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THE HYDROGEN ECONOMY: A SOLUTION TO DISRUPT THE POLITICAL GAME OF ARABIA SAUDI

By Jerico Agdan

Sep. 25, 2019

 

 

 

The concept of the Hydrogen Economy refers to the vision of using hydrogen as an energy production system, replacing oil and other transport fuels, for example. What would happen if someday we abandon oil as fuel? How would it affect us at an economic, political and environmental level? How can the Hydrogen Economy disrupt the political game of Saudi Arabia? Would the oil industry plump if this economic model succeeded? Could the hydrogen economy lead us to a more sustainable and just regime?

 

Although the United States and the OPEC countries [1] (Organization of the Petroleum Exporting Countries) control the oil prices, experts asserted that no country is more powerful than Saudi Arabia, the second biggest oil producer in the world after Russia. This can be conspicuously observed when the four-years stable barrel price of $105 [2] have sagged to a low of $30 a barrel in 2016 due to the bidding of Saudi Arabia authorities to fight off a shale gas boom (Baffes, Kose, Ohnsorge & Stocker, 2015). Owing to that fact, Saudi’s strategy was plunging its price, threatened by cheaper shale gas extraction in the USA. Therefore, we can ascertain that Saudi Arabia has a great influence on oil prices, especially in his circle, the OPEC Countries. 

 

As far as the OPEC Countries are concerned, it is an organization of a total of 14 Member Countries whose aim is to connect the petroleum policies of its Member Countries and ensure an equilibrium concerning the oil markets so as to secure to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry. Yet, as it was stated, Saudi Arabia has a dominant influence over oil prices. Furthermore, it the second largest OPEC Member Country [3] ranked as the largest exporter of petroleum, possessing around 18 per cent of the world’s proven petroleum reserves. Apart from petroleum, the Kingdom’s other natural resources include natural gas, iron ore, gold, and copper.

 

The dominance and the political game of Saudi Arabia can also be observed through its own actions. According to USA Today [4] and Business Insider [5] ,the prince of Saudi Arabia, Alwaleed bin Talal, expressed his intention not to raise the price of oil to $ 100 because he said it is artificial. What is more, albeit the supply is higher than the demand, he wanted to decrease the oil price to $30 and even at $20 instead of lessening the production, according to the USA Today. This is because it is one of the countries with the highest reserves and lower production costs. As a result, Saudi Arabia indirectly has the power to raise or lower prices without having the consent of other countries, despite objections from other OPEC nations that are losing money at current price levels. It is then that producer countries have to adapt to the market by lowering the price of oil, or otherwise, their economies would suffer from a certain economic destabilization. For instance, it raises the concerns of Russia, Iran, Venezuela, Norway, Nigeria and Canada.  According to “El blog de Salmón”, for Venezuela oil constitutes 96 percent of its export revenues. Within each dollar of decline in the country, they lose $ 800 million. Venezuela has an inflation that exceeds 60. Moreover, Russians’ oil and gas revenues represent three quarters of its export. Moreover, for Nigeria, oil represents 90 percent of its exports. Therefore, you could see how important is Saudi Arabia in this matter.

 

That said, what can we do to deal with the aforementioned political game of Saudi Arabia? As the title asserts, a shift to a new economic model could become a possible response to fight against the monopoly. This economic model is entitled as the “Hydrogen Economy”. 

 

The hydrogen economy refers to a hypothetical future system of delivering energy through the use of hydrogen (H2). The term was first coined by John Bockris at a 1970 talk at the General Motors (GM) Technical Center. Advocates of this proposed system promote hydrogen as a potential fuel source. Free hydrogen does not occur naturally in quantities of use, like other energy sources, but it can be generated by various methods. As such, hydrogen is not a primary energy source, but an energy carrier. The feasibility of a hydrogen economy depends on issues including the use of fossil fuel, the generation of sustainable energy, and energy sourcing.

