H 2 MIDDLE EAST

The H2 Handbook Legal, Regulatory, Policy, and Commercial Issues Impacting the Future of Hydrogen CONTENTS MIDDLE EAST

PART I - MENA AND THE EMERGING HYDROGEN ECONOMY...... 6 HYDROGEN RISING I. MENA and the GCC...... 6 PODCAST II. The Emerging Hydrogen Economy...... 7 A. An International Trend Towards Clean Energy...... 7

B. What is Green Hydrogen...... 8

C. The Potential Scale of the Hydrogen Economy...... 10 Tune in to our podcast program in D. Utilizing Green Hydrogen...... 11 which our global hydrogen team of E. The Potential of Green Hydrogen in MENA...... 11 lawyers and policy professionals F. The Cost and Utility of Hydrogen Technology...... 12 discuss significant issues and interesting developments impacting G. Corporate Interest in MENA’s Hydrogen Future...... 14 the hydrogen market. H. The Status of Hydrogen Projects in the GCC and MENA...... 16

Find Hydrogen Rising on the PART II - INTERNATIONAL AGREEMENTS ON K&L Gates HUB Podcast Center CLIMATE CHANGE...... 17 I. The Kyoto Protocol...... 17 K&L Gates LLP. Global counsel across five continents. Learn more at klgates.com. II. The Paris Agreement...... 18 III. The Net-Zero Producers Forum...... 18 PART III - A VISION FOR SUSTAINABILITY ACROSS MENA...... 20 I. The United Arab Emirates...... 21 II. Saudi Arabia...... 24 III. Oman...... 25 IV. Qatar...... 27 V. Egypt...... 28 VI. Kuwait...... 29

2 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 3 PART IV - THE NEED FOR A LEGAL AND REGULATORY C. Sohar Port Green Hydrogen Hub...... 39 FRAMEWORK ACROSS MENA...... 30 D. Acme SEZAD Green Ammonia Plant...... 40 E. DEME and OQ Green Hydrogen Plant in Duqm (SEZAD)...... 40 PART V - HYDROGEN PROJECTS IN KEY MENA STATES...... 32 F. Oman, Hong Kong, and Kuwait Consortium Plan Green Hydrogen Project...... 41 I. The United Arab Emirates...... 32 A. DEWA’s Pilot Green Hydrogen Project for Expo 2020...... 32 IV. Egypt...... 41 B. ESMA Draft Technical Regulations for Hydrogen-Powered Vehicles.....33 A. Egypt and Siemens Plan Green Hydrogen Pilot...... 41 C. Masdar Green Hydrogen Pilot Project...... 34 B. DEME Explores Green Hydrogen Production in Egypt...... 41 D. ADNOC Research Carbon Dioxide Capture Technology...... 34 PART VI - NEXT STEPS TO ENSURE MENA’S E. ADNOC Blue Ammonia Facility in Ruwais, United Arab Emirates...... 34 HYDROGEN FUTURE...... 42 F. Mubadala and Snam to Explore Green Hydrogen Potential...... 35 I. Legislation and Regulation...... 42 G. Mubadala and Siemens to Explore Green Hydrogen Potential...... 35 II. Investment...... 42 H. ADNOC and GS Energy to Explore Hydrogen Potential...... 36 III. Infrastructure...... 43 I. Cooperation Agreement Between the UAE and Japan to Explore Hydrogen Opportunities...... 36 IV. Public-Private Partnerships...... 43 II. Saudi Arabia...... 36 V. Regional Cooperation...... 43 A. The Neom Green Helios Fuels Project...... 36 VI. International Cooperation...... 44

B. Aramco and Hyundai Oilbank Plan Blue Hydrogen Project...... 38 VII. Government Targets...... 44 C. Aramco Ships Blue Ammonia to Japan...... 38 GLOSSARY...... 45 III. Oman...... 38 A. Sumitomo and Ara Petroleum Hybrid Hydrogen Project...... 38 AUTHORS...... 46 B. PDO Block 6 Green Hydrogen Project...... 39

4 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 5 PART I - Figure 1. MENA AND THE EMERGING HYDROGEN ECONOMY

I. MENA and the GCC The Middle East and North Africa The major financial powerhouses of change, signifying the arrival of a global, region (MENA) stretches from MENA are the oil- and gas-rich countries government-led approach to mitigate of the Arabian Peninsula: Bahrain, climate change, limit global warming, and Morocco in the far northwest Kuwait, Oman, Qatar, Saudi Arabia, to realize net-zero greenhouse gas (GHG) of Africa to Iran in the Middle and the United Arab Emirates (UAE). In emissions by 2050. East. The core MENA states are 1981, the leaders of these six nations Across governments and industry, reflected in Figure 1 below, but established the Cooperation Council for there is a developing awareness that MENA can also be said to include the Arab States of the Gulf (GCC). The the emerging hydrogen economy could other countries such as Sudan and purpose of the GCC was to establish a be vital to efforts to reduce emissions, Djibouti in Africa, as well as Turkey cooperative framework, which would allow coordination, cooperation, and decarbonize key industrial sectors, and Azerbaijan in the Caucasus. integration between the member states in and satisfy the Paris Agreement. all fields. Governments and corporations (both public and private) are investing in II. The Emerging hydrogen, researching its potential Hydrogen Economy as a clean energy fuel that could be central to a global energy transition, and A. An International Trend Toward moving away from hydrocarbons and Clean Energy towards clean, net-zero emission fuels. U.S. President Joe Biden has pledged In 2015, 196 nations—all of whom are to set the United States on the path to party to the United Nations Framework becoming a clean energy economy with Convention on Climate Change net-zero emissions by the year 2050, (UNFCCC)—entered into the Paris which would require a huge shift away Agreement; a milestone marking the from hydrocarbon energy sources. development of a cohesive, international approach to address climate change. The World Bank estimates that the MENA The Paris Agreement is a legally region contributes approximately 7 binding international treaty on climate percent of the world’s total carbon dioxide

6 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 7 emissions, with the GCC countries among B. What is Green Hydrogen? easy molecule to transport, as the energy to the challenges presented by energy the world’s top ten polluters per capita.1 density of ammonia by volume is nearly storage and demand (i.e., where batteries As of 2021, approximately 95 percent of Furthermore, the economies of MENA double that of liquid hydrogen, facilitating would be too big and heavy), including the global hydrogen supply is produced countries, specifically those in the GCC, shipping and distribution. In the form of haulage, heavy industry like steel using fossil fuels, mostly natural gas. are heavily reliant on the export of oil ammonia, energy can be transported to manufacturing, and heating. As a method Existing dedicated hydrogen production and gas, meaning they risk exposure to energy markets, such as Europe, Asia, of storing renewable energy, hydrogen facilities rely on natural gas feedstock any substantial reduction in the global and North America, where the ammonia presents a viable alternative to batteries. or the gasification of coal. This results demand for hydrocarbons. can be converted back to hydrogen for Green hydrogen is seen as an integral in either “grey” or “brown” hydrogen, use as a fuel. However, the international shift towards depending on whether natural gas component of the global effort to green energy presents an opportunity or coal is used as the feedstock, Hydrogen can potentially decarbonize decarbonize the world’s energy industry for countries across MENA, especially respectively. Given the requirement sectors that are hard to electrify due in the near future. given the abundance of solar energy for hydrocarbon to fuel the production across the region, which can be used of grey and brown hydrogen, together to produce green energy fuels such as with the associated release of carbon hydrogen. Governments across MENA dioxide into the atmosphere as a are therefore well placed to be at the byproduct of the process, grey and forefront of the international trend brown hydrogen are not sources of towards decarbonization and to develop clean energy, despite the absence the infrastructure to compete in future of emissions when the hydrogen is sustainable energy markets. combusted. The carbon footprint of the grey and brown hydrogen process Hydrogen is likely to be a critical part can be reduced by the use of carbon of the energy mix as the world strives capture utilization and storage (CCUS) to decarbonize, meaning there will be a technologies, producing what is known rapid increase in global demand between in the industry as “blue” hydrogen, 2021 and 2050. Key net importers of resulting in a significant reduction in the green hydrogen will be markets in Asia emissions profile. “Green” hydrogen, and North America, as well as Europe. however, is a zero-carbon fuel produced While European states push ahead with through electrolysis. Water is split hydrogen initiatives, it is recognized into its constituent parts of hydrogen that domestic European production and oxygen using renewable energy, would not be sufficient to decarbonize e.g., from wind or solar, to power the hard-to-abate industries in the short electrolysis process. term or for European nations to achieve their emission targets under the Paris Green hydrogen has tremendous Agreement. Clean fuels such as hydrogen benefits, since the hydrogen molecule are expected to displace around 10.4 stores clean energy from renewable billion barrels of oil (or its equivalent) by sources. Hydrogen can be converted to 2050, which represents 37 percent of ammonia (one nitrogen atom bonded global oil production. to three hydrogen atoms), which is an

1 https://www.worldbank.org/en/home.

