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At COP27 in Egypt, a spotlight on the opportunity for Middle Eastern and North African leadership

November 10, 2022 Work Area: Zero-Carbon Fuels

The International Energy Agency (IEA) forecasts a more than 500% increase in global hydrogen demand by 2050 — as the world transitions from high- to low-emitting fuels sources. The role of this zero-carbon fuel – and the quest to generate supply to match forecasted demand — is a major point of discussion at COP27 in Sharm el-Sheikh, Egypt, particularly as governments contend with the overlapping imperatives to reduce greenhouse gas emissions, secure energy supplies, and enable economic development. With all eyes on the host region, there is a clear opportunity for stakeholders in the Middle East and North Africa to position themselves for leadership in this new energy economy.  

Opportunities for the Middle East and North Africa  

CATF analysis shows that – with the right investments and demand signals — the Middle East and North African region can harness its technical expertise, financial assets, natural resources, and geographic positioning to play a leading role in supplying decarbonized energy around the world. Sitting at the nexus of Europe, Asia, and Africa — each with their own unique set of energy needs – Middle Eastern and North Africa governments are well positioned to tap into multiple markets. In so doing, they could position themselves for long-term success in the energy economy of the future, proving out innovative climate solutions like carbon capture and storage and upstream methane emissions controls while simultaneously increasing their own domestic clean energy supply.  

While this new global market is in its early stages, we’ve seen encouraging progress to rapidly scale the infrastructure needed for production. But, while some countries in the Middle East and North Africa are making plans to advance these solutions, many indicate they’ll need international cooperation to show the demand will be there for them. These potential hydrogen producers are looking for recognition from potential buyers that the Middle East and North Africa has strong resource potential and capacity – and that buyers will be ready to procure zero-carbon fuels generated using a wide range of technologies – including natural gas with carbon capture and methane controls, wind and solar power, nuclear energy, and geothermal. This will require an improved understanding of the realities of the global energy system all over the world, as well as global coordination and new and strengthened partnerships to encourage the development of this market. 

Overview of zero-carbon fuel activities in the Middle East and North Africa  

Saudi Arabia, Oman, and the UAE have already announced numerous projects to generate hydrogen using wind and solar power and natural gas equipped with carbon capture and storage and methane mitigation. These projects are mainly oriented toward the export of hydrogen-based fuels for the transportation and power sectors – two sectors that are famously difficult to decarbonize. Several countries in the region have also shown promise on the methane mitigation front, a key requirement for low-emissions hydrogen production, joining the Global Methane Pledge. Egypt is a Global Methane Pledge signatory, and has also put ambition into action by significantly reducing flaring from its oil and gas sector. A number of companies in the Middle East and North African region have announced commitments to cut their methane emissions, too.  

Furthermore, there are now many memoranda of understanding (MOUs) in place between Middle Eastern and North African countries and countries in Asia and EU that cover the production and export of zero-carbon fuels.  

Figure 1: Overview of agreements established in 2020-2022 between MENA countries and global industry on the development of zero-carbon fuels.

Translating this first batch of climate beneficial MOU’s into real projects would allow countries to showcase their technical expertise and to demonstrate the feasibility of deploying the technologies needed for long-term decarbonization. This would reinforce the region’s role as a reliable clean energy partner, addressing near-term energy security needs while helping major energy importers like Europe and other regions decarbonize their energy systems.  

Crucial for ultimate success will be shifting from the planning one-off clean energy projects to a more systematic, long-term approach to building future global markets for zero-carbon fuels, as consumers gradually shift away from unabated fossil fuel consumption. This will mean overcoming the initial challenges for zero-carbon fuels – which include high cost, lack of infrastructure development, and the lack of meaningful demand. In order to see a market, begin to develop, coordinated efforts are needed to accelerate the scale-up of low-carbon hydrogen production.  

It will take international engagement and cooperation to build new markets that recognize climate beneficial fuels. CATF is working with stakeholders across the United States, the Middle East, and Europe to shape the defining features of a global hydrogen market.  

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