White Paper Towards a Hydrogen Strategy for Kuwait

Description of impact

The global energy supply chain is undergoing a major transition to net-zero energy resources, accelerated by the adoption of the Paris Agreement in 2015 by 198 countries, which aims to limit global warming to below 2 degrees Celsius, preferably to 1.5 degrees Celsius, compared to pre-industrial levels. The transition to clean, low-carbon energy systems will need to rely on all low emission technologies and pathways, and will require robust energy transition measures, involving technologically feasible and economically affordable solutions. This transition is now driven by the electrification of the energy supply chain with an increased proportion of electricity being generated from renewable energy resources.

The energy transition and de-carbonization of energy sources represents both a risk and an opportunity to oil and gas producers, such as Kuwait. The growth demand for fossil fuels, albeit will continue for decades to come, is subject to the high risk of demand peak which could be fast approaching within 1-2 decades, followed by a decline rather than a plateau. Therefore, it is imperative that for oil producing countries, such as Kuwait, to take a robust stance and response to the energy transition, for failure to do so, will lead to risking a sizable amount of these resources becoming potentially stranded. A more central role for blue hydrogen technologies, to counter balance the stringent global response away from fossil fuels, could mitigate those risks by decarbonizing the vast low-cost hydrocarbon reserves in Kuwait and other major OPEC producers, and substituting for traditional fuels in various sectors with large GHG emissions.
Hydrogen has been considered a source of energy by scientists since the early 1800s, and is known to have the highest energy storage density among all liquid fuels. It can be produced through various resources, such as fossil fuels, biomass, waste material and by splitting water molecules. Incorporating blue hydrogen, which is produced from fossil fuels but with the associated carbon dioxide emissions captured and stored underground or consumed in other processes, into the energy transition mix will allow for a low carbon option for transportation, electricity, and manufacturing and provide oil and gas producers the opportunity to play a central role in energy transition.

There are several sources of hydrogen that should be considered strategically, as countries and governments continue to develop national, and perhaps regional, plans for energy transition to enhance the security, reliability, and resilience of their energy infrastructures. Both blue and green hydrogen can be a powerful alterative to existing energy sources, should viable business plans and strategy be developed to eliminate the cost gap between the different hydrogen sources, and drive the transition of fossil fuel exporters to clean (green and blue) hydrogen economies. Ongoing innovation and technology development are reducing the cost of generation of both blue and green hydrogen, though the pace of the latter is faster. Many leading oil and gas producing countries (e.g. Australia, Canada, Norway, Saudi Arabia) have developed their own hydrogen strategies and mega-scale projects; similarly, major energy consumers (Japan, EU, etc.) have also developed and are already rolling out their hydrogen strategies and mega scale projects.

To respond to the demands of the energy transition, Kuwait possesses the requisite resources for the production of both “blue” and “green” hydrogen and has conducted feasibility studies on carbon capture, storage, and utilization (CCUS), a pre-requisite for “blue” hydrogen production. Hence, this white paper outlines the need for a comprehensive National Hydrogen Strategy and Roadmap, highlighting key aspects of production to transport to distribution to end-use consumption. The strategy and roadmap entail dedicated policy tools and key stakeholders to carve a competitive position for Kuwait in the energy transition by using low-carbon hydrogen for structural and transformational changes. The roadmap also emphasizes the importance of parallel strategies to scale up the production of “blue” and “green” hydrogen, which would foster local demand for hydrogen, facilitate financing for hydrogen and CCUS-related projects, and lead to investments in demonstration projects in pre-competitive technologies that have the potential to reduce the costs and improve the sustainability of hydrogen production. However, the window of opportunity is limited and closing; thus, the time for action is now, especially for producing countries with great potential for low-cost blue hydrogen, like Kuwait.

Impact date	Jan 2021
Category of impact	Public policy impacts