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ZETA continues discussing the possibilities for a new hydrogen economy in Saudi Arabia in an op-ed on ZAWYA.
Jan Haizmann, CEO, ZETA, again joins with Jan Frederick Braun, Senior Expert Hydrogen Economy at the Fraunhofer Institute for Solar Energy Systems ISE, as coauthors.
They hold that Saudi Arabia should develop a new hydrogen sector by realizing its substantial domestic demand for low-carbon hydrogen in key industrial sectors, thereby significantly supporting domestic decarbonisation.
Their analysis does not shirk from setting out the challenging policies that will be required to get domestic hydrogen going. In order to become viable, clean or low-carbon hydrogen will need to have a competitive price environment that puts it on par with conventional hydrogen.
This means that local demand for low-carbon hydrogen needs a carbon pricing mechanism. It requires reform of the low subsidised natural gas prices that keep fossil-based fuels dominant.
The authors draw on recent work of Saudi researchers to consider what an effective carbon price might be.
They also argue that, because the Kingdom’s industries (petrochemicals, cement, ammonia and steel) provide a solid foundation for domestic demand, mandating low-carbon hydrogen through public procurement will drive demand and support industry scale-up.
Finally, they call for strong initiatives to accelerate hydrogen technology transfer and local innovation, which is essential to position the Kingdom as a globally competitive market.
The authors acknowledge that refocusing policies to establish a national hydrogen market in Saudi Arabia will not be easy, requiring a delicate balancing act among contending policies.
But they are convinced that implementing the policies they have outlined will be a game-changer, unlocking substantial domestic demand in the near term and laying the groundwork for future exports.
As the Middle East’s largest economy, equipped with world-class natural gas and renewable resources, established energy infrastructure, strong fiscal capacity and political commitment, Saudi Arabia holds enormous potential for new hydrogen fuels.
With the right policies in place this great potential can be realized.
