With recent upsets in the global energy market and the push towards net zero, the race to find alternatives to petrochemicals is amping up. In a report published by Deloitte, the firm highlights how “green hydrogen” – a substitute fuel which produces little to no emissions – is set to proliferate in the next 25 years.
As things currently stand, green hydrogen is a very capital-intensive venture. This is due to the high cost associated with the renewable infrastructure needed to produce the fuel. However, the cost of manufacturing both solar and onshore wind farms are set to fall by 45% and 18% respectively over the next 25 years. Consequently, we can expect the fuel to become much more competitive in these upcoming years.
Scaling up production will require large areas of land, a significant obstacle for densely populated economies. In contrast, countries with more territory available for renewable infrastructure are in the best position to service both their domestic needs and become international exporters.
The diversity and abundance of renewable resources directly correlates to the ability to produce green hydrogen. Countries with more reliable access to solar and wind resources will be an attractive choice for investors who are seeking strong returns and to minimise risks to their own dividends.
Whilst the lowering cost of renewable infrastructure will be a global phenomenon, developing economies are in the best position to capitalise on this trend. The report indicates that producing green hydrogen in North Africa, for instance, could reach a quarter of the production price of Europe by 2050.
Because of these factors, it looks like Morocco is in prime position to become a leader in green hydrogen exports. With over 80% of its territory available for renewable infrastructure, plus exceptional solar and wind resources, the country is perfectly positioned to leverage its proximity to the Europe Union and become an important export partner.
Saudi Arabia is also positioned to become a strong exporter of the renewable fuel. Due to high levels of solar irradiation, the country is set to produce four times its domestic demand by 2050. Anticipating the opportunity to diversify from their petrochemical reliance, the country has already made several international agreements in relation to green hydrogen trade.
The MENA region has inherited some of the best conditions for green hydrogen production and relative proximity to large energy exhaustive economies. With the right investment, countries can offset the negative effects of their reliance on fossil fuel exports as international buyers look towards a greener future.
Click here for the full report by Deloitte.
- John Barker