The hydrogen era for energy security

This photograph taken at French oil giant TotalEnergies platform on November 21, 2022, shows a former oil refinery as materials are decommissioned and dismantled on the site to be refitted on a "TotalEneregies bio fuel", hydrogen and solar installations in Grandpuits. (AFP/File)
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Updated 09 January 2023

The hydrogen era for energy security

  • Hydrogen is capable of providing cleaner, greener energy 
  • It can be turned into electricity, methane to power homes and industries

When energy security and climate action are the top priority for the world, modern-era hydrogen can be a game-changer to overcome the environmental crisis and provide a direction for energy security – hopefully in a cost-efficient manner. 

Hydrogen has an excellent capability to provide us with greener and cleaner energy sources: it's clean, safe, and eco-friendly, which makes it a highly desirable fuel.  It can be produced from a range of fuels, including nuclear, coal, oil, and natural gas. The gas can also be produced through renewable energy sources in the form of green hydrogen, an alternative that reduces emissions. 

If hydrogen is to play a substantial part in clean, flexible energy systems, it will be due to its ability to store vast amounts of energy for long periods of time and transport it over great distances. Thus, the cost and availability of delivery infrastructure are crucial to make the most of this resource. As of now, hydrogen is most commonly stored as a gas or liquid in tanks for mobile and stationary applications on a small scale. 

The cost of storage and transportation can be very affordable if hydrogen is used near the site of its production. However, if the hydrogen must travel a long distance, the transmission and distribution costs could be three times as high as the cost of hydrogen production. Pipeline delivery of hydrogen is likely to be the least expensive option for distances under 1500 km, but shipping hydrogen as ammonia or as liquid organic hydrogen over that distance is probably more cost-effective.

It's also very interesting to note that the existing gas transmission pipeline network can be repurposed for hydrogen. This will not only save the time to include hydrogen in the mix quickly but, at the same time, the repurposing costs of existing gas transmission pipelines can be 10 percent to 35 percent of the costs of new dedicated hydrogen pipelines, as per the European Hydrogen Backbone report. 

Global hydrogen market 

The global hydrogen demand reached approximately 94 million tonnes (Mt) in 2021. China is leading the hydrogen global market with its current annual production of 33 million tonnes (Mt), 80 percent of which comes from fossil fuels. However, the country has ambitious plans to augment the production from cleaner fuels, with an aim to produce 200,000 tonnes of green hydrogen a year and have about 50,000 hydrogen-fuelled vehicles by 2025 as per the plan by the National Development and Reform Commission, and the National Energy Administration. 

When it comes to global hydrogen production, China is followed by the European Union, Japan, India, the United States, Saudi Arabia, Korea, Germany, United Arab Emirates, and Oman. The climate emergency and net zero emissions goals have certainly accelerated the hydrogen conversation and attracted countries toward hydrogen markets.  

Across the globe, over 40 national hydrogen strategies have been proclaimed as countries lay out action plans on hydrogen's potential to reduce emissions, guarantee energy security, and encourage sustainable economic growth. The need for hydrogen to achieve net-zero emissions is being acknowledged by stakeholders across industries, government, and now even by individual consumers.  

According to the “Future of Hydrogen” report of the International Energy Agency (IEA), the demand for hydrogen in 2050 is anticipated to increase to 500–680 million MT. In terms of the market size, the hydrogen generation market is estimated at US$129 billion, estimated to grow at a compound annual growth rate (CAGR) of 6.4%, leading to a market size of US$230 billion by 2030. At present, the majority of the hydrogen is being produced from fossil fuels, however, there is a huge opportunity to produce green hydrogen through affordable renewable resources, something which can be a key driver for energy security for many countries endowed with huge renewable energy potential.  

Despite the fact that hydrogen is a colorless gas, different colors are attributed to hydrogen based on the source and method of production, according to the Global Energy Infrastructure.

Promise of green hydrogen 

Out of all the types of hydrogen, green hydrogen is the cleanest form of hydrogen as it is produced by clean/renewable energy, using a process of splitting the atoms through electrolysis. Green hydrogen is certainly a renewed hope for meeting climate action goals.   

For instance, green hydrogen might currently be produced for between €3 and €5 per kilogram in some regions of the Middle East, Africa, Russia, the US, and Australia while the production expenses in Europe range from €3 to €8 per kilogram. In areas with access to affordable renewable energy plants, it is easiest to achieve the lower end of these ranges. The economic viability of producing green hydrogen has increased as a result of declining costs for renewable energy sources, decreasing electrolyzer costs, and more efficiency brought on by technological advancements. 

By 2050, green hydrogen may be produced for $0.70 to $1.60 per kg in most parts of the world, a cost comparable to natural gas if these costs continue to decline,  according to Bloomberg New Energy Finance.