8 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 9 C. The Potential Scale of the The Hydrogen Council asserts that international energy distribution, and it hydrogen, the implementation of domestic Hydrogen Economy hydrogen can play seven major roles in can link renewable-abundant regions, regulations in terms of emission targets, the energy transition, and “across all such as MENA, with markets that will and the utilization of hydrogen as an It is estimated that global demand for seven roles, hydrogen could account be net-importers of clean energy, such energy source. green hydrogen could reach 530 million for almost one fifth of total final energy as Europe. Furthermore, both hydrogen tonnes by 2050, with a global export consumed by 2050,” and up to 25 and ammonia can be stored as strategic E. The Potential of Green Hydrogen market worth US$300 billion. Analysts percent of the energy required for road power reserves. The stage is therefore set in MENA at Barclays have estimated that the transport. The seven roles identified by for hydrogen to be a major element of the Across MENA, and specifically in the hydrogen economy could be a US$1 the Hydrogen Council are:4 world’s net-zero emissions future. trillion market by 2050, “potentially GCC, governments are beginning to • Enabling large-scale renewable explore the potential of hydrogen. This saving 5 gigatonnes in CO2 emissions D. Utilizing Green Hydrogen a year.”2 energy integration and power is an important step in the strategic generation. If nations are to make satisfactory long-term vision of transitioning towards To achieve the Paris Agreement’s “two- contributions to the reduction of GHG a clean energy economy as domestic oil degree scenario” by 2050 (see PART II, • Distributing energy across sectors emissions, as agreed under the Paris and gas reserves are depleted and as II below), global energy-related carbon and regions. Agreement, the development of green the demand for hydrocarbon products dioxide emissions will have to be reduced hydrogen technology and infrastructure • Acting as a buffer to increase energy diminishes as the world strives to reduce by 60 percent. The Hydrogen Council, will be a critical element of the process system resilience. GHG emissions. which is an industry-led effort to develop of decarbonizing the energy industry. Across MENA there is an abundance the hydrogen economy established • Decarbonizing transportation. However, to transition the energy of renewable energy, including solar in 2017, considers hydrogen to be “a economy (including transport) from • Decarbonizing industrial energy use. and wind power, which can be used to central pillar of the energy transformation hydrocarbons to hydrogen will require power green hydrogen production. At required to limit global warming.”3 enormous investment in the development • Helping to decarbonize building the Leaders’ Summit on Climate, held heating and power. of the infrastructure needed to produce, The natural properties of hydrogen give it store, transport, and distribute hydrogen. between the United States and the UAE enormous potential in the world’s energy • Providing clean feedstock for Barclays has estimated that “over the in 2021, Sultan Ahmed Al Jaber, the UAE’s Industry and Advanced Technology future, supporting its production from industry. next 30 years, $500 billion in capex low-carbon technologies. The hydrogen Minister and UAE special envoy for will be needed for hydrogen production molecule is stable, lightweight, and easy Hydrogen has quickly become a major climate change, said:6 equipment—and similar amounts for to store. Its energy content is three times energy source of the future. It is one of distribution infrastructure.”5 Due to early investment and policy greater than typical hydrocarbons such the few renewable energy sources that choices, the UAE now enjoys the as petrol, and when used as fuel, the only is, as of 2021, economically viable and The reality is that there is very little lowest-cost solar power in the world, byproduct is water (i.e., steam). It can be sufficiently advanced technologically hydrogen infrastructure in place as of enabling further competitiveness in readily produced at an industrial scale, to be produced on an industrial scale. 2021, meaning that governments will need our industries and services. and it can be stored for long periods of Because it can be stored, as hydrogen to take proactive steps to facilitate the time with minor losses. It can be used or ammonia, it can also be used to development of the necessary technology The availability of low-cost renewable to store renewable energy, which can store energy from fluctuating sources and infrastructure, in conjunction with state energy, coastlines with existing port counteract the intermittency of renewable of renewable energy such as solar power companies and private corporations. infrastructure, an abundance of power generation. and wind. Its storability allows for This will require government funding, as unpopulated low-cost land, and relatively well as incentives for companies to invest in cheap capital means that hydrogen

2 https://www.investmentbank.barclays.com/our-insights/the-hydrogen-economy-fuelling-the-fight-against-climate- change.html. 5 https://www.investmentbank.barclays.com/our-insights/the-hydrogen-economy-fuelling-the-fight-against-climate- 3 https://hydrogencouncil.com/wp-content/uploads/2017/11/Hydrogen-scaling-up-Hydrogen-Council.pdf. change.html. 4 https://hydrogencouncil.com/wp-content/uploads/2017/11/Hydrogen-scaling-up-Hydrogen-Council.pdf. 6 https://middleeast-business.com/united-arab-emirates-participation-in-biden-leaders-summit-on-climate/.

10 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 11 production could be more economical in economic growth in the world’s net-zero eventually replace grey or blue hydrogen With an abundance of solar energy, MENA than in other parts of the world. emissions future. However, government in industrial applications, but the global MENA countries are well placed to leadership will be necessary if state- demand for green hydrogen is forecast to develop green hydrogen facilities as The oil and gas producing nations of the owned companies are to emerge as rise up to 530 million tonnes per year by part of the global drive to decarbonize Gulf are geographically well positioned, frontrunners in the emerging hydrogen 2050, as it becomes more widely used as the energy sector. However, while with proximity to North American, Asian, economy. In context of the recent a fuel. production costs may be lower in and European markets. They already environmental shareholder activism MENA than elsewhere in the world, have extensive energy infrastructure in The International Energy Agency (IEA) for carbon targets to be identified and transporting green hydrogen to demand place, including refineries, storage and has assessed the cost of producing achieved, the focus on clean energy will centers, e.g., the European and Asian bunkering facilities, and pipelines. It is green hydrogen (based on 2018 data) become more pronounced. markets, can be costly, particularly since likely that existing infrastructure could be 7 as ranging between US$3–7.5 per kg. transport infrastructure has not yet been repurposed for hydrogen, meaning that International demand for oil and gas is The Hydrogen Council has set a target developed. For states across MENA the Gulf states may not have to develop expected to diminish as nations look 8 price point as US$2 per kg (delivered). to actively participate in the emerging infrastructure from scratch. to reduce their carbon footprints. The According to the Hydrogen Council, hydrogen economy, the supply chain nascent hydrogen industry appears only when this target is achieved can In the GCC states, there are a number infrastructure must be put in place, poised to fill the energy gap. However, green hydrogen be viable for use across of large state-owned energy companies which will bring down the cost of getting there is not yet a huge demand for heavy industry.9 There is therefore (e.g., Aramco in Saudi Arabia, Abu Dhabi the product to market. hydrogen within MENA, and the some way to go before the production National Oil Company (ADNOC) in the development of the hydrogen industry of green hydrogen is cost effective. Potential options for transport include UAE; Qatar Petroleum and Qatargas, is expected to focus on international However, the IEA assessment reflects shipping liquefied hydrogen, or and the Kuwait Petroleum Corporation). markets. That said, MENA governments green hydrogen production in small- converting hydrogen into ammonia These companies have significant may still look to emerging local demand scale projects, including pilot projects. for shipping, as per Aramco’s first expertise in energy infrastructure and for green hydrogen and to establish In regions with access to affordable shipment of green ammonia to Japan in logistics, and the skills and experience of domestic and regional markets. renewable energy, with existing energy 2020. Moreover, it will be important to the GCC’s energy industry workforce can infrastructure in place, it is likely that the begin the transition towards the use of be transferred to the emerging hydrogen F. The Cost and Utility of Hydrogen scaled-up production of hydrogen would green hydrogen within MENA, creating industry. The state-owned energy Technology significantly decrease the production a regional demand where the green companies also benefit from having 10 hydrogen is produced. Establishing The development of green hydrogen price. There is also a potential market access to substantial financial resources for green hydrogen in the Gulf, where it markets in close proximity to the production at scale will need to balance production facilities would reduce the and already have industrial infrastructure can be used in traditional heavy industrial in place, which could be utilized for cost and utility. The technology for the need for long distance transport. production of green hydrogen exists, processes, for example, in the production hydrogen production, storage, and but in terms of cost, it is not yet able to of ammonia and steel, as well as for oil The development of a broad international transport. These state-owned industry compete with fossil fuels. To bring costs refining. If these industrial sectors shift framework will be necessary to develop leaders have been taking steps towards down, the hydrogen industry needs to be to the use of green hydrogen, this further the hydrogen industry to an industrial the use of hydrogen; for example, scaled up, and there now exists the public reduces costs, since transportation is and commercially viable scale. This Saudi Arabia’s Aramco recently made and political drive for this to happen. regional rather than global. would need to include involvement a shipment of blue ammonia to Japan. The introduction of hydrogen technology As of 2021, global annual consumption 7 into the GCC’s well-established industrial of hydrogen is between 70–80 million https://www.iea.org/. 8 We note the very recent announcement of U.S. Secretary of Energy Jennifer Granholm launching energy sector will allow the GCC states tonnes. It is primarily produced from an “Energy Earthshot Initiative” focused on the development of hydrogen at a scale sufficient to to reduce their carbon emissions fossil fuels and used in industry, for bring the price down to US$1 per kilogram by the year 2030: https://www.energy.gov/articles/ secretary-granholm-launches-energy-earthshots-initiative-accelerate-breakthroughs-toward. while simultaneously modernizing example, in the production of ammonia 9 https://hydrogencouncil.com/en/. their industrial base and ensure and steel. Green hydrogen should 10 MEED: Winning the hydrogen rush, 27 April 2021.

