On July 7, 2020, Air Products, ACWA Power, and NEOM announced the signing of an agreement for a $5 billion world-scale green hydrogen-based ammonia production facility powered by renewable energy. The facility will integrate over four gigawatts of renewable solar, wind and storage power. It will produce 650 tons per day of hydrogen using ThyssenKrupp technology, nitrogen by air separation through Air Products technology, and 1.2 million tons per year of green ammonia using Haldor Topsoe technology for global export. The joint venture (JV), scheduled to begin operations in 2025, will consist of equal ownership between all three partners and will be located in NEOM, northwest of Saudi Arabia along the Red Sea coast.
The USSBC asked Chairman’s Circle members Neom and Air Products to comment on the significance of the new JV and share their bilateral perspectives on the Kingdom’s “green” ambitions.
Dr. Samir J. Serhan, Chief Operating Officer at Air Products and Chemicals, spoke to the USSBC regarding the JV, the company’s objectives for the Saudi market, its contribution to Vision 2030, and what attracted Air Products and Chemicals, an American world-leading industrial gases company, to NEOM:
- What is Air Products’ current and future vision for Saudi Arabia?
The world’s need for clean, sustainable energy is the mega challenge of our time. Throughout the Kingdom, our customers and our partners are developing mega projects to solve this challenge—projects that are literally and figuratively, “energizing the world.”
These essential projects need investment, technology, execution, and the right people to collaborate and innovate. At Air Products, our core competency is developing, engineering, building, owning and operating mega industrial gas facilities, providing turnkey industrial gases, syngas for gasification, and going forward, carbon-free hydrogen.
Every day we come to work, we are excited about the future we are helping to build in the Kingdom by bring world-class technology, on-site solutions, leading project execution and operational leadership for large-scale energy and environmental projects.
- How does Air Products’ vision integrate with Vision 2030?
Vision 2030 has many parallels to Air Products’ focus and expertise, which is helping countries meet their clean energy targets and transforming the resources available to our customers into engines of economic growth and social development.
With Vision 2030’s focus on building a vibrant society, there are also many parallels to Air Products’ higher purpose as a company, which goes beyond just creating value for shareholders through improved financial performance. Air Products strives to be a company where people from all walks of life and nationalities come together, work together, and feel that they belong and that their contributions matter and are appreciated; a company that is focused on innovation to solve substantial environmental issues; and a company that actively contributes to the well-being of the communities in which we operate.
- What impact do you anticipate Air Products’ projects will have on the Kingdom’s economy?
Air Products is strongly invested in Saudi Arabia, and we want to continue to deploy our full suite of capabilities in support of sustainable energy and chemicals production in the Kingdom.
Megaprojects like NEOM are proven drivers of economic development and a higher quality of life. They are job creators (thousands during construction; hundreds for operation), and they provide direct economic benefits to local communities and indirect economic benefits through supply chains. Most significantly, the high-value products produced through these projects often become the backbone for the local economy.
- Recently, Air Products, NEOM, and ACWA Power agreed on a $5 billion world-scale green hydrogen-based ammonia production facility powered by renewable energy. Is “green energy” Air Products’ new direction for the Kingdom? Is it the way of the future?
We are proud to be part of the NEOM project because it is the first, largest and the most innovative project to make the world’s dream of carbon-free energy (green hydrogen) a reality.
The NEOM project is based on proven, world-class technology and will include the innovative integration of over four gigawatts of renewable power from solar, wind and storage; production of 650 tons per day of hydrogen by electrolysis using ThyssenKrupp technology; production of nitrogen by air separation using Air Products technology; and production of 1.2 million tons per year of green ammonia using Haldor Topsoe technology.
The market potential for green hydrogen in the Middle East, and indeed globally, is significant. We estimate the market for hydrogen in mobility alone could reach $60–70 billion by 2030.
In addition to green hydrogen, Air Products Qudra—a joint venture between Air Products and Qudra Energy, a subsidiary of Vision Invest—is investing in blue hydrogen projects where CO2 is captured as part of the Kingdom’s Circular Carbon Economy.
- What drove Air Products’ interest in investing with NEOM and ACWA Power on this project?
As the largest producer of hydrogen, Air Products is very honored to be partners with NEOM and ACWA Power to bring carbon-free hydrogen to the world on a massive scale.
Our strategy was to be the first mover on a large-scale process, and we needed to find the right location and the right partners. We absolutely have the right partner in terms of the renewable energy (ACWA Power’s leadership) and a truly visionary partner in NEOM, who are committed to a carbon-free city and are located in a part of the world where there is ample wind and sun to make this landmark project possible.
NEOM is an accelerator of human progress and a vision of what a New Future might look like.
NEOM is a region in northwest Saudi Arabia on the Red Sea being built from the ground up as a living laboratory – a place where entrepreneurship will chart the course for this New Future. It will be a destination and a home for people who dream big and want to be part of building a new model for exceptional liveability, creating thriving businesses, and reinventing environmental conservation.
NEOM spoke to the USSBC regarding the green hydrogen project, its role as a driver of Vision 2030, and the vast opportunities for investment that exist for U.S. companies:
- NEOM has garnered global recognition as a destination anchored on innovation and sustainability. How does the recently announced $5 billion green hydrogen-based ammonia production facility adhere to that vision?