Transportation, distribution, and storage 

To scale production and use the hydrogen, transportation, distribution, storage methods, and costs are of immense importance.  

Over shorter distances, it is the most suitable option to transport hydrogen through pipelines. As hydrogen is a low-energy-density gas, it is costly to transport it over longer distances. There are certainly a number of possible ways to address this challenge by using technologies of compression, liquefaction, or turning hydrogen into ammonia and transportation in liquid organic hydrogen carriers (LOHCs).  

But storage is also a key consideration. Hydrogen production and on-site or near-site usage can reduce the costs, however, a number of use cases may require storage solutions. Hydrogen can be stored in tanks, salt caverns, and other geological storage solutions. And while the geological to purpose-built storages are all technically certainly possible, the same must be analyzed from the financial viability perspective, too.

Use cases of hydrogen 

In addition to being converted into fuels for automobiles, trucks, ships, and airplanes, hydrogen can also be turned into electricity and methane to power homes and supply industries. It can be converted into ammonia which can be feedstock for various industries, including the manufacturing of fertilizers. Does that mean that hydrogen can have an impact on food security? Perhaps yes.

Whatever the use case may be, it is important that hydrogen production, source, and use case ecosystem are planned very carefully to optimize resource allocation, ensure cost viability, and have a positive environmental impact. 

Hydrogen and net zero 

For some high-emission industries — such as long-haul transportation, chemicals, iron, and steel — hydrogen can be a major decarbonization source by reducing emissions in a meaningful way, and hence the initial demand may be coming from these hard-to-abate sectors. 

In the IEA’s Announced Pledges Scenario, the hydrogen demand is 130 Mt by 2030, which assumes that 25% of the demand will be coming from new applications and the use of low-emission hydrogen in traditional applications. This would certainly require stakeholders to plan for and implement robust policy actions.  

Appropriate planning and effective stakeholder engagement are absolutely key for policymakers, technology providers, innovation leaders, and industry specialists. With impactful collaborative solutions, the new hydrogen era can be a significant contributor to energy security, and an important driver in the pathway to net zero. At the same time, this may also address the vulnerabilities of emerging and developing countries, something that has been so evident during the recent global energy shocks. The future of hydrogen is undoubtedly a promising one. 

— The author is founder & CEO at Planetive Middle East & Pakistan 

Oil Updates – prices rise as supply concerns outweigh demand fears

Updated 22 September 2023

Oil Updates – prices rise as supply concerns outweigh demand fears

TOKYO: Oil prices rose on Friday as concerns that a Russian ban on fuel exports could tighten global supply outweighed fears that further US interest rate hikes could dent demand, but they were still headed for their first weekly loss in four weeks, according to Reuters.

Brent futures climbed 50 cents, or 0.5 percent, to $93.80 a barrel by 6:50 a.m. Saudi time, while US West Texas Intermediate crude futures gained 63 cents, or 0.7 percent, to $90.26 a barrel.

Both benchmarks were on track for a small weekly drop after gaining more than 10 percent in the previous three weeks amid concerns about tight global supply as the Organization of the Petroleum Exporting Countries and its allies maintain production cuts.

“Trading remained choppy amid a tug-of-war between supply fears that were reinforced by a Russian ban on fuel exports and worries over slower demand due to tighter monetary policies in the United States and Europe,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co. Ltd.

“Going forward, investors will focus on whether the OPEC+ production cuts are being implemented as promised and whether the rise in interest rates will reduce demand,” he said, predicting WTI to trade in a range of around $90-$95.

Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect to stabilize the domestic fuel market, the government said on Thursday.

The shortfall, which will force Russia’s fuel buyers to shop elsewhere, caused heating oil futures to rise by nearly 5 percent on Thursday.

“Crude oil bounced off a session low after Russia banned diesel exports, which included gasoline. The action reversed a downside movement in crude markets following the hawkish Fed decision on Thursday,” said Tina Teng, an analyst at CMC Markets, in a note.

“However, mounting fears of a recession in the Eurozone could continue pressuring oil prices.”

The US Federal Reserve on Wednesday maintained interest rates, but stiffened its hawkish stance, projecting a quarter-percentage-point increase to 5.50-5.75 percent by year-end.

That buoyed fears that higher rates could dampen economic growth and fuel demand while boosting the US dollar to its highest since early March, making oil and other commodities more expensive for buyers using other currencies.

The Bank of England mirrored the Fed and held interest rates on Thursday after a long run of hikes, but said it was not taking a recent fall in inflation for granted.

A European Central Bank governing council member said the central bank will most likely keep interest rates stable at its next policy meeting. 