12 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 13 in hand with the private sector, where generators for the 2,400 megawatt there is access to capital, knowledge, (MW) Fujairah F3 independent experience, and existing energy power producer project; this has infrastructure. It is expected that industry the potential to develop into a clean heavyweights, such as the United States’ energy project, since the turbines Cummins, Japan’s Mitsubishi Heavy can operate on a 30:70 hydrogen to Industries (MHI), Germany’s Siemens natural gas mix, with the capacity to Energy, and South Korea’s Hyundai, increase the hydrogen utilization up among others, will be important players to 100 percent. in the emerging hydrogen economy. • Germany’s Siemens Energy has Since the signing of the Paris Agreement entered into a public-private in 2015, governments across MENA partnership for a joint venture with have made it clear that they intend Dubai’s state utility Dubai Electricity to develop hydrogen production and & Water Authority (DEWA) and transportation facilities and be part of Expo 2020, which was delayed from governments, state-owned energy sea or road, or converted into ammonia the world’s emerging hydrogen economy. to the COVID-19 pandemic. The companies, sovereign wealth funds, and for shipment. Such decisions are likely A number of steps already have been plant will produce hydrogen for the private sector—in terms of capital, to be determined on a case-by-case taken by GCC governments to develop use in hydrogen vehicles at Expo expertise, and resources. The French basis by each country or even by specific the necessary infrastructure, such as the 2020, but it also will be able to asset management and investment market participants. formation of the Abu Dhabi Hydrogen accommodate future applications firm Natixis has estimated that some Alliance and the initiation of hydrogen and test platforms for the different US$300 billion will need to be invested G. Corporate Interest in MENA’s projects in countries such as the UAE, uses of hydrogen, including transport into hydrogen infrastructure by 2030 if Hydrogen Future Oman, and Saudi Arabia. Regional and industrial applications. Siemens the emerging hydrogen economy is to In MENA, governments will need to projects, with an estimated value of Energy has earmarked AED25 million achieve an economy of scale that can take the lead in the transition to the around US$10 billion, are planned, with (approximately US$6.8 million) for bring down costs across the value chain, hydrogen economy; national policies key projects such as the Neom Green 12 making the fuel a tenable replacement this project. need to be developed alongside Helios Fuels project in Saudi Arabia for hydrocarbons.11 • Indian firm Acme Group is investing the necessary legal and regulatory and the US$2.5 billion Acme green in a US$2.5 billion green hydrogen The green-hydrogen market will be driven frameworks. Public funding needs to be hydrogen-based ammonia facility in and ammonia plant in Oman’s Special by major net-energy importers, such as made available, along with schemes to Duqm, Oman, setting the benchmark. Economic Zone at Duqm (SEZAD), Europe and Asia. Government support incentivize companies to transition to With MENA governments setting out which could establish Oman as a and innovation will be needed across clean energy, for example, tax breaks clear ambitions to develop hydrogen regional green energy hub, with these markets to develop the necessary for reducing emissions and penalties infrastructure, corporations operating in storage and transportation facilities infrastructure to transition towards clean for polluters. In the GCC, led by their the clean energy sector are beginning to complementing the development of fuels. The development of the necessary respective governments, state-owned show interest in the Middle East. green hydrogen production plants.13 infrastructure requires an international energy corporations will need to drive For example: strategic approach and cooperation, the transition from hydrocarbons toward • Fusion Fuel, an Irish company though decisions need to be made about clean energy technology. Simultaneously, • Mitsubishi Power, a subsidiary of listed on Nasdaq, which makes whether hydrogen should be transported governments and state-owned MHI, is supplying three gas turbine electrolyzers, has agreed to work by pipeline, liquefied and transported by organizations will need to work hand

12 MEED: Dubai inaugurates green hydrogen plant, 19 May 2021. 11 MEED: Firm says piping hydrogen to Europe is feasible, 16 March 2021. 13 MEED: Middle East forges hydrogen path, 28 March 2021.

14 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 15 with the Lebanese engineering H. The Status of Hydrogen Projects and construction firm Consolidated in the GCC and MENA Contractors Company to develop PART II - green hydrogen plants across MENA. One of the stated objectives under Article The parties have agreed to cooperate 4 of the GCC charter is “to stimulate on projects involving the production scientific and technological progress in INTERNATIONAL AGREEMENTS of green hydrogen for potential clients the fields of industry.”16 In regard to the in the refining and petrochemical exploration of hydrogen and its potential industries in order to reduce their as a major global fuel and a replacement ON CLIMATE CHANGE carbon footprint.14 for oil and gas, there is state-driven research across GCC states. However, There is also a developing trend towards the approach so far is piecemeal, with an international, collaborative approach governments developing their own energy In order to understand the Currently, all six of the GCC states and to bring down the cost of hydrogen visions and launching localized pilot Egypt are party to the Kyoto Protocol.17 production. One such initiative is projects. Hopefully, this will pave the way commitment of the Gulf states However, the Kyoto Protocol differentiated the United Nations’ Green Hydrogen for regional collaboration, which will allow to developing clean energy, it between “developed” and “developing” Catapult project. Launched in 2020, the GCC states to work together to drive is important to understand the states, and it only set binding targets seven of the world’s largest energy down the costs of hydrogen production, background of the international for 37 developed nations,18 which did companies, including Saudi Arabia’s storage, and transportation. agreements to which they ACWA Power, announced a global not include any MENA states. Belarus are party. coalition to accelerate the scale and A number of projects now are underway was subsequently added to the list of production of green hydrogen in an effort across the GCC and MENA. While the countries with binding targets, bringing to transition the world’s most carbon- GCC states are the major players in terms I. The Kyoto Protocol the number of states with established intensive industries—including power of energy production in the Gulf, there emission targets up to 38. The Doha generation, chemicals, steelmaking, are other nations across MENA that are The Kyoto Protocol was adopted on 11 Amendment was circulated in 2012, and shipping—towards clean energy. developing renewable and clean energy December 1997, but did not come into whereby a number of the signatories The Green Hydrogen Catapult initiative technologies that can combat climate force until 16 February 2005. It is an extended their target periods up to 2020. would like to see green hydrogen industry change, particularly Egypt. The key international agreement, signed by 192 Despite the fact that there were no leaders, including ACWA Power, CWP projects and research and development countries, to operationalize the UNFCCC concrete steps established under the Renewables, Envision, Iberdrola, Ørsted, programs that are underway in MENA are by committing signatories to limit or protocol for the Gulf countries, the fact Snam, and Yara, drive down the cost detailed in PART V below. reduce GHG emissions in accordance that all GCC states and Egypt signed the of hydrogen to US$2 per kg by 2026, with agreed individual targets. The approximately half its current price. The convention requires signatories to adopt Kyoto Protocol confirms that they are partner companies aim to do this with policies and measures to mitigate their mindful of the need to combat climate 25 gigawatts (GW) of green hydrogen GHG emissions and to report periodically. change by reducing emissions. production by 2026, equivalent to a 50-fold increase in production.15

14 MEED: CCC partners with Irish firm for hydrogen schemes, 9 May 2021. 17 The GCC incorporates: the United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman. 15 https://racetozero.unfccc.int/green-hydrogen-catapult/. 18 Annex B, https://unfccc.int/sites/default/files/resource/docs/cop3/l07a01.pdf#page=24, this has now been amended 16 https://www.gcc-sg.org/en-us/AboutGCC/Pages/Primarylaw.aspx. to include Belarus.

16 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 17 II. The Paris Agreement While the Paris Agreement does not clean-energy and carbon capture and establish specific emission targets or storage technologies, diversification The Paris Agreement is a legally binding targets dates for signatories, it is a from reliance on hydrocarbon international treaty on climate change. It milestone in the process of multinational revenues, and other measures in was adopted by 196 Parties at the 21st cooperation towards tackling climate line with each country’s national Conference of Paris, on 12 December change; whereby parties have entered circumstances. 2015, and entered into force on 4 into a binding agreement, unifying them The primary aim of the Net-Zero November 2016.19 in their ambition to undertake multilateral Producers Forum is to tackle climate steps to combat climate change and The overarching aim of the Paris change and is dedicated to developing adapt to its effects. Agreement is to enhance the global long-term strategies to reach global net- response to climate change and limit All of the GCC countries are signatories to zero emissions. global warming. Some of the key aspects the Paris Agreement. However, as of May When Qatar announced it would of the Paris Agreement include: 2021, Iran, Iraq, and Turkey have not yet participate in the Net-Zero Producers committed to the Paris Agreement, along • Long-term temperature goal: Limiting Forum, Qatar’s Minister of State for Energy with Eritrea, Libya, and Yemen.20 While the global temperature increase to Affairs Saad bin Sherida al-Kaabi stated: the MENA and GCC states are not bound well below 2°C compared to pre- We believe that our engagement in industrial levels (the “two degree to any specific emissions targets, the this forum is an important mission scenario”), while pursuing efforts to Paris Agreement is a guiding principle consistent with, and supported by, limit the increase to 1.5°C. whereby governments have committed to reduce national carbon footprints. our ambition to create a better and • Global peaking and “climate more sustainable future for humanity. neutrality”: In order to achieve the III. The Net-Zero A source from Saudi Arabia’s energy temperature goal, signatories should Producers Forum ministry was quoted in the Saudi Press aim to reach the global peaking of Qatar, Saudi Arabia, Canada, Norway, Agency (Saudi Arabia’s national news GHG emissions as soon as possible and the United States collectively agency), stating: and undertake rapid reductions represent 40 percent of global oil and thereafter. Saudi Arabia is a strong advocate gas production. In April 2021, these of the key role that technology and • Mitigation: The Paris Agreement five countries released a joint statement innovation can play in the campaign requires all signatories to contribute regarding the establishment of a “Net- to reduce and remove GHG emissions to the overarching temperature goal Zero Producers Forum,” agreeing to:21 and help the world reach its net by establishing domestic targets, zero targets. known as Nationally Determined come together to form a cooperative forum that will develop pragmatic net- Contributions (NDCs). All signatories The fact that Qatar and Saudi Arabia— zero emission strategies, including are responsible for implementing key energy producers in the Gulf—have methane abatement, advancing the and reporting on their NDCs, announced their intentions to be a circular carbon economy approach, pursuing domestic measures to part of this initiative is indicative of development and deployment of achieve their targets. their commitment to the reduction of emissions on a global scale and 19 https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement. supports the implementation of the Paris 20 https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXVII-7-d&chapter=27&clang=_en. Agreement on climate change. 21 https://www.energy.gov/articles/joint-statement-establishing-net-zero-producers-forum-between-energy-ministries- canada.

