Oil and gas have long shaped the economies and geopolitics of many nations, but the rising importance of green hydrogen is set to revolutionize the energy landscape.
Unlike traditional fossil fuels, green hydrogen relies on renewable resources like solar, wind, and hydropower to produce a zero-carbon fuel. This emerging clean energy source has the potential to decarbonize heavy industries and provide sustainable fuels for transportation, making it a key player in combating climate change. However, its successful implementation requires vast areas of flat and open land with abundant access to renewable resources.
For developing countries with ample sun, wind, and land, green hydrogen presents a unique opportunity for economic growth and sustainable development. One such example is Mauritania, where a consortium of companies plans to invest $34 billion in a ten-gigawatt green hydrogen project. This ambitious endeavor could transform the country’s energy landscape and make it a major player in the global green hydrogen market.
The potential for green hydrogen extends beyond Mauritania. Namibia, South Africa, Egypt, Morocco, and Angola are also exploring hydrogen projects that could reshape their economies. In Africa, only Europe is expected to outpace the continent in green hydrogen production by the early 2030s.
However, significant challenges lie ahead for these projects. Developing countries face the task of attracting huge investments, building necessary infrastructure, and securing long-term off-take contracts to underpin financing. The market for green hydrogen is still nascent, and investors are cautious about the uncertain costs and advancements in the industry.
Moreover, Africa faces competition from countries like Australia, Brazil, Chile, and the Arabian Peninsula, which possess similar advantages in terms of renewable resources and technical expertise. The United States, with its abundant land and generous government subsidies for hydrogen production, poses a significant threat as well.
To ensure a successful and sustainable transition to green hydrogen, African countries must strike a delicate balance. Heavy taxation or government ownership could deter investors while exporting all hydrogen without generating value locally might miss the opportunity for domestic growth. Instead, African nations should consider turning hydrogen into ammonia, a valuable chemical feedstock and constituent of fertilizers. This strategy would not only create local value but also facilitate easier transportation of hydrogen-derived products.
Despite the challenges, Africa’s hydrogen potential has attracted interest from Gulf investors and renewable energy companies. However, global players from China, the US, and Japan are notably absent. This presents an opportunity for fruitful partnerships that can transform energy trade into a model vastly different from the traditional extractive approach.
As green hydrogen continues to gain momentum worldwide, African nations have a unique chance to leverage their renewable resources and play a pivotal role in the global energy transition. By fostering a supportive investment climate and promoting local value creation, Africa can position itself as a key player in the green hydrogen revolution and contribute significantly to a sustainable future.