Pakistan seeks $6 billion for corporate farming from Saudi Arabia, other Gulf nations by 2028

Updated 22 September 2023

Pakistan seeks $6 billion for corporate farming from Saudi Arabia, other Gulf nations by 2028

  • Arab News speaks exclusively to CEO of FonGrow, spearheading agriculture projects under new investment body
  • Pakistan in talks with Saudi companies like Al-Dahara, Saleh and Al-Khorayef for investment in corporate farming

ISLAMABAD: Pakistan is seeking up to $6 billion investment from Saudi Arabia, the United Arab Emirates (UAE), Qatar and Bahrain over the next three to five years for corporate farming, with the aim of cultivating 1.5 million acres of previously unfarmed land and mechanizing existing 50 million acres of agricultural lands across the country, the CEO of the company spearheading the initiative has said.

The development comes months after Pakistan set up a Special Investment Facilitation Council (SIFC) — a civil-military hybrid forum — to attract foreign funding in agriculture, mining, information technology, defense production and energy as the South Asian country deals with a balance of payments crisis and requires billions of dollars in foreign exchange to finance its trade deficit and repay its international debts in the current financial year.

Earlier this month, caretaker Prime Minister Anwaar-ul-Haq Kakar said Saudi Arabia and the UAE would invest up to $25 billion each in Pakistan over the next five years in the mining, agriculture and information technology sectors.

Initiatives in the agriculture sector under SIFC are being administered by FonGrow, which is part of the Fauji Foundation investment group run by former Pakistani military officers.

“We have estimated about $5-6 billion [investment from Gulf nations] for initial three to five years,” Major General (retired) Tahir Aslam, FonGrow’s managing-director and chief executive officer, told Arab News in an interview. 

He declined to share details about the breakdown of the investment from each individual country.

The CEO said the company was engaging with several Saudi companies like Al-Dahara, Saleh and Al-Khorayef to attract investment in the corporate farming sector. He did on elaborate on progress made so far in the discussions. 

Aslam said his company was also working on different investment models with the Saudi and UAE companies for corporate farming, including joint ventures.

“If they want to make direct investment, it is a corporate model. So, they will take an equal number of stakes in the company, and they get an equal number of positions in the governance [of the company]. So, it is going to be a joint company.”

About strategy and targets to mechanize farming, Aslam said FonGrow was working on a two-pronged approach to bring up to 1.5 million acres of new arable land under cultivation and modernize 50 plus million acres of land already being farmed.

This, he said, would require about “$25 million per each thousand acres and other for machinery, and setting up of infrastructure for value addition.”

FonGrow is aiming to set up corporate farms on over 100,000 acres in the next 5-7 years. The first such farm had already been established on over 5,000 acres of land in Khanewal, he said. 

“Next year, we will be starting our second farm on over 10,000 acres and we hope to develop the capacity to be able to develop 20 to 25 thousand acres every year,” Aslam said. “Mainly, we are starting in Punjab and then we are looking for lands. Wherever we get suitable lands, we will go to all the provinces.”

To a question about the source of capital to develop the land, the official said: “We have no issue of rupee capital availability for our project because ultimately it will bring returns to Fauji Foundation.”

“There is a small challenge that we are facing basically, which is of foreign exchange because the irrigation systems and the tractors and harvesters that we have to import, they need foreign exchange.”

Aslam said Pakistan’s corporate farming model envisioned that sixty percent of the crops would contribute to the country’s food security, and the remaining 40 percent would be exported mainly to Gulf countries to earn foreign exchange. 

He said Pakistan had received a first export order of Fauji cereal products from a Gulf nation, though he declined to name the country:

“It is a starting quantum [that] is about $25 million worth of products in one year. But I think as we break more grounds this will continue to increase in the coming years.” 

Responding to concerns about the army’s involvement in economic projects in Pakistan, he said the military was only contributing where requested by the civilian government.

“They [foreign countries] wanted an organization which provides continuity or security of their investment, that was the reason the army joined in and then the army also said we have such a large [investment] potential available,” the FonGrow CEO said.

“In the past also, the army has very willingly contributed to projects of nation-building and national importance … Army is playing its part, but no soldiers are involved.”

Saudi Arabia elected ISO council member for two years

Updated 21 September 2023

Saudi Arabia elected ISO council member for two years

RIYADH: In recognition of its efforts to implement health and safety standards, Saudi Arabia has been elected as a member of the council of the International Organization for Standardization, the Saudi Press Agency reported.

The Kingdom will maintain the position for a two-year period starting 2024, it said.

This was announced during ISO’s 45th general assembly meeting held in Brisbane in Australia.

The Saudi Standards, Metrology, and Quality Organization, known as SASO, represented the Kingdom at the recent ISO meetings.

