Hydrogen diplomacy has intensified in recent years, and the EU is outpacing other competitors — including the US — on the green hydrogen front in Africa, which has been flagged for its potential to produce up to 50-million tonnes a year by 2050, at or below $1.09/kg.
A joint EU/AU report recently noted that Africa has “extraordinary green hydrogen potential”, and a 2022 study by the European Investment Bank concluded that Africa is worthy of a €1-trillion investment in green hydrogen, which could make the continent an international energy powerhouse.
The EU has recently made significant investments and technical assistance commitments to the six countries that form the Africa Green Hydrogen Alliance — SA, Namibia, Kenya, Morocco, Egypt and Mauritania. It’s a new shift — support started flowing at the start of 2022. Here’s a snapshot of some advancements.
The European Bank for Reconstruction & Development provided assistance to the Egyptian government with developing a low-carbon hydrogen strategy that was launched at COP27, in addition to committing to an $80m loan to Egypt Green, to develop the country’s first green hydrogen facility.
Earlier in 2023 the vice-president of the European Investment Bank (EIB) signed a joint declaration with the Kenyan government on renewable clean hydrogen. The EIB agreed to provide €1.8bn in grant funding. Additionally, Germany committed to provide €112m to Kenya for its renewable energy efforts. The UK government has also designed a scheme to serve as a guarantor for hydrogen projects.
Namibia is perhaps the best example of high hydrogen potential and resulting support. Renewable energy sources such as wind and solar are the bedrock of hydrogen production. Namibia has one of the highest levels of solar irradiation in the world, at nearly 3,000 KWh/m². It also has strong wind resources during peak demand hours — mean wind speeds at typical turbine heights exceed 10m/s.
My impression is that there is domestic political will to build the sector. At COP27 the EU and Namibian presidents signed a joint declaration on hydrogen co-operation. The EU has committed to a potential loan of €500m; a Dutch firm, Invest International, will be provide an initial €40m. In co-operation with German investors, Hyphen Hydrogen Energy, a Namibian firm, recently cut a deal to undertake a $10bn green hydrogen project (almost equivalent to Namibia’s GDP).
Two key barriers are inhibiting African countries from reaching their full potential: financing and technical assistance. It is estimated that developing the hydrogen economy in the six countries will require $450bn-$900bn of investment by 2050.
It is vital that the development and export of hydrogen is mutually beneficial, not just in export revenues but also the socioeconomic advancement of African countries. On a recent visit to Windhoek German minister Robert Habeck announced that “the last thing we can accept is a kind of new energy imperialism”.
There are two priorities. The first is helping Africa reach universal energy access before supplying other parts of the world. Almost half of Namibians have no electricity. At present 590-million people in Sub-Saharan Africa lack access to energy. That’s about 1.5 times the population of the US and 1.3 times the population of all 27 EU countries.
The second is providing technical assistance to the continent on producing green hydrogen cost efficiently, and maximising the benefits of exporting green hydrogen. Notably this includes prudent macro-fiscal management of resources. With the support of a Dutch firm, Namibia has established a new sovereign wealth fund for the green hydrogen sector to counteract the effects of macroeconomic shocks (which Namibia has experienced due to the downturn in the diamond market) and protect foreign reserves.
This past week SA also announced the launch of a $1bn green hydrogen fund backed by the Netherlands. Green hydrogen is a cornerstone of the country’s just transition given its ability to bring in investment and generate jobs.
This is a welcome acceleration from the preceding 15 years. In May 2007 the department of science & technology approved Hydrogen SA, a 15-year programme. But little moved until Anglo American spearheaded the feasibility study for Hydrogen Valley. The study concluded that the sector could add $4bn-$9bn to SA’s GDP by 2050 while generating 14,000-30,000 direct and indirect jobs per year.
The reality is that while the EU is outpacing the US in hydrogen diplomacy on the continent, everyone is trying to catch up with China. China is estimated to have invested $120bn in Africa between 2007 and 2020, while the US has invested just $20bn over the same period.
• Dr Baskaran (@gracebaskaran), a development economist, is a bye-fellow in economics at the University of Cambridge.
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