18 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 19 I. The United Arab Emirates energy in the total energy mix from 25 percent to 50 percent by 2050, while PART III - In 2015, the UAE submitted its first reducing the carbon footprint of power NDC to the UNFCCC, setting out its generation by 70 percent, potentially commitment to reduce carbon emissions saving AED700 billion by 2050. The A VISION FOR SUSTAINABILITY and to increase the share of clean power Energy Strategy 2050 also seeks to of the total energy mix. Confirming this increase consumption efficiency of commitment, the United Arab Emirates individuals and corporations by 40 ACROSS MENA submitted its second NDC in December percent. In 2021, Minister of Energy 2020. The UAE’s second NDC, reflecting and Infrastructure Suhail Al Mazrouei the UAE’s “enhanced ambition with the explained that the Energy Strategy inclusion of an economy-wide emissions 2050 is intended to “diversify the future energy mix, and raise the contribution At present, the level of detail reduction target,” establishes a 23.5 If the international community of clean energy to the total energy mix percent reduction in the UAE’s GHG is to achieve the goals set out contained in NDCs differs from produced in the country to 50 percent.” emissions by 2030.24 The second NDC in the Paris Agreement detailed country to country, with little in-depth As part of the Energy Strategy 2050, identifies technological innovation and analysis and limited quantitative in order to meet the growing energy above, there will need to be a sustainable finance as key enablers of information about the role of demand and ensure a sustainable transition away from hydrocarbon the UAE’s green transition, with a focus renewable energy in meeting GHG growth for the country’s economy, the energy production, which emission reduction targets. on the following key sectors: energy, UAE government aims to invest AED600 according to the International industry processes and product use, billion by 2050. Renewable Energy Agency While the Paris Agreement is the waste, agriculture, and land use change principle international treaty guiding (IRENA), “accounts for two- and forestry. One of the main branches of the Energy the development of national targets and Strategy 2050 is research, development, thirds of global emissions in the strategy, the NDCs of many states are In 2016, the UAE established the and innovation to ensure the sustainability energy industry.”22 not specific enough to be used to set Council for Climate Change and of energy. This has seen the UAE invest practical emission targets. Similarly, Environment, an interministerial, inter- in research and development into green emirate governance body to reinforce hydrogen energy solutions and work hand Hydrocarbons will need to be replaced with many states have not yet established the legal and regulatory framework that will policies and strategies on climate in hand with the private sector in order to low-carbon or carbon-free energy sources, change, environmental and sustainable be necessary to encourage and regulate launch joint initiatives. such as blue or green hydrogen. CCUS development, and to “create partnerships the emerging hydrogen economy. may be implemented in the hydrocarbon with the private sector and conduct On the launch of Energy Strategy 2050 sector as an interim measure to reduce Presently, the international approach studies and lead scientific research.”25 in January 2017, Sheikh Mohammed bin 27 carbon emissions as the hydrogen market to developing the hydrogen value Rashid said: In 2017, the UAE launched “Energy develops. But the transition to renewable chain remains piecemeal, with a lack Strategy 2050,” which is the first unified The Gulf countries are similar in their and low-carbon energy sources will be of international or regional strategy. energy strategy in the UAE that is based economic structure, and we hope fundamental in national strategies to However, certain of the key energy on supply and demand.26 The strategy that we will one day have a unified achieve relevant targets. However, IRENA players across MENA are developing 23 aims to increase the contribution of clean GCC energy strategy in order to has observed that: their own national energy strategies and visions, as detailed below. 24 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/United%20Arab%20Emirates%20Second/UAE%20 Second%20NDC%20-%20UNFCCC%20Submission%20-%20English%20-%20FINAL.pdf. 25 https://www.uaecabinet.ae/en/details/news/uae-forms-council-for-climate-change-and-environment. 26 https://u.ae/en/about-the-uae/strategies-initiatives-and-awards/federal-governments-strategies-and-plans/ 22 https://www.irena.org/climatechange. uae-energy-strategy-2050. 23 https://www.irena.org/climatechange. 27 Vice President and Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum.

20 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 21 ensure sustainable growth for where green and blue hydrogen can At the 2021 launch of the Model, Under- Practical steps also have been taken our people and global influence for be produced, to markets such as Asia, Secretary of the Ministry of Energy and in terms of implementing pilot projects our economies. where there is an appetite for clean Infrastructure for Energy and Petroleum and preparing the supporting regulatory energy fuels. Affairs Sharif Al Olama said:28 framework, as follows: While, as of 2021, there is not yet a unified energy strategy across the Gulf, In March 2021, in support of the Energy The National Integrated Energy • Dubai’s first green hydrogen plant it is clear that the leaders of the regional Strategy 2050, the UAE’s Ministry of Model is a major supporter of the was commissioned in May 2021. governments are beginning to recognize Energy and Infrastructure, in partnership national energy strategy that was DEWA, in collaboration with Expo the need to collaborate to develop the with Khalifa University and IRENA, launched in 2017; work is currently 2020 Dubai and Siemens Energy, is clean energy industry. launched the National Energy Integrated under process on developing a implementing the green hydrogen Model (the Model). The purpose of the national energy strategy to harmonize project at DEWA’s R&D Centre at the Similarly, the UAE has recognized the Model is to support the UAE’s ambition developments in the energy sector at need to draw in expertise from abroad. Mohammed bin Rashid Al Maktoum to increase the proportion of clean local and global levels, and it takes It is actively pursuing agreements with Solar Park. It is intended that the energy in the UAE’s total energy mix into account the UAE’s orientation foreign governments (such as Japan and plant will produce green hydrogen towards diversifying energy sources Korea) and private companies (such to 50 percent by 2050. By providing a that will be used to supply vehicles and developing the sector, finding as Siemens Energy) in order to develop common framework that brings together powered by hydrogen fuel cells for various solutions in addition to hydrogen technology and look for ways stakeholders across the energy sector, use during Expo 2020. traditional energy, in a way that to develop a supply chain with all of the the Model is intended to support the supports sustainable development, • Complementing this pilot green necessary logistical components. For formulation of a strategic future for hydrogen vehicle project is the example, in 2021 the UAE entered into sustainable energy in the UAE, relying on national economies, and the development of the first set of an agreement to research opportunities the experience of IRENA and the research country’s passage to the next 50 domestic regulations regarding for hydrogen development with the capabilities of Khalifa University and years of achievements, up to the UAE hydrogen vehicles. The Emirates Japanese government, indicative of drawing on that experience to develop Centennial 2071. Authority for Standardization and the intention to develop a clean energy a road map for the development of In January 2021, the Abu Dhabi Metrology (ESMA) has established supply chain from the Middle East, sustainable energy over the next 50 years. sovereign wealth fund Mubadala the first set of regulations regarding Investment Company signed a vehicles that use hydrogen memorandum of understanding fuel cells. (MOU) with ADNOC and Abu Dhabi Developmental Holding Company (ADQ) In May 2021, the inaugural Middle by which the parties agreed to form the East Energy virtual event was held, Abu Dhabi Hydrogen Alliance. The UAE bringing together MENA stakeholders Ministry of Energy and Infrastructure to discuss the regional opportunities joined the Hydrogen Alliance later in for clean energy. At the virtual summit, 2021. Through the Hydrogen Alliance, Minister of Energy and Infrastructure the group is aiming to establish Abu Suhail Al Mazrouei reiterated the UAE’s Dhabi and the UAE as a leader in the commitment to reduce carbon dioxide emerging international markets of green emissions and increase clean energy and blue hydrogen, while bolstering use by 2050. Assistant Under-Secretary the development of a green hydrogen of the UAE Ministry of Energy and economy in the UAE.29 Infrastructure Yousif Al Ali explained the

28 https://wam.ae/en/details/1395302914826. 29 MEED: GCC Clean hydrogen initiative, 23 February 2021.

22 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 23 UAE’s commitment to taking a global by up to 130 million tonnes annually within five years and 58.7 GW by 2030.35 hydrogen markets toward the end of lead in terms of hydrogen production:30 by 2030, with the reduced emissions However, Saudi Arabia remains pragmatic this decade. coming “through contributions that have in its approach, and while committed The UAE is well-positioned to be one co-benefits in diversifying the economy to reducing emissions, the country will III. Oman of the top producers of hydrogen in 32 continue to develop its conventional and mitigate GHG emissions.” Oman’s 2015 INDC projected that “Oman the world. The UAE is committed and hydrocarbon energy sector, with plans to will control its expected GHG emissions working with confidence to reduce In its first NDC, Saudi Arabia set out “double our gas production, and construct growth by 2% to be 88714 Gg during the nationwide carbon footprint, by its intention to diversify its economy, a national gas distribution network.”36 working on the demand side, supply- including the development of “renewable the period from 2020-2030.”38 While side and working on our different energy and energy efficiency technologies Saudi Arabia already stands out as this target is modest compared to other energies and future technologies to to enhance economic growth.” Saudi a MENA leader in terms of hydrogen countries, Oman has identified the reduce our carbon footprint. Arabia recognized the need for projects since it is already building a 5 need to increase its use of renewable economic diversification, investment, GW green hydrogen plant, which will energy and to “develop new legislation While in the UAE the development of and renewable energy programs. Given provide power for the Neom gigaproject. on climate change which will support hydrogen technology, infrastructure, and its hydrocarbon industrial base, in an Furthermore, Saudi Arabia’s state-owned the adoption of low carbon and energy legislation remains at a nascent stage, the effort to reduce industrial emissions, Aramco made the world’s first shipment efficient technology.” government’s ambition, as set out in its Saudi Arabia “plans to build the world’s Energy Strategy 2050 and seen through of a cargo of blue ammonia to Japan in largest carbon capture and use plant. Oman’s Vision 2040 rests on three pillars: the projects underway in the UAE, is for September 2020. This initiative aims to capture and purify people and society, governance, and the country to take a leading role in the about 1,500 tonnes of CO a day for use Of the GCC state-owned energy economy and development. This last pillar world’s emerging hydrogen economy, 2 in other petrochemical plants.”33 companies, Aramco appears to be includes Oman’s ambition to preserve including an ambition to become one of leading efforts to incorporate renewable, environmental sustainability.39 One of the the top global hydrogen producers. In a world that is moving towards clean clean energy into its operations. As identified priorities is “environment and II. Saudi Arabia energy and away from hydrocarbons, the global demand for low carbon fuel natural resources,” whereby:40 Saudi Arabia is beginning to recognize the rises, Aramco is developing zero-carbon importance of developing a clean energy The future strategy in natural In November 2016, Saudi Arabia ratified technologies, such as green hydrogen industry. In an effort to reduce its reliance resource management will focus on the Paris Agreement and its Intended and CCUS, with plans to develop and on oil and gas, Saudi Arabia has launched developing nontraditional sources Nationally Determined Contribution implement infrastructure for hydrogen a number of environmental initiatives and of natural resources, such as the (INDC) became its NDC. Saudi Arabia’s fuel by 2030. now plans to generate 50 percent of its ambition under its first NDC was to use of renewable energy to reduce domestic energy requirement from clean “seek to achieve mitigation co-benefits In February 2021, Aramco Chief production cost and subsequently energy sources by 2030. ambitions of up to 130 million tons of Technology Officer Ahmed al-Khowaiter enhance the competitiveness of said, “we don’t see much growth in [the economic sectors. New infrastructure CO eq avoided by 2030 annually through According to Saudi Arabia’s Vision 2030, 2 hydrogen] market until 2030, when projects will be geared towards contributions to economic diversification “we will transform Aramco from an oil the infrastructure and policies will be and adaptation.”31 Saudi Arabia has producing company into a global industrial green economy, green strategies and 37 He added that Aramco is therefore committed to reduce its conglomerate.”34 Under Vision 2030, in place.” renewable energy production. targeting Japan and Korea as potential carbon dioxide (or equivalent) emissions Saudi Arabia has increased its renewable The government of Oman has therefore energy targets, aiming for 27.3 GW