SASO is committed to the ongoing enhancement and revision of Saudi standards and technical regulations, with its efforts aimed at safeguarding the nation’s markets against counterfeit, substandard, and deceptive products, ultimately bolstering the national economy. 

Meanwhile, ISO, which came into existence in 1947, is an independent, nongovernmental international organization with 169 members.

Red Sea International Airport becomes operational

Updated 21 September 2023

Red Sea International Airport becomes operational

RIYADH: The Red Sea International Airport became operational with the touchdown of the first Saudia flight early on Thursday, according to the Red Sea Global. 

In a statement, the multi-project developer behind the world’s most ambitious regenerative tourism destinations, The Red Sea and AMAALA, said that the flights from King Khalid International Airport in Riyadh will arrive every Thursday and Saturday, connecting the two destinations in less than two hours. 

It added that a flight would return to the capital on the same day. “We promised to make TRS a place where people from all around the world would come to experience the best of Saudi culture, hospitality, and nature. Now, with the first flight touching down at RSIA, and our first resorts receiving bookings, Saudi Arabia’s position on the global tourism map is all but secured,” said John Pagano, group CEO of Red Sea Global. 

From today, the statement added, the flights depart Riyadh every Thursday at 10:50 a.m. before flying back to the capital after 165 minutes. It added that the other flight departs from Riyadh every Saturday at 12:50 p.m., with the return flight at 15:35 p.m. from the Red Sea airport. 

Positioned within an eight-hour flight from 85 percent of the world’s population, the airport will grow to welcome international flights from next year as additional phase one resorts open their doors. 

According to the statement, RSIA is operated by daa International, which has supported RSG with design validation and commissioning of RSIA since 2020. 

“With the arrival of RSIA’s first commercial flight, daa International’s operational responsibility commences,” it added 

In its press release, RSG also revealed the new brand for RSIA with visitors to see the brand expressed across multiple touchpoints, from the airport terminal and staff uniforms to the electric mobility vehicles that will transport passengers from air to land side. 

“RSIA is the gateway to TRS destination. It is the first impression visitors have, and their parting memory when they leave. The brand echoes the qualities of the five-star hospitality guests will enjoy across the destination,” Pagano added. 

The brand icon is a representation of the RSIA’s unique architecture. The company noted that the iconic shape is inspired by the bird’s eye view of the airport’s exterior. “It has been created to express the creativity, novelty, and sophistication of the brand in a way that is contemporary and distinct.” 

RSG further stated that it has made great progress across other infrastructure works to ensure TRS is ready to welcome visitors and meet its promises for responsible development and regenerative tourism. 

Sole Pakistani company at Foodex expo eyes joint ventures

Updated 21 September 2023

Sole Pakistani company at Foodex expo eyes joint ventures

ISLAMABAD: A Pakistani food company participating in the 10th edition of Saudi Arabia’s leading international food exhibition, Foodex Saudi, has praised the Kingdom’s market, saying over a dozen Saudi companies had expressed interest in forming joint ventures and distributing its products.

The 10th edition of Foodex Saudi, the Kingdom’s leading international exhibition for food and beverages, was held from September 17-20 at the Riyadh International Convention and Exhibition Center and featured over 500 exhibitors from 75 countries, offering an array of food and drinks to Saudi buyers from the distribution, retail, manufacturing and hospitality sectors.

Dashi International, a Karachi-based food company that sells ready-to-cook and ready-to-eat food products, was among the 500 exhibitors at the event.

“Dashi International is the only Pakistani company participating in this edition of the Foodex Saudi exhibition,” Fawaz Khalil Allahwala, the company’s chief executive officer, told Arab News over the phone from Riyadh.

“It was a great opportunity to showcase our product as the Saudi market is certainly growing and we found a dozen leads from interested companies from the Kingdom,” Allahwala said.

He said some Saudi companies had sought joint ventures with Dashi International while others were interested in a distribution partnership with the Pakistani company. He declined to name the Saudi companies. 

Allahwala said he experienced a lot of “enthusiasm and optimism” at the exhibition where visitors explored various food items with the aim of seeking new business opportunities.

He said the response was “encouraging and positive.”

“The Saudi market seemed very receptive and growing so we are very hopeful of progress,” Allahwala added.

Hamzah Gilani, the spokesperson of the Pakistani consulate in Jeddah, said the exhibition played a “crucial role” in advancing and diversifying Saudi Arabia’s thriving food and drinks industry.

“This success [of Dashi] should encourage more Pakistani companies to seize such opportunities and expand their involvement in the international market,” Gilani told Arab News, saying Foodex provided Saudi buyers with an “unprecedented opportunity” to discover a diverse range of global food and beverage products.

“This esteemed gathering facilitated extensive networking opportunities,” Gilani said, “and showcased latest industry innovations.”