Environmental - Hydrogen: A Catalyst To Fuel Africa’s Green Industrial Revolution

By Tiago Marques, Head of Content of Global African Hydrogen Summit and Vice President of Production at the Sustainable Energy Council

What Is Hydrogen And How Is It Produced?

Hydrogen is a clean alternative to methane, also known as natural gas. It's the most abundant chemical element, estimated to contribute 75% of the mass of the universe. Hydrogen can be made directly from fossil fuels or biomass, or it can be produced by passing electricity through water, breaking the water into its constituent components of hydrogen and oxygen.

According to the National Renewable Energy Laboratory from the US Department of Energy, hydrogen has very high energy for its weight, but very low energy for its volume, so new technology is needed to store and transport it. And fuel cell technology is still in early development, needing improvements in efficiency and durability.

The Emerging Clean Hydrogen Market

The International Energy Agency (IEA) has stated the key pillars of decarbonising the global energy system are:

• Energy efficiency

• Behavioural change

• Electrification

• Renewables

• Hydrogen and hydrogen‐based fuels

• Carbon capture, usage and storage (CCUS)

In addition to the projected volume of emissions reduction hydrogen is expected to facilitate, hydrogen is positioned to play a significant role in the energy transition due to emerging capabilities to produce clean hydrogen and hydrogen-based fuels as well as increasing hydrogen demand generation.

According to McKinsey research, total hydrogen demand has the potential to reach up to 660 million tons by 2050, abating more than 20% of global emissions. Realising this opportunity will require all relevant stakeholders to come together to develop clean hydrogen value chains - often across geographies. Those positioned to take action in these areas will be uniquely advantaged to create new sources of value and play a leading role in future global energy markets.

Clean hydrogen is expected to play a critical role in decarbonising hard-to-abate sectors, often as a complement to other technologies, including renewable power and biofuels. Hydrogen has the potential to decarbonise heavy industries including steel, petrochemicals, fertilisers, long-haul transport and more as well as to support flexible power generation, among other applications. While momentum is strong, more needs to be done to be on track to achieve net zero ambitions by 2050.

The increasingly supportive policy and funding environment - including quantified 2030 production capacity targets for many countries - means about two-thirds of announced projects are projecting start-up by the end of the decade. The momentum created by the US Inflation Reduction Act has helped boost energy-related sectors globally, including low carbon hydrogen. For investors, comparing the effect of hydrogenrelated policy and legislation on costs and pricing will be a key element of making informed, data-driven investment decisions.

However, the emerging hydrogen economy faces significant challenges in ramping up, including:

• A complex and capital-intensive value chain

• Value chain segments that are developing at varying paces, challenging scale-up

• Still-evolving facilitating technologies and supportive regulations

• Increasing equipment and financial costs that may put projects at risk as well as muffle the impact of government support

• Demand generation that does not match the current enthusiasm for production

The Opportunity for Africa

For many African countries, the question is not about reducing their carbon footprint but rather to sustainably harness their existing resources to meet the growing demand for energy that will advance economic development, map a sustainable path to a net zero future and eliminate energy poverty across the continent. To this end, some African countries are setting their sights on clean hydrogen.

In the global drive to develop and commercialise clean hydrogen, Africa is on an equal footing with developed economies. Governments around the world are promoting projects for domestic and export markets of clean hydrogen, with billions of dollars expected to be invested over the next few years. To capture the opportunity, supportive and facilitating policy will be needed to incentivise investment as well as:

• Catalyse collaborative R&D innovation platforms for sustainable, competitive technologies suited to the capabilities of each country

• Build the needed infrastructure to support hydrogen production, storage, transport and refuelling

• Construct the legal frameworks to support the localised hydrogen value chains

• Mobilise skilled and specialised workforce and supportive technology infrastructure needed to scale and mature a local hydrogen value chains

Given the advantage of abundant wind and solar resources, vast underpopulated landmasses and strategic coast lines, the continent could be highly competitive in supplying clean hydrogen for local and global consumption. A McKinsey Achieved Commitments scenario projects global hydrogen demand could grow sevenfold by 2050, accompanied by falling hydrogen production and renewable capacity increases.

Africa has a significant opportunity to export the clean hydrogen needed to balance global demand with available supply. Collectively and through collaboration, hydrogen-producing African countries have the potential to complement African hydrogen exports of up to 40 megatons by 2050 with self- supply its full domestic demand potential of 10 to 18 megatons of hydrogen.

To enable these shifts, McKinsey projects $2.9-trillion of cumulative capital expenditure would be required between 2022 and 2050, most of which would need to be dedicated to green energy sources. In 2022, annual investments in energy amounted to $70-billion, of which nearly 60% were derived from oil and gas activities. By 2050, the annual investment required is expected to more than double to $160-billion, with the focus of investment likely shifting to an expected 43% of capital expenditure spent on hydrogen, 38% on renewables, and 17 percent on power transmission, distribution and mini-grids.

The African clean hydrogen potential represents a major opportunity for growth, employment and innovation. Stakeholders across the public and private sectors, both domestically and internationally, will have a critical role to play in moving Africa and the countries across it toward a sustainable energy future.

The Opportunity For Namibia

Hydrogen as a catalyst to propel green industrialisation across the African continent is emerging as a multifaceted solution that aligns to domestic, regional, and global agendas. By capitalising on its renewable energy potential and strategic geographic location, Namibia can spearhead the development of a green industrial ecosystem that not only supports its own economic objectives but also contributes to broader regional and global sustainability goals. If executed diligently, it represents a pathway to overcome its structural economic constraints while simultaneously fostering high-skill job creation, increased productivity, market expansion, and foreign direct investment.

Central strategies include promoting export development, enhancing efficient production, ensuring external debt sustainability, and developing an integrated industrial strategy. Namibia’s own Green Industrialisation Blueprint also highlights the importance of modernising agriculture, empowering women and disadvantaged groups, and fostering a highly skilled and productive labour force. To avoid the potential pitfalls identified by its founding fathers and enshrined in Vision 2030, Namibia must reduce its reliance on the primary sector and adopt policies that promote economic diversification and resilience.