In Saudi Arabia and Namibia, enormous green hydrogen manufacturing facilities are being constructed. Germany is a partner in the project.
The future city’s access route passes over virgin desert terrain. A few camels occasionally trot beside the road, being followed by Bedouin herdsmen. If not, nothing. If it weren’t for the signage, one could believe they were in no man’s land. On them is inscribed “Neom.” It is the name of the future metropolis that will encircle all of Saudi Arabia’s northwest. Neom is a promise as well as something else. Neologism means “new future” in English. And the Saudi royal family intends to celebrate just that.
Saudi Arabia is still seeing economic growth as a result of oil. But motivated by his “Vision 2030,” Crown Prince Mohammed bin Salman is searching for alternative revenue streams, including hydrogen, as a safeguard. Experts from firms like ThyssenKrupp are constructing a massive manufacturing facility from the ground up in Neom. Saudi Arabia plans to export 650 tons of green hydrogen per day from their country. Energy Minister Abdulaziz bin Salman Al Saud declares, “We are certain that we will be the most competitive producer.” The objective has been established: After serving as a worldwide refueling station for many years, Saudi Arabia is aiming to dominate the hydrogen industry.
Germany is one of the partners in these programs. Peter Altmaier, who was the federal economy minister at the time, and the Saudi energy minister inked a contract in March 2021. Because Germany aspires to lead the world in green hydrogen. But mostly as an outfitter and user, not as a producer. The National Hydrogen Strategy declares that “green hydrogen is the oil of the future.” It should primarily replace fossil fuels in the heating, transportation, and industrial sectors.
In search of a companion
This won’t be viable in Germany without green hydrogen imports, according to Malte Küper of the German Economic Institute (IW) in Cologne. Researchers predict that Germany would need 50 to 60 terawatt-hours of green hydrogen by 2030. This is equivalent to around one-tenth of the nation’s overall electrical needs. By 2030, Germany will be able to manufacture almost half of it on its own, if the traffic light alliance gets its way. Where should the remaining green hydrogen come from, one wonders?
There are plenty of qualified import applicants. Countless locations throughout the world are vying for a prominent position in the hydrogen industry, from the Arabian Peninsula to Australia, from South America to Africa. They all enjoy the sun, breeze, and ample space that Germany does not. According to Küper, “a lot of green power is required if you wish to manufacture hydrogen without emitting any emissions.”
Even nations that have up to now been at best outsiders in the global energy market are considering their chances in the battle for hydrogen. It includes Namibia. A new alliance between Germany and the arid nation in southwest Africa was signed in August 2021. The national government plans to contribute 40 million euros to the development of Namibia’s hydrogen industry. Later on, that ought to pay off. Berlin estimates that no country will have a cheaper energy source than another. Anja Karliczek, the research minister at the time, referred to Namibia’s production of hydrogen as having a significant geographic advantage. After all, Germany requires a lot of hydrogen, and it needs it now. People in Berlin are sure that “Namibia can deliver.”
Plans point to the Tsau-Khaeb National Park in the country’s desolate south. A facility with the capacity to manufacture 300,000 tons of green hydrogen annually is going to be constructed there, on the outskirts of the fishing town of Lüderitz. Even so, that goes beyond what Neom had intended. A German corporation is engaged, much like in Saudi Arabia. Enertrag is a member of the Hyphen consortium, which was named the project’s preferred bidder in November 2021.
They think Lüderitz is a “special blend,” according to those involved. A wind speed that is only ever recorded outside at sea in Germany, nearly twice as many hours of sunshine, and most importantly, a ton of empty space. Namibia is the nation with the second-lowest population in the world, behind Mongolia. As a result, the consortium anticipates much fewer conflicts of interest. The hydrogen market is where Namibia is very, very far ahead, according to Matthias Philippi of Enertrag. The nation is democratic and innovation-friendly in addition to having the necessary geographic characteristics. He is addressing an issue that detractors of the German-Saudi alliance frequently raise.
