Hydrocarbon-Rich Countries to play major role in bringing in green hydrogen, says McKinsey & Company report; said to be a golden opportunity
Here’s the blog by McKinsey & Company that describes the factors which are expected to drive a continuous supply of hydrogen from the hydrocarbon rich countries. The factors are:
- Access to hydrocarbon resources
- Cheap renewable energy
- Strong domestic demand
- Advantaged location
- A proven track record in establishing global energy markets
The spotlight falls on HRCs to bring about a major development. With various stakeholders involved, it is imperative that a country coordinates with its sectors and industries in order to carry out its objective.
Here are the key ways hydrocarbon-rich countries (HRCs) can coordinate across industries and sectors to develop an integrated hydrogen economy and supply chain domestically:
- Develop Hydrogen Roadmaps and Regulatory Frameworks:
- Governments in HRCs need to develop comprehensive hydrogen roadmaps that outline national hydrogen production ambitions and implement regulations to stimulate local demand across different sectors.
- This includes setting up policies, incentives, and carbon pricing mechanisms to drive decarbonization and promote the adoption of clean hydrogen technologies.
- Example: Saudi Arabia has developed a comprehensive National Hydrogen Strategy that outlines the country’s ambition to become a global hydrogen leader, including targets for domestic production and export.
- Foster Partnerships and Collaboration:
- HRCs should facilitate partnerships between key stakeholders across the hydrogen value chain, including national oil companies (NOCs), utilities, chemical companies, downstream industries, and equipment manufacturers.
- These partnerships can help coordinate investments, share knowledge, and ensure the consistent development of the hydrogen ecosystem.
- Example: The Canadian government has partnered with industry players to establish the Canadian Hydrogen Alliance, which aims to coordinate investments and share knowledge across the hydrogen value chain.
- Leverage Existing Infrastructure and Assets:
- HRCs can leverage their existing oil and gas infrastructure, such as pipelines and storage facilities, to facilitate the transportation and distribution of hydrogen domestically.
- NOCs and utilities can also invest in repurposing this infrastructure and developing new hydrogen-specific networks to support the growing demand.
- Example: Canada’s national oil company, Suncor, is exploring the use of its oil and gas assets to produce and transport blue hydrogen.
- Stimulate Domestic Demand:
- Governments should implement policies and regulations that create a robust local market for clean hydrogen and its derivatives, such as green steel, green ammonia, and synthetic fuels.
- This can include long-term offtake agreements between hydrogen producers and downstream industries to derisk investments in clean hydrogen projects.
- Example: The United Arab Emirates has set a target for green hydrogen to meet 25% of the country’s energy demand by 2030, driving local adoption.
- Support Hydrogen Equipment Manufacturing:
- HRCs with strong manufacturing capabilities can establish domestic hydrogen equipment manufacturing champions to produce critical components like electrolyzers and carbon capture equipment.
- This can help secure access to these technologies and create new jobs and economic opportunities.
- Example: Saudi Arabia is investing in the development of a domestic hydrogen equipment manufacturing industry, including the production of electrolyzers and carbon capture equipment.
- Develop Integrated Hydrogen Projects:
- HRCs can support the development of large-scale, integrated hydrogen projects that span the entire value chain, from production to transportation and downstream applications.
- This can help derisk investments and ensure the consistent development of the hydrogen ecosystem.
- Example: Saudi Arabia’s NEOM project is an integrated green hydrogen and ammonia production facility that spans the entire value chain, from renewable energy generation to transportation and export.
- Facilitate International Partnerships and Exports:
- HRCs can form government-to-government partnerships to secure demand for their hydrogen exports and facilitate the flow of hydrogen between countries.
- This can help create a global hydrogen market and support the decarbonization efforts of other countries.
- Example: The Indian government has formed partnerships with countries like Japan and South Korea to secure demand for its hydrogen exports and facilitate the flow of hydrogen between nations.
By coordinating these efforts across industries and sectors, hydrocarbon-rich countries can develop a robust, integrated hydrogen economy and supply chain that leverages their unique advantages and supports the global transition to clean energy.
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Interestingly, we have some other posts related to this content:
- “Hydrocarbon Nations Lead 2030 Clean Hydrogen Revolution for Global Warming Combat!” : McKinsey & Company highlights the need for scaling supply, stimulating demand, and enhancing cooperation across countries to fulfill hydrogen’s promise in reducing emissions globally.
