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In terms of energy politics, the Saudi desert has always had some symbolic meaning. For many years, it stood for oil—infinite reserves beneath rocks and sand that powered economies thousands of miles away. However, something different is emerging on the periphery of the futuristic city project known as NEOM. Wind turbines spin slowly in dry coastal air, solar panels reach the horizon, and engineers discuss hydrogen molecules rather than barrels of crude.
The biggest oil exporter in the world, Saudi Arabia, is currently spending billions on the production of hydrogen. The goal is so audacious that some analysts secretly question whether the kingdom is getting ready for a future in which oil will no longer control energy markets as it once did. It’s possible that Saudi policymakers view hydrogen as the next phase of the nation’s lengthy energy history rather than as a side project.
| Category | Details |
|---|---|
| Country | Saudi Arabia |
| Strategy | National Hydrogen Strategy / Vision 2030 |
| Major Project | NEOM Green Hydrogen Project |
| Estimated Investment | $5 Billion+ |
| Production Target | Up to 4 million tonnes of clean hydrogen annually |
| Global Ambition | Produce around 15% of the world’s blue hydrogen by 2030 |
| Key Companies | Saudi Aramco, ACWA Power, Air Products |
| Energy Goal | 50% renewable electricity by 2030 |
| Net-Zero Target | 2060 |
| Reference | https://www.weforum.org |
Just the plan’s scope causes people to hesitate. By splitting water into hydrogen and oxygen using renewable energy, a massive hydrogen facility being built in NEOM is anticipated to produce hundreds of thousands of tonnes of green hydrogen annually. In order to facilitate transportation across oceans to energy-hungry markets in Europe and Asia, the fuel will probably be transformed into ammonia for shipping. Cranes are lifting equipment in the scorching desert sun, and workers wearing hard hats already navigate partially finished structures.
It’s intriguing how well-known the tactic appears. Saudi Arabia was a master at producing, refining, and exporting oil on a massive scale for decades. In certain respects, hydrogen might take a similar route. The kingdom already has ports, pipelines, engineers, and trading networks built for massive fuel exports, according to experts in energy logistics. It appears that Saudi Arabia may be attempting to modify rather than give up its oil expertise as the shift takes place.
That goal is reflected in the government’s objectives. By 2030, Saudi Arabia intends to produce about 15% of the world’s blue hydrogen while making significant investments in green hydrogen generated by solar and wind power. That combination is important. Green hydrogen completely eschews fossil fuels, whereas blue hydrogen depends on natural gas with carbon capture. The kingdom seems to be hedging its bets by pursuing both, keeping options open as international energy policy continues to change.
Geography is another benefit that is difficult to overlook. Saudi Arabia boasts some of the strongest solar resources in the world, as well as vast expanses of open land where renewable energy infrastructure can grow without many of the limitations encountered in nations with dense populations. Sunlight over the desert feels almost unrelenting on some afternoons; this is the kind of energy source that engineers are beginning to view as a benefit rather than a drawback.
However, not everyone is certain that the hydrogen economy will develop without a hitch. One difficulty is the production of hydrogen. It’s another to find buyers. International demand is still unclear, according to some reports, and some major projects have had trouble obtaining long-term purchase agreements. Energy companies seem cautious but interested. Despite its potential, hydrogen is still more costly than traditional fuels in many situations.
Thus far, Saudi investment has not been hindered by this uncertainty. While ACWA Power is constructing renewable projects intended to support large-scale hydrogen production, state energy giant Aramco is investigating the export of hydrogen and ammonia. In the meantime, legislators are still pushing for hydrogen transportation systems, from fuel cell-powered buses to possible uses in rail networks. One can envision hydrogen pipelines eventually joining the complex web of current petrochemical infrastructure while strolling through industrial areas in cities like Yanbu or Jubail.
The change has geopolitical ramifications as well. Oil shaped international energy relations for a large portion of modern history. Countries relied on imports of crude, and exporters such as Saudi Arabia had significant market and diplomatic clout. That balance may change if hydrogen becomes a commodity that is traded extensively. The same desert nation that formerly influenced oil prices may now be influencing the market for hydrogen.
Whether hydrogen will grow quickly enough to supplant a sizable amount of the world’s oil demand is still up for debate. Synthetic fuels, electric cars, and battery storage are just a few of the technologies vying for the same low-carbon future. In some industries, such as heavy industry, shipping, and aviation, hydrogen performs exceptionally well, but it may not be as successful in others. Even for the most optimistic investors, the future is still unclear.
However, Saudi Arabia’s timing makes sense. Energy transitions seldom occur in a single leap, but oil demand is unlikely to vanish overnight. They sometimes develop unevenly and slowly. The kingdom may be positioning itself to stay relevant in whatever energy system eventually emerges by making early investments in hydrogen infrastructure.
The scope of the goal becomes evident when one stands close to NEOM construction sites, where turbines spin slowly against the Red Sea sky. An experiment in how a nation built on fossil fuels might reinvent itself is currently taking place in the desert, which once represented the era of oil.
It’s still unclear if hydrogen will eventually change the world’s energy markets. However, if it does, Saudi Arabia seems committed to ensuring that it has a front-row seat.