35 https://www.ief.org/_resources/files/events/third-ief-eu-energy-day/turki-al-shehri-24.02-repdo---ief_riyadh_v2-2.pdf. 30 https://www.wam.ae/en/details/1395302935261. 36 https://www.vision2030.gov.sa/v2030/overview/. 31 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Saudi%20Arabia%20First/KSA-INDCs%20English.pdf. 37 MEED: Aramco hydrogen business at world-scale by 2030, 23 February 2021. 32 https://climateactiontracker.org/countries/saudi-arabia/pledges-and-targets/. 38 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Oman%20First%20NDC/OMAN%20INDCs.pdf. 33 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Saudi%20Arabia%20First/KSA-INDCs%20English.pdf. 39 https://omanuna.oman.om/en/home-top-level/eparticipation/oman-vision-2040. 34 https://www.vision2030.gov.sa/v2030/overview/. 40 https://www.2040.om/Oman2040-En.pdf.

24 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 25 identified the need to explore renewable However, the total investment required energy and diversify energy sources, and is estimated to be in the region of it is now a national objective to develop US$28 billion, which equates to about “a green and circular economy that 40 percent of Oman’s current gross addresses national needs and moves domestic product, so funding for the consistently with the global trends.”41 project remains an issue. Whereas in 2015, none of Oman’s energy Proposed projects such as this indicate demand was satisfied by renewable that Oman is taking steps to transition sources, it now targets 20 percent towards clean energy and intends to does cover the government’s investment renewable energy consumption by 2030 IV. Qatar establish industrial production of green in research and development into clean and 35–39 percent by 2040. hydrogen and green ammonia in support The Qatar National Vision 2030 energy and its ambitions for “utilizing Oman is in the process of developing Oman’s economic diversification strategy, identifies four central pillars to the clean energy and renewables, reducing a renewable energy strategy and but it remains to be seen whether the government’s development strategy, emissions to the atmosphere and encouraging investment in renewable government will facilitate the access to the fourth pillar being “Environmental developing technologies that convert and alternative energy resources. As capital that such projects will require. Development.” The Qatar National emissions into useful products.” part of this strategic development, an Vision states:43 Geographically, Oman is well placed The Qatar government also has raised international consortium was formed to have access to hydrogen markets in The environmental pillar will be the necessity for the countries of the Gulf in May 2021, comprising Hong Kong- Europe and Asia. In the Al Wusta region, increasingly important as Qatar is to cooperate to protect and conserve based InterContinental Energy, Oman’s there is abundant solar and wind power, forced to deal with local environmental the environment, and it has stated energy holding company Oman Oil with a long coastline giving access to issues, such as the impact of its objective to encourage “regional and Orpic Group (OQ), and EnerTech, water. In line with Vision 2040, Oman is diminishing water and hydrocarbon cooperation to put in place preventive a subsidiary of the sovereign wealth developing the SEZ at Duqm, Al Wusta resources, and the effects of pollution measures to mitigate the negative fund Kuwait Investment Authority. The Governorate, since it provides a strategic and environmental degradation, as environmental effects of pollution arising consortium aims to develop Oman’s green and competitive location to develop large- well as international environmental from development activities.”45 fuel infrastructure, with the ambition of issues such as the potential impact of scale green hydrogen production. Duqm developing a plant that will produce green global warming. In line with the government’s approach to is considered to be very well located for hydrogen by 2028. The planned plant will protecting the environment, state-owned green energy production, given the site’s In 2015, Qatar made a report to the be opened in phases, with hopes for the Qatar Petroleum (QP) has developed its abundant wind and solar resources, its UNFCCC on its INDCs. Referring to plant to reach capacity by 2038. own “Environmental Sustainability Plan.” proximity to a thriving industrial zone, the the four pillars of the Qatar National In 2021, QP launched a sustainability The project is intended to be performed existing port facilities, and easy access Vision 2030, the report asserted that strategy, setting targets to reduce carbon in stages, meaning the capital investment to global energy markets, in particular, the forth pillar “is of high importance emissions from its upstream and liquefied will be distributed over a period of about Europe, Japan, and South Korea, where as it seeks to strike a balance between natural gas (LNG) facilities by 2030. 14 years, commencing in around 2024 the greatest demand for green hydrogen development needs and environmental QP aims to reduce carbon emissions at when the consortium partners envisage and its derivatives exist.42 protection, and supports international its LNG facilities by 25 percent, reduce signing the first offtake agreements. efforts to mitigate the effects of climate emissions from its upstream facilities change.”44 While Qatar’s INDCs do not by at least 15 percent, and cut flaring include emission targets, Qatar’s report

43 https://www.gco.gov.qa/wp-content/uploads/2016/09/GCO-QNV-English.pdf. 44 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Qatar%20First/Qatar%20INDCs%20Report%20 41 https://www.2040.om/Oman2040-En.pdf. -English.pdf. 42 https://www.chemengonline.com/large-scale-renewable-hydrogen-project-to-launch-in-oman/. 45 https://www.gco.gov.qa/wp-content/uploads/2016/09/GCO-QNV-English.pdf.

26 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 27 intensity by 75 percent. QP also aims Although a low contributor to global economic, social, and environmental. One strategic approach to the emerging to end outline flaring by 2030 and limit emissions, the low-lying Nile Delta is of the objectives is an “integrated and hydrogen economy. methane emissions, setting a methane one of the most vulnerable areas in the sustainable ecosystem” whereby “Egypt intensity target of 0.2 percent across all world in terms of rising sea levels. In seeks to preserve both development and VI. Kuwait QP facilities by 2025. response to rising global temperatures, the environment through the rational Kuwait is taking steps to establish a Egypt signed the UNFCCC in 1992, and use of resources to preserve the rights of Between 2012 and 2018, the company national hydrogen strategy as it continues it signed the Kyoto Protocol in 1999. future generations to a safer and more spent US$900 million on reduced to assess the role hydrogen may play in Sensitive to the fact that the country is efficient future.”49 Egypt Vision 2030 flaring, and it has earmarked a further its energy transformation. In context of vulnerable to rising global temperatures, illustrates the government’s determination US$170 million for investment up to the the transition to cleaner fuels and low- in 2010, Egypt initiated the for Climate to diversify the energy mix and to improve end of 2021. QP also has committed to carbon energy sources, hydrogen is seen Change, indicating that climate change is the efficiency of electricity consumption. by Kuwait as a fuel of the future and the employing CCUS facilities to capture more high on the agenda of the government. potential means by which to secure a than 7 million tonnes of CO annually One example of Egypt’s diversification is 2 position in the clean energy market, while by 2027. QP also is aiming to add more In November 2015, Egypt submitted its wind energy independent power project reducing the state’s dependence on oil than 4 GW of renewable energy, reducing a climate action plan to the UNFCCC, at Ras Ghareb. Egypt has an onshore wind revenues which is a key aim of Kuwait’s’ Qatar’s annual emissions by up to 5 identifying its INDC, which became energy potential of approximately 20,000 Vision 2035. The production of blue million tonnes per year. the country’s first NDC in 2017. This MW, which is focused in the Gulf of Suez. hydrogen for export is often seen as the recognized that “the key for Egypt With the aim of exploiting this renewable Qatari Minister of State for Energy natural starting point for an oil exporter to mitigate GHGs emissions is to energy source, Egypt’s first 250 MW Affairs Saad Sherida al-Kaabi, who is such as Kuwait. However, given the provide appropriate foundations for wind-based independent power project also QP’s chief executive officer, said abundance of solar energy and existing the development of low carbon energy is currently under construction in Ras the sustainability strategy will “play a infrastructure, any future hydrogen systems” and one of the pathways for Ghareb, with numerous other utility-scale decisive role in helping reduce the impact policy will likely focus on the potential achieving a reduction in carbon dioxide solar photovoltaic independent power of climate change by implementing production and export of green hydrogen. emissions was the “widespread diffusion projects also under way in the country. measures to curb emissions, produce While Kuwait is yet to announce plans of locally-appropriate low-carbon LNG using the latest proven carbon Egypt is a major gas exporter, with for any hydrogen specific projects aimed energy production technologies.”47 reduction technologies, and compensating large natural gas reserves. With 2,450 at export, a hydrogen production facility However, Egypt’s NDC does not for residual emissions where necessary.” kilometers of coastline and 1,530 was previously constructed as part of provide quantifiable targets for reduced kilometers of riverbank along the Nile, the Shuaiba refinery which allowed high Qatar’s successful bid for the 2022 emissions. Furthermore, its NDC is Egypt’s geography is suitable for the sulphur heavy crude to be processed. FIFA World Cup included a pledge that conditional on the receipt of international large-scale, low cost production of The Shuaiba refinery, which closed the event would be carbon-neutral, so funding, to the tune of US$73 billion.48 hydrogen using electrolysis, as well as in April 2017, was Kuwait National the government is clearly alert to the Launched in 2016, and updated in 2018, the production of blue hydrogen, using Petroleum Company’s (KNPC) first challenges of reducing the country’s Egypt’s Sustainable Development Strategy, CCUS technology. Given the abundance refinery. The tanks and export facilities carbon footprint.46 Egypt Vision 2030, is the national agenda of both natural gas and renewable energy of the Shuaiba refinery have since V. Egypt regarding Egypt’s long-term strategic sources (notably solar and wind) and its been assimilated into KNPC’s Clean plan towards sustainable development. proximity to global energy marketplaces, Fuels Project which itself incorporates Egypt contributes around only 0.6 Egypt Vision 2030 focuses on three such as the European Union, Egypt is Hydrogen Membrane Units to recover percent of global GHG emissions. dimensions of sustainable development: potentially well placed to establish itself and recycle purified hydrogen for as a hydrogen producer and supplier, use in the Atmospheric Residue

46 https://www.qatar2022.qa/en/news/qatar-on-track-to-meet-carbon-neutral-commitments-for-fifa-world-cup. and the government is developing its Desulphurization process. 47 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Egypt%20First/Egyptian%20INDC.pdf. 48 https://www.researchgate.net/publication/339668565_Egypt’s_nationally_determined_contributions_to_Paris_ agreement_review_and_recommendations. 49 https://mped.gov.eg/EgyptVision?lang=en.

