The Middle East has a great potential to utilize carbon capture for the production of blue hydrogen, according to an analysis by Kyle Hodge, the senior technical research analyst at S&P Global Commodity Insights.
The region accounts for about 10% of the world’s carbon capture storage capacity with three large-scale commercial carbon capture and storage (CCS) sites: Uthmaniyah CO2-enhanced oil recovery (EOR) Demonstration Project in Saudi Arabia, Al Reyadah CO2-EOR Project in Abu Dhabi and, Ras Laffan CCS Project in Qatar.
CCS offers a platform for the production of low-carbon hydrogen, or blue hydrogen, from coal and natural gas and creates an opportunity to bring blue hydrogen to new markets. The production of low-carbon hydrogen is about half cheaper than that of green hydrogen, which is produced using renewable energy.
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Green hydrogen’s price will likely decrease over time but blue hydrogen will remain a competitive product in regions like the Middle East that have appropriate CO2 storage resources and low-cost fossil fuels. Additionally, low-carbon hydrogen is associated with over 800 million metric tons per annum (MMtpa) of carbon globally, and CCS currently captures 3.7 MMtpa of carbon from hydrogen-production plants.
As the Middle East already utilizes large amounts of H2 in several sectors, it has a potential competitive advantage in the production of blue hydrogen, Hodge writes. The projections are that the global export of hydrogen annually will reach US$300 billion by mid-decade, creating an economic opportunity for the region. The comparatively low price of low-carbon hydrogen gives the Middle East the chance to become a market leader in the production of H2 and an innovator in CCS technology.
Currently, the majority of hydrogen projects globally rely on fossil fuels, which results in the production of the so-called brown or grey hydrogen. While the process itself produced clean energy, it releases large quantities of CO2 into the atmosphere.
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