chain.”

Fitch Solutions’s Thomas van Lanschot agreed: “Within MENA, a substantial first-mover advantage exists for the first markets that are capable of rapidly increasing the scale of their hydrogen production, establishing trading arrangements to export the fuel, and capitalising on the low-carbon energy transition.

“In particular, we highlight ongoing discussions between the UAE and Germany and other Western European markets to explore future hydrogen export capabilities from the UAE.”

The hydrogen rainbow

  • Green hydrogen is produced on a carbon-neutral basis through water electrolysis. 
  • Turquoise hydrogen is created when natural gas is broken down into hydrogen and solid carbon with the help of methane pyrolysis.
  • Blue hydrogen is generated from the steam reduction of natural gas. 
  • Grey hydrogen is obtained by steam reforming fossil fuels such as natural gas or coal. 
  • Sometimes other colours are ascribed to hydrogen, based on how it is produced. For red, pink and violet hydrogen, the electrolysers are driven by nuclear power. 
  • Yellow hydrogen is hydrogen produced from a mixture of renewable energies and fossil fuels. 
  • White hydrogen is a waste product of other chemical processes, while the use of coal as a fuel produces brown hydrogen.

Hydrogen uses

  • Hydrogen is used by industry for refining petroleum, treating metals, producing fertiliser, processing foods and to lower the sulphur content of fuels.
  • Smaller hydrogen fuel cells can power laptop computers and even cell phones and military applications. Larger fuel cells can supply electricity to power grids, supply backup or emergency power in buildings and supply electricity in places that are not connected to electric power grids.
  • In the glass industry, hydrogen is used as a protective atmosphere for making flat glass sheets. In the electronics industry it is used as a flushing gas during the manufacture of silicon chips. 
  • Hydrogen is considered an alternative vehicle fuel, although high costs and limited availability fuelling stations have limited vehicles in use so far.
Toyota’s hydrogen-fuel concept car

Latest articles

Flooding in Dubai affected many people's homes. Emaar has promised .free repairs for its residents, and an upgraded sewerage system is planned

Emaar promises free repairs as Dubai launches sewerage system

Emaar Properties is offering free repairs to residents whose homes were damaged during this week’s extreme flooding, as Dubai also announced an AED80 billion ($22 billion) sewerage system. The developer announced on Friday that it would repair all homes in its communities affected by the historic levels of rain, “at no cost to residents”. Emaar’s […]

A customer paying with a credit card inside the Black Friday Market in Beirut. Lebanon wants more people to move away from cash

Lebanon launches plan to promote use of bank cards

Lebanese central bank Banque du Liban announced a new agreement on Thursday that it hopes will result in a rebound in the use of bank cards. As part of the agreement, Mastercard and Visa will lower card fees on transactions, particularly for people with bank accounts based outside Lebanon. In a press release, the bank […]

Construction work in Kuwait. Nurseries, schools and shops are being built for the new residential district of Al Metlaa

Kuwait signs $140m contracts for Al Metlaa development

Kuwait’s Public Authority for Housing Welfare (PAHW) has signed two contracts worth KD42 million ($140 million) to construct public buildings in Al Metlaa, a new residential district north of Kuwait City. Nurseries, stores, schools and shops will be included, state news agency Kuna reported. Electricity connections have been provided for 109 buildings in the district, […]

Workers at Cano Limon oil field in eastern Colombia. Oil is one of the country's largest exports

UAE strikes Colombia deal to strengthen Latin American links

The UAE has strengthened trade relations with Latin America after signing a comprehensive economic partnership agreement with Colombia, just days after a Cepa deal was struck with Costa Rica. Officials from the UAE and Colombia put pen to paper on an agreement that will cut tariffs and remove trade barriers between the two countries. UAE […]