28 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 29 While the Gulf states now are investing in The countries of MENA and the GCC clean energy, most of these projects are already have begun the process of PART IV - at the research or pilot stage. So far, only diversifying into clean methods of Saudi Arabia has taken the next step; energy generation. However, in order having made the world’s first delivery of to maintain and develop economic THE NEED FOR A LEGAL AND blue ammonia to Japan in 2020, and growth, the regional governments need Saudi’s ACWA Power having signed up for to establish a strategic policy road a US$5 billion green hydrogen project map, coupled with an appropriate legal REGULATORY FRAMEWORK in Neom. and regulatory framework, to facilitate the emergence of the MENA and GCC In the words of UAE Undersecretary of the states as leaders in the emerging Ministry of Energy Sharif Salim Al Olama, hydrogen economy. Developing a legal ACROSS MENA speaking at the Siemens Energy week and regulatory framework will be a virtual conference in 2020:50 crucial step if the GCC is to attract the Hydrogen is very high on our agenda, fiscal and technological investment that right now we are really at initiation will be essential components to the phase…We are in the process of development of the hydrogen industry As of 2021, there is no setting the roadmap of where we are in the Middle East. overarching strategy for the going with hydrogen. development of hydrogen across the GCC or the Middle East. Similarly, there is a lack of hydrogen-related legislation in the GCC states, and no specific regulations regarding the development, implementation, or licensing of hydrogen facilities. The limited regulation of hydrogen in countries such as the UAE, Saudi Arabia, or Egypt is indicative of the fact that the development of hydrogen projects remains at an early stage.

50 https://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/101920-uae-investing-in-green-and-blue-hydrogen- projects-as-part-of-clean-energy-move-official.

30 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 31 Siemens. The project was tendered in The UAE has implemented a three-tiered 2018, broke ground in February 2019, approach to developing legislation for PART V - and is on track to be commissioned more environmentally friendly vehicles. ahead of Expo 2020. The first step was related to hybrid semi- environmentally friendly cars, the second HYDROGEN PROJECTS IN KEY The pilot project should pave the way step related to electric vehicles that are for large-scale hydrogen projects and more environmentally friendly vehicles, allow DEWA and Siemens to refine the and the third step was hydrogen vehicles, MENA STATES production of hydrogen so that the which produce zero-emissions. ESMA cost of the process can be reduced. Director-General Abdullah Al Maeeni In relation to this pilot project, UAE stated that the third step had to consider Undersecretary of the Ministry of Energy hydrogen technology:52 Sharif Salim Al Olama stated that the The project covers the general safety competitive prices for solar power in the A range of factors can affect a requirements that must be met in I. The United Arab Emirates region will enable Dubai “in the near country’s potential for hydrogen hydrogen vehicles, in terms of setting future to produce a very competitive A. DEWA’s Pilot Green Hydrogen requirements for storage tanks used, production, including government price for green hydrogen.” policy, geolocation, availability Project for Expo 2020 types and metal manufactured, and B. ESMA Draft Technical tests to be performed on cylinders of solar power, availability State-owned DEWA is developing a pilot Regulations for Hydrogen- in particular, as well as the need for of natural resources (i.e., oil green hydrogen mobility project for Expo safety valves to prevent high pressure Powered Vehicles and natural gas), existing 2020 (to be held from 2021–2022).51 inside the cylinder and keep them industrial infrastructure, and from different influences. The pilot plant will produce hydrogen Complementing DEWA’s pilot green the affordability of finance. hydrogen mobility project for Expo 2020, using renewable solar energy, store In March 2021, UAE Vice President and ESMA announced that it has completed Across the GCC and Egypt, it, and use it for re-electrification, Prime Minister and Ruler of Dubai Sheikh drafting the technical regulations there is an uptick in renewable transportation, and other industrial uses. Mohammed bin Rashid al-Maktoum for hydrogen fuel cell vehicles. energy projects; in terms of At Expo 2020, green hydrogen produced announced the approval of a national hydrogen projects, most remain at Dubai’s Mohammed bin Rashid Al Hydrogen-powered vehicles, which are system for hydrogen fuel-powered vehicles. environmentally friendly and emit only at the research and development Maktoum Solar Park will power a fleet of Also announced was the approval of fuel-cell vehicles. By 2030, the solar park water vapor, also will be used for Expo stage, albeit some projects are a national water and energy demand should have capacity to generate 5 GW. 2020, fueled by locally produced green management program, aiming to increase underway. Below we consider hydrogen. The UAE is the first country energy efficiency by 40 percent across The project is part of DEWA’s strategic some of the key hydrogen projects in MENA that has developed regulations the three most energy-consuming sectors: approach to develop hydrogen across MENA. for hydrogen-powered vehicles, industry, construction, and transport. A technologies in line with Dubai’s ambitious demonstrating that the UAE intends to be shift toward hydrogen-powered vehicles clean energy targets, i.e., for 75 percent of a regional leader in terms of establishing could substantially cut emissions produced its energy to consumption to be satisfied a legal and regulatory framework for low- by regional transport, such as haulage and, by renewable sources by 2050. carbon fuels. potentially, shipping.53 The US$14 million project is a public- private partnership project between DEWA, Expo 2020 Dubai, and Germany’s 52 https://www.esma.gov.ae/en-us/Media-Center/news/Pages/UAE-develops-first-technical-regulation-of-hydrogen-cell- vehicles-regionally.aspx. 51 MEED: Dubai commissions hydrogen plant, 17 May 2021. 53 MEED: United Arab Emirates announces hydrogen vehicles system, 21 March 2021.

32 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 33 C. Masdar Green Hydrogen ADNOC is on track to expand its CCUS of our blue hydrogen and ammonia and promote hydrogen development in Pilot Project capacity at least five-fold to 5 million business, building on the UAE’s strong the UAE, and elsewhere globally.” tonnes of carbon dioxide annually by position as a producer of competitive, Mubadala’s chief executive officer of In January 2021 the Abu Dhabi 2030, capturing the carbon dioxide at its low-carbon natural gas and our UAE investments, Musabbeh al-Kaabi, Hydrogen Alliance was formed between own natural gas plants. ADNOC’s Shah leadership role in carbon capture and described the collaboration as “an Abu Dhabi’s ADNOC, holding firm ADQ, gas plant has the potential to enable the underground storage.”55 extension of our joint efforts to and sovereign wealth fund Mubadala, capture of 2.4 million tonnes of carbon The project is currently in the design develop a hydrogen economy for the which owns Masdar. The first project dioxide, while the Habshan and Bab stages, with UK contractor Wood UAE ... and [in] advancing the role to emerge from the Hydrogen Alliance plants could enable the capture of almost undertaking front-end engineering and hydrogen will play to meet future energy is the Masdar green hydrogen pilot 2 million tonnes. project, which is supported by Germany’s design work. Final investment decisions demand globally.”56 Siemens Energy, Japan’s Marubeni, E. ADNOC Blue Ammonia Facility in are expected in 2022, and the project Snam has a business unit dedicated Etihad Airways, the Lufthansa Group, should commence in 2025. Ruwais, United Arab Emirates to the development of new hydrogen the Khalifa University, and the Abu F. Mubadala and Snam to Explore technologies and projects, and it was a Dhabi Department of Energy. The idea ADNOC, in partnership with state holding pioneer in the blending of hydrogen into behind the project is to commission a company ADQ, is planning to develop a Green Hydrogen Potential 1,000 kiloton blue ammonia project at a existing natural gas pipeline networks. The green hydrogen plant that will produce Abu Dhabi’s sovereign wealth fund downstream facility in the Ta’ziz industrial relationship with Mubadala allows Snam to hydrogen fuel for use in local vehicles, Mubadala Investment Company zone in Ar-Ruwais, Abu Dhabi. The plant enhance its presence in the GCC, giving it such as buses, in Masdar City and (Mubadala) and Italy-headquartered will take blue hydrogen, derived from access to the strategic MENA markets for to develop aviation fuel for use by Snam have agreed to a joint exploration natural gas feedstock as carbon dioxide potential hydrogen production. Etihad and Lufthansa. There also will of hydrogen development and is captured and stored, and convert it be research into the use of fuel in the investment opportunities across the G. Mubadala and Siemens to into blue ammonia, which is easier to maritime and shipping industry. The UAE, as well as globally. Explore Green Hydrogen Potential plant design is expected to be ready by store and transport as a fuel source. Snam (a gas transmission system Mubadala and Siemens Energy of the end of 2021, with construction taking ADNOC and ADQ are both members of 54 operator) is part of the Hydeal Germany have agreed to establish a an additional two years. the Abu Dhabi Hydrogen Alliance, which consortium, an initiative with ambitions partnership to push for investment aims to develop hydrogen infrastructure D. ADNOC Research Carbon Dioxide to deliver 100 percent green hydrogen to and development into green hydrogen in the UAE and this project is part of European markets at €1.5 (US$1.8) per production. Under the partnership, Capture Technology the strategy to meet the demand for kilogram, including transport and storage the partners hope to establish an Abu The UAE is looking at blue and grey low-carbon fuels and to establish the overheads, by 2030. Dhabi-based leader in the synthetic UAE as a key hydrogen exporter in the hydrogen, capitalizing on its experience fuels sector. They intend to investigate emerging hydrogen economy. ADNOC in CCUS. The UAE intends to study A memorandum of understanding green hydrogen technology and use the technology of CCUS with hydrogen and ADQ have further plans to develop was signed by the companies in early technological advancement to drive production from fossil fuels. projects worth US$5 billion at the Ruwais 2021, and the companies released a down the costs of green hydrogen and Derivatives Park. statement stating their intention to “carry synthetic fuels production. They intend Currently, state-owned ADNOC, the out a number of assessment activities, to utilize renewable energy to produce UAE’s biggest energy producer, has the Dr. Sultan Al Jaber, Minister of Industry including technical and economic green hydrogen and synthetic fuels, ability to capture 800,000 million tonnes and Advanced Technology and managing feasibility studies, to explore potential providing clean and transportable per year of carbon dioxide from Emirates director and group chief executive of projects and solutions [that will] foster energy to fuel new hydrogen-based Steel and inject it into its oil reservoirs for ADNOC, stated that this facility “is a enhanced oil recovery. significant milestone in the development

55 https://www.thenationalnews.com/business/energy/adnoc-to-build-major-blue-ammonia-facility-in-ruwais-1.1228840. 54 MEED: Masdar hydrogen plant design under way, 16 May 2021. 56 MEED: Mubadala and Snam to cooperate on hydrogen, 22 March 2021.

