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Green hydrogen—A whole transformation

“The green hydrogen sector will create about 2–4 million jobs by 2050 as well as increase the GDPs of countries with about 6–12%,” says Joyce Kabui, the Africa Manager for the Green Hydrogen Organisation and coordinator of the Africa Green Hydrogen Alliance.

She continues: “Already we can see the impact that countries are going to feel. It also truly shifts the energy map, because we’re seeing countries that have not originally been known to be large energy producers can now contribute to this energy space, such as Namibia, which is one of the leading countries in the production of green hydrogen.”

The Africa Green Hydrogen Alliance currently has eight members: Angola, Egypt, Ethiopia, Mauritania, Morocco, Namibia and South Africa. Nigeria and Djibouti have also expressed interest in joining the alliance.

Says Ms Kabui: “These are the countries that are the frontrunners in the development of green hydrogen on the continent. They’re also the countries that have announced projects in one aspect or another, some more than others, such as Egypt and South Africa, and are way ahead. Kenya has taken a domestic markets approach, and Ethiopia has also started engagement on whether it’s fertilisers or sustainable aviation fuels. So these are the countries that are actually leading in the region when it comes to the production of green hydrogen, both looking at domestic markets and the exports to Europe.”

Governments increasingly engaging

She adds: “We are working with national governments to help in the development of national level standards to ensure that there is harmonisation. If you’re going to trade between Africa and Europe, at least the standards in the two regions need to be speaking to each other. And so it’s really exciting to see countries like Egypt starting discussions on what does a national level standard look like or certification of a green hydrogen standard, which currently has been left to the project developers to figure out. What we’re seeing is that governments are increasingly engaging in this issue.”

Ms Kabui notes that the main challenges this new sector is faced with are: “First, we can say there is really no agreement on the definition of green hydrogen. Second, the projects are still taking quite a bit of time to get off the ground.” [Read the full interview here.]

Hyphen Project

Last week, Namibia was one of several African nations addressing the UN General Assembly in New York, voicing their commitment to achieving sustainable development and calling for a more equitable and prosperous world. In his address, Namibian President Hage G. Geingob highlighted his country’s efforts in transitioning to green energy, emphasising its green hydrogen projects and their potential to decarbonise hard-to-abate sectors. The largest of these developments, known as the Hyphen Project, entails a total estimated investment of $10 billion, more or less the equivalent of Namibia’s annual GDP. President Geingob also noted Namibia’s plans to develop green shipping corridors in partnership with other key stakeholders, aiming to create carbon-neutral maritime value chains for clean fuel and products.

Unique value proposition

In South Africa, the Freeport Saldanha SEZ is poised to become one of the first movers to establish a green hydrogen hub in the country. CEO Kaashifah Beukes: “Hydrogen has been around for many years, and luckily South Africa has the institutional and the industrial know-how to produce hydrogen at scale. But the greening, let’s say, of the molecule is new, because there is a price premium to be paid in first takers or first movers. I think that’s the major challenge.”

She adds: “what I draw upon is that the green hydrogen economy is largely for industrial purposes, and we have proven that we can make the molecule, and that we have very competitive IP in this field. So, I think that South Africa has a very unique value proposition to add to other areas, and that it’s a really interesting time for South Africa in its electricity and its energy transition journey.” [Read full interview here.]

Early stages of the market

While Karim Badr, former CEO of the Sovereign Fund of Egypt’s Infrastructure and Utilities Subfund and now a green projects development consultant believes that Africa might not hit the 50 million tonnes target of green fuel production by 2050, “but we should definitely be around the 30 million tonnes target by then.”

He continues, “we are also still in the very early stages when it comes to the market. But if that market develops, if that technology risk reduces, and will really bridge the gap between hydrocarbons and green fuels when it comes to pricing, you will see a whole transformation.”

“Today, a lot of industries and companies in the world say that they want to reach zero carbon emissions, or they want to be carbon neutral or they want to decarbonise. All of these targets will never be achieved unless we reach the right formula when it comes to cost. What is being announced is one thing and what is being decided in board meetings is another. Unless we can produce a green fuel that is competitive with grey fuels, I don’t think we would be able to reach that.” [Read full interview here.]

Liquidity and appetite

Speaking on Moneyweb recently, Kevin Anderson, head of strategic initiatives at Climate Fund Managers—a joint venture between the FMO Group, the Dutch entrepreneurial development bank in the Netherlands, and Sanlam in South Africa—said there is investor appetite for green hydrogen projects. “We’ve done some soft sounding in the market both locally and internationally. We have seen that there’s a lot of interest locally. Sanlam are looking to come on board as an anchor equity investor in the fund and hopefully bring along their peers, which we think will be very important.”

He explains: “In order to get these projects off the ground, we are talking mega-sized projects. There are similar sized projects being earmarked for South Africa and in order to build such big projects, you need quite a long lead time.”

“We believe the capital markets in South Africa have liquidity and have appetite to perhaps look at this new sector. It does provide a new infrastructure opportunity but South Africa on its own can’t do it. If we keep in mind that a $10 billion project in Namibia will require funding to come from international sources as well. So, we have also reached out to our international investors to see how they would look at it and there is definitely appetite to join this fund, come on board and get going.”

Source: Image by Freepik – This article first appeared in the Green Economy Express, issued by Africa’s Green Economy Summit.

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