Saudi Aramco's Clean Hydrogen Efforts: Between economic diversification and effective climate action

A major component of Saudi Aramco’s strategy for reaching its goal of net-zero greenhouse gas emissions involves large investments in low-carbon hydrogen; this is alongside the complementary technology of carbon capture, utilization, and storage. Although hydrogen and its derivatives such as ammonia are unlikely to attract more than a fraction of the substantial profits Aramco generates from producing and exporting Saudi crude oil, the hydrogen approach remains attractive. This is because it allows fossil fuel producers to sustain and diversify continued investment in oil and gas reserves while repurposing the existing infrastructure and employee expertise for a new but related supply chain. Hydrogen also serves as a bet-hedging strategy for oil companies seeking to bolster their resilience to climate action and reduce the risk of revenue disruption. The more climate action discourages the combustion of non-abated hydrocarbons, the more it encourages the consumption of clean hydrogen and its derivatives. Nevertheless, Aramco’s hydrogen-based energy transition pathway, although rational from a business perspective, remains to be proven at scale. The Company’s wealth and mastery of technology, along with its substantial geographic and geological attributes, provide it with strong competitive advantages in the emerging hydrogen sector.