34 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 35 economies, supplied from the U. In this sector, supporting the ambition to The project, jointly owned by all three Once commissioned, the facility intends way, Mubadala and Siemens Energy will accelerate the energy transition towards partners, will be based in Neom and will to integrate 4 GW of renewable solar and have access to internationally emerging a low-carbon future. be part of Saudi Arabia’s US$500 billion wind power, use electrolysis to produce hydrogen markets.57 gigaproject in Neom. up to 650 tonnes of green hydrogen per The agreement was signed by Suhail day, produce nitrogen by air separation, Al Mazrouei, Minister of Energy and The planned facility will include a H. ADNOC and GS Energy to Explore and produce 1.2 million tonnes of green Infrastructure, and METI State Minister 20 MW electrolysis plant that will Hydrogen Potential ammonia per year, which can then be Ejima Kiyoshi. produce hydrogen from solar and wind transported around the world to be In a virtual summit between ADNOC power, supplied by the technology At the virtual conference, Suhail Al used to produce green hydrogen for the and South Korea’s GS Energy in March division of Germany’s Thyssenkrupp Mazrouei explained that cooperation transport market. 2021, the two companies agreed to unit Uhde Chlorine Engineers. The with Japan was an important step explore Abu Dhabi’s opportunities in Saudi and German governments While the project is still in the design towards developing hydrogen production, the hydrogen economy. GS Energy has have been collaborating on clean phase, there are plans for it to be building the supply chain and transport a long-standing strategic relationship hydrogen developments in Saudi delivered as early as 2025, which links between the two countries, and with ADNOC, with approximately 10 Arabia, and in December 2020, the would make it one of the world’s first developing the necessary regulations and percent of South Korea’s imported oil German government confirmed it would green hydrogen and green ammonia policies. He stated that the agreement:58 coming from the UAE. UAE Minister contribute around the equivalent of export projects. of Industry and ADNOC Group chief Also aims to open broad prospects US$1.83 million to the planned hydrogen executive officer Sultan Ahmed Al Jaber for growth and development as electrolysis plant. said that ADNOC and GE Energy were part of the two countries’ efforts “identifying possible areas of investment to diversify the energy mix, relying in Abu Dhabi’s emerging blue hydrogen on clean energy, building more ecosystem.” While ADNOC is beginning partnerships, and strengthening to explore opportunities, this remains at cooperation to take advantage of the the preliminary stages, with no targets or opportunities associated with the projected outcomes. global leadership of the UAE and I. Cooperation Agreement Between Japan in the fields of innovation, technology, and sustainability. the UAE and Japan to Explore Hydrogen Opportunities II. Saudi Arabia

In April 2021, the UAE’s Ministry of A. The Neom Green Helios Fuels Energy and Infrastructure and the Project Japanese Ministry of Economy, Trade, and Industry (METI) signed a virtual In July 2020, Saudi Arabia’s utility cooperation agreement to explore developer ACWA Power and Neom hydrogen development opportunities. signed an agreement with U.S.- The aim of the agreement is to expand based Air Products for a US$5 billion the joint areas of collaboration and hydrogen-based ammonia production enhance investment in the hydrogen facility powered by renewable energy.

57 MEED: UAE and German firm sign hydrogen pact, 18 January 2021. 58 https://www.moei.gov.ae/en/media-centre/news/11/4/2021/a-cooperation-agreement-between-uae-and-japan-to- explore-the-opportunities-available-in-the-field-of-hydrogen-development.aspx#page=1.

36 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 37 B. Aramco and Hyundai Oilbank C. Aramco Ships Blue Ammonia B. PDO Block 6 Green The Sohar Port and Freezone is managed Plan Blue Hydrogen Project to Japan Hydrogen Project by Sohar Industrial Port Company, a 50:50 joint venture between the Port of In March 2021, Saudi Arabia’s state- In September 2020, Aramco shipped Petroleum Development Oman (PDO) Rotterdam and the Sultanate of Oman. owned energy company Aramco a cargo of blue ammonia to Japan for has engaged Hinicio, a Brussels-based Sohar is working in collaboration with the announced an agreement with South use in zero-carbon power generation, consultancy firm, to undertake a feasibility Port of Rotterdam, as well as Hydrogen Korean industrial giant Hyundai to supplementing coal and natural gas. study for the development of a green Rise and other international research cooperate on a blue hydrogen project. This was the outcome of a pilot study hydrogen pilot project within PDO’s Block institutions, to identify cost-effective The Hyundai Oilbank Company,59 which into zero-carbon power generations 6 cluster. The feasibility study should take solutions for the utilization of hydrogen as refines hydrocarbons, will import Aramco’s undertaken by Saudi’s Aramco and about seven months to complete, and it an alternative to natural gas. liquefied petroleum gas (LPG) into South Japan’s Institute of Energy Economics, in will allow PDO to evaluate the viability of Korea, where it will be used to produce partnership with Aramco subsidiary Saudi green hydrogen technologies before any With excellent renewable resource blue hydrogen. During the production Basic Industries Corporation.61 commercial rollout. conditions, coupled with the declining process, Hyundai will capture and store costs for solar photovoltaic power According to a local media report carbon dioxide, which will then be shipped III. Oman generation, Sohar intends to build citing PDO Corporate Research and to Saudi Arabia and provided to Aramco electrolyzers at the port in order to A. Sumitomo and Ara Petroleum Development Adviser Zakiya al-Azri:63 for use in carbon-based enhanced oil produce a low-cost supply of green Hybrid Hydrogen Project hydrogen, which can be stored for use on recovery. Furthermore, Hyundai Oilbank PDO’s pursuit of green hydrogen demand. Sohar will also be exploring the plans to build a LNG boiler by 2024, In March 2020, Japan’s Sumitomo and is driven by a desire to reduce its potential to use green hydrogen to power which will use blue ammonia (produced Oman’s Ara Petroleum signed a MOU in dependence on natural gas for its seagoing vessels. by Aramco) as feedstock. relation to a hybrid hydrogen project in energy requirements while, at the Oman. They are currently conducting a same time, exploring low or zero Hyundai Oilbank intends to sell blue Mark Geilenkirchen, chief executive feasibility study for a project that would carbon fuel alternatives as part of a hydrogen as fuel for vehicles, part of a officer of Sohar Port and Freezone, involve the production of hydrogen from commitment to reduce greenhouse wider plan to establish 300 hydrogen explained that “the hydrogen stored gases generated as a byproduct of gases responsible for global warming. charging stations across South Korea by for later delivery (via pipelines and oil and gas production at an Ara trailers) will be used by the port’s 2040. Hyuandi Oilbank also intends to It is likely that the proposed green Petroleum refinery. industries and tenants for clean use the blue hydrogen as fuel for thermal hydrogen pilot project will be supported transport and industrial purposes.” power plants and utilize it to power If the project goes ahead, it is expected by PDO’s solar-paneled car park at Mina Geilenkirchen also stressed the need desulphurization processes. to produce an estimated 300–400 tons al-Fahal, Muscat, and the 100 MW Amin to scale up the hydrogen industry in of hydrogen annually from flare gas solar project. In order to develop the international order to bring production costs down generated at the site. A 20 MW solar infrastructure, Korea Shipbuilding and make hydrogen an economically plant will be installed at the site to power C. Sohar Port Green Hydrogen Hub & Offshore Engineering Company, a viable alternative fuel, explaining that the hydrogen production facility, and it is subsidiary of Hyundai Oilbank, is building In Oman, there are plans for Sohar Port an industrial “scale-up will be critical to intended that the hydrogen produced will ships capable of transporting LPG and and Freezone to become the country’s bring down the costs of technologies for be used as fuel for fuel cell vehicles that carbon simultaneously, and it is also first green hydrogen hub by using low- producing and using clean hydrogen, Ara Petroleum will introduce at the site.62 planning ammonia carriers as well as cost solar power to produce carbon-free such as electrolyzers, fuel cells and 60 ammonia-fueled ships. green hydrogen, which will be used to hydrogen production with CCUS.”64 help fuel clean vehicles and reduce

59 Aramco has a 17 percent shareholding in Hyundai Oilbank. onsite emissions. 60 MEED: Aramco signs hydrogen cooperation deal with Hyuandai, 3 March 2021. 61 MEED: Saudi Aramco ships blue ammonia to Japan, 28 September 2020. 63 MEED: Oman awards green hydrogen study, 28 February 2021. 62 MEED: Oman starts hybrid hydrogen study, 25 January 2021. 64 https://www.greenport.com/news101/lng/sohar-plans-first-green-hydrogen-hub-in-oman.

