Renewable and clean energy is becoming increasingly important around the world, not only for the necessities of protecting the climate and the environment, but for geopolitical reasons. As the Ukrainian war and Russia’s ability to control the routes and prices of gas used to generate electricity in Europe have shown how many Western countries need to diversify their energy sources and open new channels based on technological development.
One of the most important goals that Europe seeks to achieve is getting rid of fossil fuels, by building a hydrogen economy. But in the absence of sufficient internal supplies, the old continent’s countries are looking to import it from countries in the south of the globe and from North Africa because of geographical proximity, which may open the way in front of improving economic conditions in those countries.
“Let’s face it; we want you to be leaders in producing green hydrogen. A prosperous Europe without implementing the sustainable development goals in Africa is impossible.” Head of Climate at the European Commission, Frans Timmermans said (1)
Global giants based in active markets in the African continent are paying increasing attention to the production of green hydrogen, especially in Egypt, South Africa and Morocco, as well as in Mauritania and Namibia. During 2021, the production of African countries reached 11% of the 163 GW produced globally through the green hydrogen projects.
All hydrogen projects announced in Africa have a European investment partner, which is not surprising given the lack of funding available for the projects, till this date. According to Hydrogen Research and Technologies Analyst, Bridget Fan. Dorsten (2)
The orientation of African countries, especially Arab ones, towards the production of clean energy opens the way for the rich Gulf countries to invest in renewable energy projects, especially those based on solar energy, because of their experience in this field. This will enable it to overcome the crisis of phasing out fossil oil globally, and ensure that it remains an influential party in future energy equations.
Why is Africa a good choice?
Africa has one of the best renewable energy potentials in the world, along with relatively low energy consumption, due to the possibility of producing green hydrogen at competitive prices, because the electricity prices needed to produce green hydrogen are relatively cheap, especially those that will be produced through solar energy projects (3). According to the head of climate at the European Commission, Frans Timmermans.
The African continent has great potential for green hydrogen production, due to its geographical advantages, as it is characterized by abundant land, easy access to water sources and port facilities, enabling it to become a major hub for hydrogen export. Large and young human resources, large water resources such as lakes and rivers, which can be used for electrolysis, are also available. (4).
Which African countries are the luckiest?
Egypt, South Africa and Morocco, as well as Mauritania and Namibia are the top candidate countries for hydrogen production, given their potential in renewable energy; also South Africa, Kenya, Nigeria and Namibia are developing green hydrogen plans. (5)
Egypt is leading the accelerated construction of the world’s largest green hydrogen project, due to its abundance of solar and wind energy and its proximity to European markets. The project aims to use green hydrogen as a feedstock to produce green ammonia, which will be produced in the current ammonia plant in the Ain Sukhna area in the Gulf of Suez.
Project developers include Norwegian companies SCATEC, UAE’s VirtuGlobe, Egypt’s Orascom and Egypt’s sovereign fund. The facility is set to contain a huge 100 MW electrical analyzer provided by the US Company “Balag Power”, which will allow the production of 90,000 tons of green ammonia annually.
With world-class solar and wind resources and access to the platinum range metals used in the electrolyzer, South Africa offers strong potential for cost production and global hydrogen export.
In October 2021, South African government invested this potential by conducting a feasibility study for the establishment of the Hydrogen Valley, in partnership with Anglo-American Platinum, Energy SA and South African Bambili Energy.
Mauritania is likely to be one of the cheapest suppliers of green hydrogen on the African continent, with offshore wind speeds of more than 10 meters per second and some of the highest levels of solar brightness in the world.
Morocco is also of countries likely to have more advanced projects in the field of hydrogen production. Last July, the Moroccan Ministry of Energy, Mines and Environment launched the “Hifu Ammonia Morocco” project in Rabat, which represents the largest project announced on hydrogen and green ammonia in the country to date.
