New oil: Hydrogen as a competitor in Saudi Arabia

Saudi Arabia is banking on green hydrogen as an alternative to oil to fuel its futuristic Néom project, investing heavily in plants powered by renewable energy. However, despite its potential as a clean energy source, green hydrogen faces obstacles such as high production costs and storage and transport challenges.

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The new oil could be green hydrogen in Saudi Arabia. This energy is currently booming worldwide, seen as one of the solutions for achieving decarbonization objectives. Saudi Arabia is betting on this resource to create its new futuristic city: Neom.

New oil to power the city of Neom

The new city of Neom is to be built along the Red Sea, on the edge of the Saudi Arabian desert. The state has invested over $500 billion to develop a city based on advanced technologies that will accommodate a million people. Saudi Arabia is betting not on oil, but ongreen, carbon-neutralhydrogen to power this electricity-hungry project.

Green hydrogen: the new oil?
Green hydrogen is produced from renewable energies.

A new hydrogen plant to power Neom

The major American gas company, Air Products & Chemicals, announced that it had been building agreen hydrogen production plant in Saudi Arabia for four years as part of this project. The plant is powered by four gigawatts of electricity from wind and solar projects stretching across the desert. However, other projects are under study.

The Middle East currently has high-quality, low-cost wind and solar energy resources, such as the 300 MW Sakaka site. An opportunity for this new project, which could propel Saudi Arabia to the forefront of green hydrogen.

Koch Blank, head of the Rocky Mountain Institute’s Breakthrough Technology program, said:

“Saudi Arabia has ridiculously cheap renewable energy. The sun shines pretty reliably every day and the wind blows pretty reliably every night. It’s hard to beat.”

NEOM, future capital of new oil?
NEOM project for a $500 billion megalopolis in Saudi Arabia along the Red Sea coast.

An important energy source for the energy transition

Green hydrogen could be an ideal energy source for energy-intensive industries such as concrete and steel manufacturing, as well as for sea and air transport. However, Airbus has highlighted the many storage problems associated with using this energy. He believes, however, thathydrogen could be flying airplanes by 2035. Roxana

Bekemohammadi, Executive Director of the Western States Hydrogen Alliance pointed out:

“Hydrogen fuel cells will power the future of emissions-free mobility in these heavy, hard-to-elect vehicle sectors. This fact is indisputable. ”

The new oil for a new green hydrogen “rush

Many countries are currently interested in this type of energy. The European Union and Germany, in particular, have allocated major investments to develop this energy on their territory.

An Australian consortium has also developedhydrogen businesses to Singapore, thanks to 1,743 large wind turbines and 30 square miles of solar panels. However, for the Asian Renewable Energy Hub, ammonia gas could be easier to export than hydrogen. Japan has also developed its own green hydrogen company at Fukushima.

Only the USA is lagging behind in this area, despite the development of hydrogen projects in Utah, California and Nevada. In fact, natural gas is still much cheaper and more attractive.

Hydrogen: A new oil, but still limited

At present,hydrogen production still relies on fossil fuels and is therefore not climate-friendly. Indeed, to power the electrolysis plants that separate water into hydrogen and oxygen, we’d need to massively expand renewable energy production. BloombergNEF estimates that producing enough green hydrogen to meet a quarter of the world’s energy needs would require an $11 billion investment in production and storage.

Hydrogen is also difficult to store and transport without a pipeline. Michael Liebreich, UK analyst at Bloomberg New Energy Finance said:

“It doesn’t exist in nature, so energy is needed to separate it. Its storage requires compression to 700 times atmospheric pressure, refrigeration to -253C… It carries a quarter of the energy per unit volume of natural gas… It can embrittle metal, it escapes through the smallest leaks and yes, it really is explosive”.

Finally, even if hydrogen appears to have great potential as a substitute for oil, its use remains limited by a number of obstacles, not least production costs.

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The Belfort commercial court has approved the sale of McPhy to John Cockerill Hydrogen, a €600,000 transaction involving majority retention of staff and an industrial project partially funded by European subsidies.
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The European Commission grants €3.5mn to support preparatory work for a Franco-German cross-border network aimed at transporting hydrogen between the Grand Est region and Baden-Württemberg starting in 2029.
French company McPhy Energy awaits a court decision regarding offers submitted during its judicial reorganization, paving the way for probable liquidation and potential delisting of its shares.
The majority-Indigenous-owned Canadian manufacturer HyVera Distributed Energy is introducing an eCat pellet that instantly produces ultra-pure green hydrogen without external electricity and is counting on two pilot plants to simplify industrial supply.
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Singapore-based hydrogen specialist Hydrexia seals a protocol with Indonesian gas giant Samator to deploy purification, transport and storage of hydrogen, betting on rapidly growing local demand and export outlets to the Asia-Pacific region.
Cadiz Inc. signs a memorandum of understanding with British company Hoku Energy for a large-scale energy project including green hydrogen, solar power, and digital infrastructure in the Californian desert, projecting annual revenues of up to $10mn.
BP indefinitely halts its blue hydrogen project at the Whiting refinery in Indiana, raising questions about the future of federal funding and the impact on regional plans for a decarbonized hydrogen sector in the United States.
The Polish energy group ORLEN receives a non-repayable grant of €382 million from the National Recovery Plan to finance its renewable and low-emission hydrogen production initiatives.
Georgia Power and Mitsubishi Power announce successful completion of an unprecedented test incorporating 50% hydrogen into an advanced gas turbine, reducing CO2 emissions by 22% compared to natural gas alone.
Neoenergia has begun construction of one of Brazil's first green hydrogen plants, aimed at supplying heavy and light vehicles, with an investment exceeding 30 million Brazilian reais ($5.99mn).