38 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 39 D. Acme SEZAD Green E. DEME and OQ Green Hydrogen The step is also complementing first phase of the project—comprising Ammonia Plant Plant in Duqm the recently announced decision about one-third of the final capacity— of the Public Authority of Special expected to be completed in 2032, Indian ACME Group has announced a In 2020, Belgium-based DEME Economic Zones and Free Zones of with the project expected to reach full collaboration with the Oman Company International NV (DEME) and OQ, Oman’s dedicating 150 square km of land for capacity in 2038.68 for the Development of the Special energy holding company, announced green energy projects in the Special Economic Zone (Tatweer) and it intends a joint project to develop a green Economic Zone at Duqm, in line with IV. Egypt to invest US$2.5 billion to set up a large- hydrogen plant in the SEZAD, along with the Oman Vision 2040. scale hydrogen facility in Duqm, Oman, the Public Authority for SEZs and Free A. Egypt and Siemens Plan Green that will be capable of producing 2,200 Zones (OPAZ). Duqm has the geographic The facility is intended to contribute to the Hydrogen Pilot million tons of green ammonia per day. advantage of abundantly available decarbonization of the regional industry In January 2021, Egyptian Minister The two parties signed a memorandum renewable energy (solar and wind); large, in Oman, producing green hydrogen and of Electricity and Renewable Energy of understanding (MOU), which sets out accessible sites; and access to Oman’s its derivatives (such as green ammonia) Mohamed Shaker and Joe Kaiser, chief their ambition to produce green hydrogen port infrastructure. for export to the international market, executive officer of Germany’s Siemens, and green ammonia from renewable especially in Europe. Having jointly conducted a prefeasibility signed an agreement to explore a energy, to support the energy transition, study for the project, which demonstrated F. Oman, Hong Kong, and potential pilot project for the production and to enable the integration of a higher the potential for such a project, OQ and of green hydrogen in Egypt. Although proportion of renewable energy in both Kuwait Consortium Plan Green DEME have moved to the engineering details of the location, capacity, and the transportation and manufacturing Hydrogen Project and design phase of the project. The technology of the pilot project remain sectors. The planned facility will produce electrolyzer capacity for the first phase In May 2021, an international under discussion, the pilot project will be hydrogen through water electrolysis using of the hydrogen plant is expected to be consortium was formed, comprising in line with Egypt’s clean energy strategy renewable energy, and the hydrogen will between 250 and 500 MW. Following this Hong Kong-based InterContinental to increase renewable energy sources.69 then be processed into ammonia. first phase, the project can be scaled up, Energy, OQ, and EnerTech, a subsidiary Speaking at a press conference in March with a final capacity of 1 GW. of the sovereign wealth fund Kuwait B. DEME Explores Green Hydrogen 2021, founder and chairman of ACME Investment Authority. The consortium Production in Egypt There are corresponding plans to develop aims to establish a green hydrogen plant, Group, Manoj Kumar Upadhyay, said, In or around March 2021, DEME signed a clean hydrogen facility at Oman’s and it is planning the development of a “this is an exciting beginning of global an agreement with the Egyptian Ministry Sohar Port. An OPAZ site on Oman’s 25 GW solar and wind farm project in alliances for producing green hydrogen of Electricity and Renewable Energy, the windy coast has been reserved for the Oman’s Al-Wusta Governorate, powering and ammonia—the most important Ministry of Oil and Mineral Resources, installation of a solar and wind park. the electrolysis of water sourced from the future source of energy that will help and the Egyptian Navy to conduct studies 65 Arabian Sea, to produce green hydrogen decarbonize the world.” Dr. Ali bin Masoud Al Sunaidi, Chairman on the production of the low-carbon fuel and its derivatives, such as green of the Board of Directors of OPAZ, said of in Egypt. This exploratory agreement falls Upadhyay also said that the large-scale ammonia, for domestic, regional, and the project:67 squarely within Egypt’s strategy to expand plant is “strategically planned to cater to international markets. clean and green energy production, as international markets for supply of green The start of this cooperation between The first production from the planned well as increase the share of renewable ammonia across Europe, America and DEME and OQ is very important, not 66 facility is expected from 2028, with the energy in the electric energy mix. Asia region.” only for the project, but towards the biggest cause of placing Duqm as hub in the Hydrogen Value chain.

65 https://www.h2-view.com/story/plans-for-2-5bn-hydrogen-facility-in-oman-unveiled/. 66 MEED: Firm plans $2.5bn hydrogen plant in Oman, 28 March 2021. 68 MEED: Oman turns into a hydrogen hotspot, 19 May 2021. 67 https://www.chemengonline.com/large-scale-renewable-hydrogen-project-to-launch-in-oman/. 69 MEED: Siemens and Egypt plan green hydrogen pilot, 19 January 2021.

40 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 41 III. Infrastructure construction, and operational structures can be formulated so PART VI - • MENA countries need to exploit their as to make the hydrogen market advantage in terms of abundant appealing for investment, viable, and solar energy and invest in industrial- competitive. Existing relationships NEXT STEPS TO ENSURE scale solar plants alongside the and structures that exist in the development of technology for MENA PPP sector, for example, can scaled-up hydrogen production. be utilized in the development of green hydrogen plants. MENA’S HYDROGEN FUTURE • The MENA region is well placed to provide clean energy; so governments V. Regional Cooperation and industry should look for ways in which the clean energy can be • There needs to be support for the utilized locally, developing a regional utilization of green hydrogen and demand for clean energy that is its fuel derivatives across major It is clear that the Middle East schemes and providing financial regionally produced. industries within the MENA region. support mechanisms. and the wider MENA region This will provide a market for locally have huge potential in the II. Investment • The infrastructure for storing and produced hydrogen and provide green energy sector, including transporting green hydrogen is not a launch pad for international hydrogen, and it will require a • Governments need to allocate sums yet in place; exploiting existing expansion. For example: ports and industrial infrastructure, strategic, multilateral approach and create financing opportunities for investment in hydrogen projects MENA countries should focus on » Blending hydrogen into existing to develop the region’s hydrogen and infrastructure, as well as the development of integrated domestic and regional gas potential. Below, we consider create conditions to attract foreign hubs that combine green hydrogen networks to boost local demand. the key steps that need to be investment. and ammonia infrastructure. The » Local government deployment taken to ensure the countries of development of a reliable, cheap of hydrogen-powered public MENA can take the lead in the • Because the hydrogen market is storage solution for renewables could nascent, financiers tend to apply transport vehicles. emerging hydrogen economy. be exported globally. more onerous lending principles for IV. Public-Private Partnerships » Using hydrogen to power state hydrogen projects. The limited offtake infrastructure, such as airports. opportunities for green hydrogen can I. Legislation and Regulation • Further alignment between cause concern for traditional debt • Regional and domestic carbon-pricing governments and private sector • Specific hydrogen-focused legislation regimes should be developed in order financiers. Governments should seek companies with the requisite and regulatory frameworks need to to facilitate regional utilization of green to encourage private equity investors knowledge, experience, and be developed and implemented. This hydrogen and to realize its potential to and pension funds to fill the liquidity capabilities should continue includes downstream regulations, for decarbonize polluting industries. shortfall. to advance. example, regarding the manufacture • As yet, there is no regional of fuel cell cars, trucks, and buses. • Sovereign wealth funds of the GCC • Public-private partnerships (PPP) strategy for the development should be advised to invest in the need to be promoted to foster • A supportive regulatory environment of hydrogen infrastructure. emerging hydrogen economy. production and export infrastructure. must be established, including a Governments across MENA should regulatory regime that incentivizes • Long-term investments must be • Both the public and private sectors work together to develop a regional green hydrogen projects, for made in cross-border transport need to take a sensible approach program for infrastructure and example, by introducing emissions infrastructure. to ensuring appropriate financing, logistical development.

42 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 43 VI. International Cooperation • National plans and visions should continue to be developed. It may • Attention needs to be given even be necessary to strictly require GLOSSARY MIDDLE EAST to identifying and developing and enforce decarbonization limits relationships with potential markets in certain sectors. Hydrocarbons and off-takers in key demand will remain prevalent in the MENA Acronym Description centers such as Europe, North energy portfolio. However, the ADNOC Abu Dhabi National Oil Company America, and Asia (notably Japan carbon footprint of the MENA ADQ Abu Dhabi Developmental Holding Company and South Korea). hydrocarbon industrial base can Aramco Saudi Arabian Oil Company be offset in the short term with the CCUS carbon capture utilization and storage VII. Government Targets employment of green technologies, DEME DEME International NV such as CCUS. • Governments, government bodies, DEWA Dubai Electricity & Water Authority and the public sector must ensure • Hydrogen production may be ESMA Emirates Authority for Standardization and Metrology that a supportive environment exists prioritized in the region’s state- GCC Cooperation Council for the Arab States of the Gulf from which to build a competitive owned oil and gas companies, such GHG greenhouse gas GW gigawatt hydrogen sector and export offering. as ADNOC, QP, and Aramco. These IEA International Energy Agency Governments should consider energy giants will undoubtedly INDC Intended Nationally Determined Contribution (Paris Agreement) encouraging investment in clean be able to utilize and adapt their IRENA International Renewable Energy Agency energy opportunities by reducing or traditional hydrocarbon industrial KNPC Kuwait National Petroleum Company alleviating taxes for green hydrogen models to green hydrogen, as they LNG liquefied natural gas projects and potentially consider the already have the infrastructure, LPG liquefied petroleum gas introduction of penalties or a expertise, and capital necessary to higher tax burden for carbon-heavy Mubadala Mubadala Investment Company develop clean energy and hydrogen Middle East and North Africa region energy projects. MENA technology and infrastructure. METI Ministry of Economy, Trade, and Industry MHI Mitsubishi Heavy Industries MOU Memorandum of Understanding MW megawatt NDCs Nationally Determined Contributions (Paris Agreement) OQ Oman Oil and Orpic Group OPAZ Oman Public Authority for Special Economic Zones and Free Zones PDO Petroleum Development Oman PPP Public-Private Partnership QP Qatar Petroleum SEZ Special Economic Zone SEZAD Special Economic Zone at Duqm, Oman Tatweer The Oman Company for the Development of the Special Economic Zone at Duqm UNFCCC United Nations Framework Convention on Climate Change

44 | K&L Gates: The H2 Handbook | August 2021 KLGATES.COM | 45 AUTHORS

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