The investment project is worth more than $850 million. The construction of the project will be implemented in phases, and the first phase will be launched in 2022. When the project is fully completed, the facility will produce 183,000 tons of green ammonia and dispose of 280,000 tons of carbon dioxide annually.
In 2020, Tunisia concluded an agreement with Germany in support of the Tunisian-German Alliance for Green Hydrogen, and Germany grants Tunisia of 31 million euros to establish a hydrogen production pilot unit, conduct studies, and establish an institutional and regulatory framework. Italian investors have also expressed interest in developing green hydrogen. (1)
Hydrogen production projects depend on investments
Green hydrogen production is expensive in its early phases, it needs infrastructure and adequate logistics, such as railways and ports, in addition to solar and wind power plants, so African countries need a lot of funding.
“Trying to develop plans for renewable energy usually requires a lot of funding, and governments themselves are not really able to provide that funding through their budget. So they require funding from both the public sector and the private sector.” (6) According to researcher, University of Cape Town Kennedy Cheg
The amount of water required to produce hydrogen is one of the challenges facing renewable energy projects, and seawater desalination can be expensive, such as electrolysis processes used later in the hydrogen making process, all of which requires large capital and huge investments, and many African countries haven’t the appropriate infrastructure, this raises concerns that not all African countries will benefit equally from the available investments.
For example, Germany is focusing on Nigeria and Angola, where the German Foreign Ministry has opened so-called “hydrogen offices” in the capitals of these countries to support the development and export of hydrogen (7)
Hydrogen and Political Changes
Gulf energy companies’ entry into partnerships with European and others in Africa, raises the position of the Gulf countries as part of the future economy and green economy and shows them as leading countries in achieving sustainable development on the African continent.
The UAE has achieved astonishing success with few resources at its disposal. This success puts the UAE in a good position to significantly expand efforts to promote sustainable development in the Global South and lead in renewable energy innovation. (8)
The UAE Ministry of Foreign Affairs and International Cooperation announced the launch of the “Union 7” initiative as part of Abu Dhabi Sustainability Week 2022, which aims to secure funding for renewable energy projects in Africa and clean electricity for 100 million people by 2035.
The initiative will raise funds from the public and private sectors to invest in clean energy under the guidance and coordination of the Ministry of Foreign Affairs and International Cooperation and the Office of the Special Envoy for Climate Change.
The International Renewable Energy Agency (IRENA) predicted in a recent report that the rapid growth in the global hydrogen market will lead to significant geo-economic and geopolitical shifts leading to a wave of new interdependencies, and the emergence of new geopolitical centers of influence based on hydrogen production in parallel with the decline in oil and gas trade.
Green hydrogen production projects will intensify competition between countries to produce this environmentally clean substance, especially when it becomes an export commodity. Hydrogen produced in Africa has a competitive advantage of labor cheapness, which will lead to its lower price, and it is closer to Europe, which reduces transportation costs, which may make it cheaper than hydrogen to be produced in the Arabian Gulf. Therefore, investing in green hydrogen production in Africa may represent an opportunity for the rich Gulf countries to become increasingly partners in this emerging market.
Challenges and expectations:
African countries face many challenges, the first of which is the high costs of capital investments, which are currently unable to compete with the prices of fossil fuel production, therefore green hydrogen may not be fully viable. This makes African countries, most of which suffer from severe economic crises, unable to implement their projects without large foreign investment.
Profits will come late, because the green hydrogen market is still limited, with hydrogen today accounting for less than 2% of Europe’s current energy consumption and expected to provide at least 13% of final energy demand by 2050. (9)
Land is one of Africa’s most highly contested resources, and water resources are extremely valuable to communities and wildlife and become scarce as temperatures rise. In the medium term, renewable hydrogen production will therefore be derived mainly from desalinated seawater. (10)
The expected economic recession due to the lack of gas supplies from Russia, and the global food crisis resulting from the Russian war, represent one of the biggest challenges that may hinder green hydrogen and clean energy schemes in general, whether those that depend on foreign investment or domestic capital.
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