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Oman among global first movers in green hydrogen development

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The Sultanate of Oman is among a tiny handful of countries globally that are walking the talk on green hydrogen with concrete projects in development on the ground, according to a report published by World Bank experts.

Titled ‘Unleashing the Power of Hydrogen for the Clean Energy Transition’, the blog underscores the urgent need for accelerating the global energy transition through large-scale adoption of clean hydrogen — a goal still fraught with challenges, it points out.

Authored by World Bank experts Dolf Gielen, Priyank Lathwal and Silvia Carolina Lopez Rocha, the report bemoans the fact that although clean hydrogen project announcements have been soaring globally, too few are “reaching the finish line” — Oman and a handful of others being the exception.

“Despite several announcements, only a few projects have been realised or are under construction — in Chile, Egypt, Oman, Saudi Arabia, and UAE. Many large-size projects are in the pipeline,” the authors noted.

In recent months, Oman has gone further than most countries in the Middle East in kickstarting the development of a new clean energy industry centring on investments in green ammonia and other derivatives.

Initial construction has already commenced on a first-ever green ammonia project at Duqm in the southeast of the country, while five other mega-scale ventures are in early development as well.

Also during 2023, the first set of awards of land blocks via an auction route overseen by Hydrom, the orchestrator of this new industry, is due to be announced.

These efforts will collectively contribute to the development of around 1 million tonnes per annum of green ammonia (or its derivatives) project capacity by the year 2030.

According to the World Bank blog, global clean hydrogen demand needs to be ramped up five-fold between now and 2050 if commitments under the Paris Accords are to be met.

This would require a 75-fold increase in installed production capacity for green hydrogen between now and 2030, it warns.

All in all, there are more than 500 hydrogen projects that aim for commissioning by 2030, but the vast majority of them are still in the concept stage, the report points out.

Besides scaling up capacities, green hydrogen production costs also need to fall dramatically in order to drive wide-scale adoption, the report states.

It notes in this regard that production costs are projected to fall rapidly to US$2-3/kg by 2030 “due to learning effects that enhance technology performance and production processes as well as economies of scale”.

One option to make clean hydrogen more affordable, the authors point out, is to impose greenhouse gas (GHG) emission pricing for grey hydrogen, thereby closing the competitiveness gap between green and grey hydrogen.

Another impediment is the absence of offtake commitments necessary to secure competitive funding for these projects. Further complicating market dynamics is the current lack of standard and certification systems for green hydrogen and its products.

For its part, the World Bank says it is committed to helping governments and the private sector with investments and regulatory solutions in the development of quality project pipelines.

At the same time, it is helping countries with mechanisms that have proven to work, such as competitive auctions, feed-in tariffs (FiT) which provide guaranteed prices for producers, and contracts for difference (CfD) that pay the difference between production cost and market price.

To this end, the World Bank has established the Hydrogen for Development (H4D) initiative to help catalyse, among other objectives, significant financing for hydrogen investments from both public and private sources.

A meeting of the H4D initiative, scheduled to take place in New Delhi next week, will attract a number of countries, including Oman, which has signed up for technical assistance in the development of national strategies and roadmaps.

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