The Unlocking Hydrogen Growth in the Middle East  report said that a combination of abundant renewable energy and natural gas resources, and location for export to European and Asian demand centres “uniquely positioned” the Middle East become a future hydrogen export hub.

It notes that over 60 hydrogen production projects in the Middle East have been announced in recent years, with 80% of them focusing on green hydrogen production, and more than 20 projects in Egypt alone.

Read more: MENA’s hydrogen potential in focus at gasworld’s MENA Industrial Gases Conference

However, the Roland Berger report said that an overarching strategy direction is missing, saying no Middle Eastern country having released a defined strategy to support, with “tangible steps”, their hydrogen ambitions.

By creating a central approach to support hydrogen projects, countries in the Middle East can offer project developers the clarity required to invest in the hydrogen industry, the report states.

“As future major producers of low-carbon hydrogen, it is critical for Middle Eastern states to formulate key policies and regulations required to enable the local development of their respective hydrogen ecosystems,” said Vatche Kourkekian, Partner at Roland Berger.

Infrastructure was another missing link highlighted by the report, saying that insufficient infrastructure including solar, electrolysers, pipelines, and storage units was evident in the region, but suggested that hydrogen valleys could come as a solution to the issue.

It said hydrogen valleys are hubs of hydrogen production and consumption that “lead to system-wide synergies and reduce overall infrastructure cost for players through sharing mechanisms and incentives,” adding they hold great potential for realising economies of scale.

The report said that creating and regulating the valleys requires complex coordination between multiple stakeholders, large amount of financing, and new business models, and clear regulatory frameworks need to be set to offer clarity to project develops on laws and licensing regulations along the hydrogen value chain.

Additionally, Roland Berger noted that due to the higher price of low-carbon hydrogen compared to more carbon intensive sources of energy and the lack of regulations or incentives to support its adoption, the demand for low-carbon hydrogen in the Middle East is currently low.

It read, “Developing initiatives can stimulate the production and consumption of low-carbon hydrogen at the macro and project specific level,” suggesting regional/country level incentive schemes, as well as sector/project level initiatives.

The report also highlighted that a lack of technical standards for low-carbon hydrogen production, distribution, storage, and utilisation, in addition to the absence of local certification schemes was evident in the Middle East.

“The establishment of credible and transparent certification schemes is essential to install confidence in buyers and stimulate local and export demand,” the report said.

Finally, it found that a lack of domestic workforce trained in the sector, and limited emphasis on local technology development could hinder the growth of the low-carbon hydrogen economy in the Middle East, suggesting that education programmes and sector specific training to support skills and competencies developments need to be established.

Implementation

 The Roland Berger report said it is vital for Middle Eastern countries to create integrated implementation roadmaps that ensure a phased roll-out of “hydrogen economy enablers,” suggesting three phases:

Countries should lay the foundations for a strong hydrogen economy and provide clarity to stakeholders, with a focus on setting a national hydrogen strategy, clarifying and approving regulations, and identifying a renewable energy framework.
In the medium-term hydrogen production and development should be supported with initiatives, the launch of certification schemes, standard setting, and hydrogen specific training.
Identify opportunities and localisation initiatives, adopt a wider R&D ecosystem, while consolidating Net Zero strategy efforts.

The report concludes, “If well-informed national strategies are set and executed, the Middle East can see a boom in large-scale hydrogen projects, an expansion of hydrogen valleys, and a decline in production costs.”