The new green hydrogen project in NEOM is the first step in creating an entirely new industry in NEOM and the Kingdom, contributing to economic growth and diversity. It is one part of NEOM’s role as a driver and the embodiment of the Kingdom’s Vision 2030 plan.
NEOM will be a hub for innovation where global businesses and entrepreneurs can research, incubate and commercialize ground-breaking technologies to accelerate human progress. Green hydrogen is potentially one of the world’s most important renewable energy sources. For it to really succeed, there needs to be more research and development in its production, distribution and usage. NEOM is one of the few places on earth where green hydrogen can be produced in large quantities as we have the benefit of abundant solar and wind power resources.
So, as a marker of the kind of business and industry that NEOM will attract and nurture, this new green hydrogen facility is fully aligned with the longer-term vision of NEOM as an accelerator of human progress and a vision of what the future will look like. This vision is based on three strategic pillars: exceptional liveability, thriving businesses, and reinventing conservation – each clearly evident in this project.
- What other steps is NEOM taking towards developing a carbon positive society? Is the “solar dome” desalination plant, announced in early 2020, part of that objective?
Everything in NEOM is founded in sustainability, or more precisely, regenerative development, whereby the environment is improved by actions taken rather than just maintaining the status quo. In other words, it assumes that development may contribute to improving the environment.
Every project in NEOM has to undergo the highest level of scrutiny and adhere to strict environmental controls before it can take place; NEOM will be powered by 100% renewable energy; the majority of the region will be protected and free from development; all manufacturing in NEOM will adopt a cradle to cradle strategy to contribute to a circular carbon economy. NEOM intends to be in the vanguard of Saudi Arabia’s commitment to leading the world as a circular carbon economy.
NEOM will also be the first climate positive society – a place where people and nature live in harmony. Our sustainability strategy focuses on creating the infrastructure to enable the first at-scale, renewable and sustainable energy, water and food system. Solar dome technology and other pioneering desalination technology will supply NEOM with cheap, abundant water for residential and commercial use.
- What role do international partnerships and investments play in contributing to NEOM’s goals of sustainable living?
Investors and partners who wish to be involved in NEOM will need to share the same goals as our organization. Businesses will see NEOM as an opportunity to lead their own industries into 22nd century practices. NEOM will have one of the most technologically advanced logistics hubs and supply chains in the world. It alone will create opportunities for businesses to develop their own systems and processes.
NEOM’s foundation on technology will create the world’s first cognitive cities that use data to learn and become proactive rather than reactive. Artificial Intelligence (AI) and the Internet of Things (IoT), upon which NEOM will run, will provide enormous volumes of usable data allowing almost instant adaptation and development for the benefit of companies across all aspects of the value chain. NEOM is a living laboratory where businesses can collaborate to identify how best to meet the challenges of the future and create new economic models that contribute to improving nature and the quality of life.
- What are the opportunities currently offered by NEOM?
We have created 15 different sectors in which opportunities for investment are plentiful. Key areas of focus at the moment are in the creation of NEOM’s base infrastructure. Most of our discussions with investors are related to technical and digital, energy and water projects, but given lead times for direct investment all sectors are in active discussions with potential investors. The list of sectors includes: Energy; Water; Food; Technology and Digital; Mobility; Tourism; Financial Services; Education; Biotech; Health & Well-Being; Sport; Design and Construction; Media; Entertainment, Culture & Fashion; and, Manufacturing. There will be many projects coming to fruition between 2021 and 2023 when we expect to have the first of our cities ready for residents.
- Why invest in NEOM?
NEOM has fundamental attributes that make it a natural choice for inward investment. Its location in northwest Saudi Arabia means that 40% of the world’s population will be able to reach NEOM in less than four hours. Additionally, approximately 13% of the world’s trade already flows through the nearby Red Sea. NEOM will be powered by abundant, low cost, renewable energy from solar, wind and hydrogen-based energy sources.
NEOM is the embodiment of Saudi Arabia’s Vision 2030 to diversify the economy and it will play an important role in creating new jobs and supporting the Kingdom’s goals. But, NEOM will also play a role as a global economic hub for the 22nd century, opening new trade routes, creating new industries and shaping the digital economy. It is at the crossroads of international trade, in close proximity to major European, regional GCC, sub-continental, and emerging African markets.
What is really exciting is that we are starting from a blank slate, supported by what will be a progressive regulatory system in line with international norms and structured to accelerate economic growth. There are a variety of incentives and opportunities for engagement in NEOM to suit a wide range of investors in each sector. Our Education, Research and Investment initiative fuses talent, ideas and finance together to serve the needs of the sectors. And, with NEOM’s foundation in technology, we will be a living laboratory for ideas and innovation allowing entrepreneurs and businesses the flexibility to experiment with the requirements and needs of a future economy. NEOM is a place where companies can come to experiment and commercialize new technologies and lead the way in developing the new digital economy.
Add to this an enviable climate and exceptional liveability, NEOM will attract residents and businesses from around the world who want live in cities, or a region, that shares their vision of developing a way of living that is in harmony with nature.