One thing that the Lüderitz and Neom systems have in common is that, aside from a few wind-measuring masts, not much of them can be seen yet. Because Namibia’s size has drawbacks as well, at least from a business standpoint. The desert nation’s infrastructure is underdeveloped. Philippi acknowledges that “things are occurring,” but that “we’re still at the beginning.” Time is limited, and there are many chores to complete. The group must also build its own production facilities. There are still no roads, electrical lines, or appropriate port in place. The newly built terminal will serve as the shipping point for the hydrogen. It must first be transformed into green ammonia. because it is far more affordable to transport.
Initial plans call for 90 percent of the hydrogen to be exported; the remaining 10 percent to be used domestically. Namibia doesn’t have any significant industry that needs hydrogen. The market hasn’t yet developed, says Philippi. But he talks of a win-win scenario. In the first stage, Hyphen hopes to hire 15,000 people. This closely equates to the population of Lüderitz, where the jobless rate is now 55%.
Additionally, they intend to upgrade the local water system. A desalination plant will eventually provide the inhabitants as well as the manufacturing plant with fresh water. The remaining wind and solar energy will be injected into Namibia’s electrical infrastructure. Future green initiatives should use the newly built infrastructure. According to Philippi, the production of sustainable value is of utmost importance: “The gains shouldn’t merely remain in Europe.”
The initiatives in the Global South are criticized by certain campaigners. In discussions, there is talk of “green colonialism,” in which the global North utilizes the resources of other areas to further its own climatic objectives, while the countries that produce those resources remain stagnant or even regress. The so-called rebound effects are another issue that Küper from the IW and his colleagues address in their work. The energy transformation is not as far along in many potential industrial nations as it is in Germany. According to Küper, “importing from nations that would then have to build their own coal-fired power plants would obviously not be in keeping with the global energy transition and the Paris climate targets.”
Dream accomplice Norway
The obvious opposite conclusion: Anyone importing hydrogen must make sure that doing so will not have a negative impact on the local community or environment. Instead, the ability to utilize renewable energies by the makers themselves is required. However, you must also wish to utilize them. For instance, Saudi Arabia is now ranked second-to-last in terms of climate protection by German Watch.
Political scientist Andreas Goldthau advises that we should carefully consider the partners with whom we embark on such energy collaborations. We are discussing route dependencies that you build, after all. Which supplier nations does he suggest? Goldthau gives a rating that he and his master’s students at the Willy Brandt School of Public Policy developed for a project. According to Goldthau, “it’s not simply an issue of import costs; it’s also about political, social, economic, and ecological concerns.”
Goldthau and his colleagues considered issues like: How effective is the legal system in the nation? Could the output have an impact on how the locals live? What steps is the supplier nation doing to safeguard the environment right beyond its borders? Additionally, does Germany already have relationships with this nation, or would this be a new alliance? As a result, a reliable partner takes first place rather than a desert nation. Norway has a sizable advantage. Chile, New Zealand, Australia, and Mexico come next. The curvature then descends sharply, according to Goldthau. Due in part to its inadequate national climate strategy, Saudi Arabia is in the middle. Namibia falls to one of the worst spots as a result of its inadequate governance principles.
A race against the clock
The ranking list, according to Goldthau, is only an offer of interpretation; the variables and their relative weights are not fixed. In any event, the ranking demonstrates that finding energy partners is difficult and fraught with dangers. Despite all the difficulties, Goldthau advises against being naïve.
How therefore can Germany fulfill its demands by 2030? According to Claudia Kemfert of the Advisory Council on the Environment, quality is now more important than quantity. She describes green hydrogen as “champagne among energy sources,” not the crude oil of the future. It is exclusive to exceptional events, precious, and unique. Only in cases when there is no electrical substitute, she advises, should hydrogen be used.
In their analysis, Küper and his colleagues also advocate a diverse import portfolio to reduce reliance on certain manufacturing nations. Germany should simultaneously increase its own capacity as soon as feasible. It will take time for the global hydrogen economy to take off and for imports by pipeline and ship to be heavily controlled, according to Küper. Additionally stating: “We are talking about green hydrogen, which de facto does not yet exist,” political scientist Goldthau. It’s time if the hydrogen race had a significant rival.