 

It is also characterized by its high-level of ignition, therefore, it has the ease of burning in contact with oxygen with a high calorific energy (140MJ / kg) [6] . As a potential fuel, hydrogen is appealing because it has a high energy density by weight. This results in a 38% efficiency for a combustion engine, compared to 30% when gasoline was used as a fuel. That said, it has more efficiency than any other source.

 

What is more, should the hydrogen economy would be carried out, the level of carbon dioxide emissions would decrease. One of the greatest problems in the world is the amount of carbon dioxide emitted due to hydrocarbons triggering the greenhouse effect, hence, climate change. According to the International Energy Agency (IEA), the overall emissions of carbon dioxide is extremely high.  We would not depend on oil and derivatives, and the temperature of the planet would stabilize – making a more sustainable world. The glaciers would stop shrinking, and the fauna and the flora would improve. In addition, the final theoretical residue of the fuel cell – which has potential to become the future way of generating hydrogen– would be water in a liquid form, hence, it would not cause a negative impact on the planet. All in all, it provides an environmentally clean source of energy that does not release pollutants.

 

Ergo, the Hydrogen Economy is a possible scenario in the future. Not only will it eliminate the monopoly of Saudi Arabia and lead it to a more just regime - taking into consideration that water-splitting is an efficient method to obtain hydrogen (considering water is available in any part of the world) –, but also it is also a good path for a sustainable world and a greener economy. Thanks to the hydrogen economy, the political and economic conflict could be faced, leading to a more democratic regime. The developing countries would no longer depend on the flow of oil and could possibly gain access to power since there will be no monopoly. That is, the hydrogen economy could be the first ever democratic regime in history.

 

However, there are several obstacles for the use of hydrogen as a fuel, including the purity requirement of hydrogen and difficulties that arise with its storage. Although hydrogen is very abundant, it is not available in a free state in nature. It is very flammable which makes challenging to store it. Moreover, it does need to obtain it from the compounds of water, fossil fuels or organic matter (biomass). Indeed, 96% [7] for the production of hydrogen is based on fossil fuels. This is due to the large amount of hydrogen that hydrocarbons have. As we know, fossil fuels are a detriment to the environment since it emits greenhouse gases as a result.  Not to mention the current lack of infrastructure and vehicles in the automotive sector.

 

Although scientists see hydrogen as a fuel with great potential to replace oil, many countries in the world attach more importance to the development of electric cars due to the lack of hydrogen technology and the required infrastructure. In spite of this, the technology of the hydrogen is beginning to show indications in its development in the European countries. Each time more projects are being carried out, to extend its net production, storage and distribution. For instance, the Horizon 2020 and CUTE Project by the European Union. The Hydrogen Economy is not a fiction anymore, it could become a reality.

 

 

 

 

 

BIBLIOGRAPHY

 

[1] INVESTOPEDIA (2019, August). Retrieved August, 2019, from https://www.investopedia.com/articles/investing/081315/opec-vs-us-who-controls-oil-prices.asp

 

[2]Baffes J., Kose MA., Ohnsorge F. & Stocker M. (2015). The great plunge in oil prices: causes, consequences and policy responses. Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy. Retrieved from https://cama.crawford.anu.edu.au/publication/cama-working-paper-series/5904/great-plunge-oil-prices-causes-consequences-and-policy

 

[3] OPEC. Retrieved August, 2019, from 

 https://www.opec.org/opec_web/en/about_us/169.htm


 

[4] USA Today (2015, January 11). Retrieved August, 2019, from 

https://eu.usatoday.com/story/money/columnist/bartiromo/2015/01/11/bartiromo-saudi-prince-alwaleed-oil-100-barrel/21484911/

 

[5] LUMEN. Retrieved August, 2019, from 

 https://courses.lumenlearning.com/introchem/chapter/the-hydrogen-economy/

 

 [6][7] PRODUCCIÓN DE HIDRÓGENO. Retrieved August, 2019, from https://producciondehidrogenoporelectrolisis.wordpress.com/metodos-de-obtencion-del-hidrogeno/