Oman is planning to build one of the largest green hydrogen plants in the world in a move to make the oil-producing nation a leader in renewable energy technology.
Construction is scheduled to start in 2028 in Al Wusta governorate on the Arabian Sea. It will be built in stages, with the aim to be at full capacity by 2038, powered by 25 gigawatts of wind and solar energy.
The consortium of companies behind the $30bn (£21bn) project includes the state-owned oil and gas company OQ, the Hong Kong-based renewable hydrogen developer InterContinental Energy and the Kuwait-based energy investor Enertech.
Once online, the plant will use renewable energy to split water in an electrolyser to produce green hydrogen, which is able to replace fossil fuels without producing carbon emissions. Most will be exported to Europe and Asia, said Alicia Eastman, the co-founder and president of InterContinental Energy, either as hydrogen or converted into green ammonia, which is easier to ship and store. The facility aims to produce 1.8m tonnes of green hydrogen and up to 10m tonnes of green ammonia a year.
Oman currently relies heavily on fossil fuels, generating up to 85% of its GDP from oil and gas, but its fossil fuel reserves are dwindling and becoming increasingly costly to extract. In December 2020, the country published its Oman Vision 2040 strategy, a plan to diversify the economy away from fossil fuels and increase investment in renewables.
Green hydrogen could play an important role, said Eastman, thanks to the Oman’s combination of plentiful daytime sun and strong winds at night. “Oman is one of the places in the world that I’ve called the ‘future renewable superpowers’,” said Michael Liebreich, the founder of BloombergNEF, “because what you really want [to produce green hydrogen] is very cheap solar and very cheap wind.”
While electrification is the most efficient way of decarbonising most sectors, it’s limited when it comes to energy-intensive industries such as steel, chemicals, aviation and shipping. Green hydrogen will be vital to help fill these gaps, said the International Energy Agency in its report published this week, which called for an end to fossil fuel investments if governments are serious about climate commitments.
A wave of net zero-emissions pledges has already led to a slew of hydrogen strategies, including from the European Commission in 2020, which predicted the share of hydrogen in the EU’s energy mix would rise from 2% to 14% by 2050.
Yet green hydrogen currently makes up less than 1% of global hydrogen production. The majority is still produced using fossil fuels such as gas and coal, in a process that emits about 830m tonnes of carbon annually, equivalent to the emissions of the UK and Indonesia combined. “Blue hydrogen” is a cleaner version, as emissions are captured and stored, but it is still produced using gas – and is seen by some oil companies as a way to keep using fossil fuels.
One of the stumbling blocks for green hydrogen has been cost, partly because of the huge amounts of energy required. But as renewables and electrolysers become cheaper, and fossil fuel prices rise, costs could fall by up to 64% by 2030, according to research from the consultancy Wood Mackenzie.
“Most green hydrogen products will not be competitive for at least another decade,” said Falko Ueckerdt, a senior scientist at the Potsdam Institute for Climate Impact Research, who sees the Oman project as “a sign that investors anticipate large future demands for hydrogen-based fuels after 2030”.
Oman’s proposed plant is just one in a slate of green hydrogen mega projects planned globally. Eastman said InterContinental Energy has a number of other plants in the works, including a 26GW wind and solar green hydrogen plant in the Pilbara, Western Australia. If constructed, this $36bn (£25.5bn) plant would be the world’s biggest energy project. The first phase is expected to be online by 2028.
In March, the renewables company Enegix Energy announced the construction of a green hydrogen plan in Ceará state, north-eastern Brazil. Once built, which the company estimates will take about four years, the plant would produce more than 600,000 tonnes of green hydrogen per year from 3.4GW of wind and solar power.
“People are upping the gigawatts, and they should,” said Eastman, “there’s so much room in the market.”