The European Union’s flagship green hydrogen import strategy is confronting hard economic realities in Namibia, where the €10 billion Hyphen project remains unbuilt and industry insiders increasingly question whether it will ever materialize. As of October 2024, the sector has created fewer than 800 jobs against government projections of 280,000 by 2030, exposing a widening gap between political ambition and market fundamentals, FTM reports.
The numbers tell a sobering story. Only three of 14 planned hydrogen projects in Namibia have reached the pilot phase, according to research collective Oxpeckers. The European Commission now admits green hydrogen exports from Namibia won’t begin before late 2028—five years behind the September 2023 feasibility study timeline—while Hyphen CEO Marco Raffinetti pushes expectations to 2029. European Court of Auditors’ December 2024 report concluded bluntly: “The Commission has set unrealistic targets for hydrogen production and imports. The EU is not on track to meet them.”
Economic Viability Under Scrutiny
The technical challenges compound the timeline failures. Green hydrogen requires conversion to ammonia for transport from Namibia to Europe, then back to hydrogen through cracking—a process that loses more than half the energy content, according to multiple studies. British energy analyst Michael Liebreich characterizes importing ammonia from Namibia as “a crime against the climate,” questioning the environmental logic of such energy-intensive logistics.
Cost projections remain stubbornly high. Even with anticipated 2030 price reductions, green hydrogen is expected to significantly exceed alternative energy sources. Rens de Rijke of Dutch construction firm Ballast Nedam states plainly: “There is no business model” for green hydrogen. His company, interested in building Namibian infrastructure, sees “downscaling” ahead, which would further increase unit costs and make imported hydrogen even less competitive.
Market Demand Collapses
RWE’s withdrawal from Hyphen crystallizes the demand problem. The German energy company, which signed a 2022 memorandum to potentially purchase 300,000 tonnes of green ammonia annually, cited weak European demand for hydrogen and ammonia when pulling out. RWE represented the only potential buyer publicly showing interest in large-scale Namibian imports—its exit leaves the project without confirmed customers.
This aligns with broader market data. Westwood Global Energy’s April 2024 study found that only 17% of the EU’s planned green hydrogen capacity will materialize by 2030 without market intervention. Bart de Smet of Invest International reports similar struggles across North Africa: “I have just been to Morocco and Egypt. All projects there are currently on hold.”
Germany’s May 2024 “reality check” on energy transition under Friedrich Merz’s government has further undermined the sector. Berlin has scaled back hydrogen ambitions and shown increased interest in blue hydrogen—which involves carbon capture but isn’t climate-neutral—effectively abandoning the green premium that justified Namibian imports.
Political Support Erodes
The September 2024 resignation of James Mnyupe, director of Namibia’s Green Hydrogen Programme, signals weakening political commitment. Described by The Namibian as “the face of Namibia’s green hydrogen ambitions,” Mnyupe’s departure on November 1 left no appointed successor. The newspaper suggests current President Netumbo Nandi-Ndaitwah, who took office in March, shows less enthusiasm than her predecessor for the hydrogen agenda.
Local skepticism runs deep in Lüderitz, where Hyphen plans to erect 650 wind turbines and install 60 square kilometers of solar panels in a protected nature reserve. Recently resigned mayor Phil Balhao admits being “kept in the dark” about developments, while residents like diamond mining worker Karl Klatte call the project “a bottomless pit.”
Regulatory and Subsidy Challenges
European policymakers face two primary mechanisms to improve green hydrogen’s business case: subsidies and clean energy mandates. Both encounter significant resistance.
Brussels and Berlin’s enthusiasm for hydrogen subsidies has waned over the past year. The EU has allocated just over €1 billion in loans and grants for Namibia’s green hydrogen sector, with nearly €200 million spent—but further commitments remain uncertain as budget priorities shift.
Clean energy mandates carry their own risks. Forcing sectors like aviation to use expensive green hydrogen would disadvantage European companies against competitors still using cheaper fossil fuels. This competitiveness concern has stalled regulatory progress, leaving project developers without the policy certainty needed for final investment decisions.
Alexandre Baron, head of cooperation at the EU delegation in Namibia, describes the industry as “at a critical point,” hoping for final investment decisions within one to two years. Yet industry participants remain doubtful. Erwin Rietman of French water technology company Saur questions Hyphen’s factory plans: “Without customers, it makes no sense.”
Import Target Arithmetic
Even if Hyphen meets its ambitious goals, the numbers don’t add up to EU targets. The project aims to ship one million tonnes of green ammonia annually from 2029, rising to two million tonnes by 2031. This would provide 350,000 tonnes of green hydrogen—just 3.5% of the EU’s 10 million tonne import target for 2030.
The European Commission maintains it “remains fully committed” to importing 10 million tonnes of renewable hydrogen by 2030 while producing another 10 million tonnes domestically. Yet with Namibia’s flagship project years behind schedule, no confirmed buyers, and similar delays reported across Morocco and Egypt, the pathway to these volumes appears increasingly implausible.
The Commission spokesperson acknowledged “challenges in scaling up the hydrogen value chain” when responding to questions, citing issues with Hyphen being “actively addressed.” This diplomatic language masks fundamental questions about whether the green hydrogen import model can function at scale without transforming the underlying economics through either technological breakthroughs or sustained public intervention at levels far exceeding current commitments.
The reality Namibia’s green hydrogen sector faces isn’t merely delayed timelines or implementation challenges—it’s a collision between policy aspirations and market realities that no amount of optimistic projections at industry summits can resolve through enthusiasm alone.
