Europe’s inexperienced hydrogen rush in Africa dangers power ‘cannibalisation’

Europe’s inexperienced hydrogen plans have set off a race amongst creating nations, notably in Africa, to grow to be the bloc’s first suppliers, risking power wants amongst their very own populations.

The EU bloc sees hydrogen made with renewable power – often called “green hydrogen” – as a cheap technique to scale back emissions, particularly in industries which are tough to decarbonise corresponding to aviation and heavy land transport.

Whereas the European trade is in its infancy, hopes of reaching short-term targets largely relaxation on manufacturing abroad. International locations, particularly in Northern and Sub-saharan Africa, have been attracted by the sector’s alternative for investments and new jobs, analysts instructed Local weather Dwelling Information.

However specialists warned the passion hides vital dangers. Incentives constructed into the EU laws imply the huge scale-up of inexperienced hydrogen exports might take up most renewable electrical energy in creating nations, on the expense of native populations.

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This might be an issue for international locations like Namibia – one of many EU’s key hydrogen companions – the place simply over half of the inhabitants has entry to electrical energy.

For Godrje Rustomjee, an analyst on the African Local weather Basis, international locations want to seek out the appropriate trade-off between home wants and export potential.

In any other case, he says, the chance is that inexperienced hydrogen could flip into “another neo-colonial project”.

“There is a real possibility that foreign countries come in with direct investment, but all the benefits and added value end up being extracted and sent across to Europe”.

Marta Lovisolo, a hydrogen analyst at Bellona, says the chance creating international locations will divert assets towards manufacturing for exports is “extremely high”.

“Green hydrogen is something Europe desperately wants and developing countries could potentially mass-produce for a lucrative market,” she says. “As it happened with fossil fuels, countries seem ready to stake everything on becoming exporters without being given the necessary safeguards.”

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Namibia is a trusted associate of the EU. We stand by your facet within the battle in opposition to the pandemic.
#GlobalGateway can assist 🇳🇦 Inexperienced Hydrogen plans and sustainable uncooked minerals worth chains.

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Betting large on hydrogen

Regardless of being a virtually non-existing power supply in the present day, inexperienced hydrogen has grow to be a cornerstone of Europe’s decarbonisation plans.

Inexperienced hydrogen is generally produced by way of electrolysis, a course of that separates water into hydrogen and oxygen, utilizing electrical energy generated from renewable sources.

The bloc has set a goal of reaching annual home manufacturing of 10 million tonnes of renewable hydrogen by 2030 and importing the identical quantity. It’s a tall order, contemplating that final yr worldwide inexperienced hydrogen manufacturing capability was 109 kilo tonnes – a fraction of what the EU needs to realize.

Presently, most hydrogen is created utilizing fossil fuels. Round three-quarters is derived from methane fuel and 1 / 4 from coal. Inexperienced hydrogen is costlier to provide and accounts for lower than 1% of complete international manufacturing.

To gas its ambition the EU is pouring billions of euros into the sector. Alongside investments within the build-up of home capability, funds are being dedicated in the direction of partnerships with future exporting nations.

The EU has signed agreements with a sequence of nations together with Egypt, Kazakhstan, Morocco and Namibia. The partnerships are billed as a win-win state of affairs.

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Guidelines exemption

The Fee has additionally just lately set out the principles on renewable hydrogen. Amongst varied provisions, it features a standards for creating renewable electrical energy known as ‘additionality’.

Sooner or later, hydrogen producers must make it possible for solely new renewable electrical energy era capability is used for inexperienced hydrogen manufacturing. That is to make sure hydrogen manufacturing doesn’t take away present renewable power from the grid, probably rising reliance on fossil fuels elsewhere.

Additionality may be achieved both by straight connecting a photo voltaic or wind farm to a hydrogen manufacturing facility or by way of buy agreements with clear energy turbines.

However European lawmakers have included a phase-in clause to hurry up the trade with the hope of assembly its 2030 targets. Any inexperienced hydrogen set up that begins manufacturing earlier than 2028 might be exempted from the additionality guidelines for the next ten years, till 2038.

Meaning the initiatives developed earlier than that date will be capable of use already put in capability, as an example taking clear power straight from the grid.

Analysts say the principles have set off a race between exporting nations to fulfill the 2028 deadline. Namibia, for instance, hopes to start exporting inexperienced hydrogen in 2026, though analysts imagine this might be very tough to realize.

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Danger of ‘cannibalisation’

Maria Pastukhova, a senior coverage advisor at E3G, says the principles enable hydrogen initiatives to “cannibalise” the present native infrastructure for the aim of export manufacturing.

“For many countries, especially in Africa, this energy is needed at home, where grids need to be decarbonised or local citizens don’t have access to electricity,” she added.

Solely 56% of Namibians had entry to electrical energy in 2022. The nation imported 60-70% of its electrical energy demand, most of it coming from fossil gas sources.

The Southern African nation, specifically, is racing to grow to be Africa’s first inexperienced hydrogen exporting hub, however faces a context of excessive unemployment and one of the crucial unequal economies on the planet, in keeping with the World Financial institution.

Namibia’s pitch

Namibia’s President Hage Geingob sees inexperienced hydrogen as an “engine of growth” that may make the nation an industrialised financial system and create a lot of jobs.

“Because of our national green hydrogen efforts, Namibia remains well-positioned to become a major supplier of clean and green energy to the world,” he stated at Cop27.

In 2021 the Namibian authorities started pitching its proposition to European leaders, luring them in with the promise to produce as much as three million tonnes of renewable hydrogen yearly.

Germany was first to reply to the calls and rapidly partnered with its former colony. A German personal three way partnership is now working with the Namibian authorities to develop a $9.4 billion inexperienced hydrogen mission. The massive infrastructure is predicted to take up 4,000km2 of land (roughly 4 occasions town of Berlin) throughout the Tsau Khaeb Nationwide Park.

Its aim is to start hydrogen manufacturing by the tip of 2026.

Cash for hydrogen

Following Berlin’s lead, the European Fee signed a memorandum of understanding (MoU) with Namibia on renewable hydrogen, one thing they’ve additionally achieved in no less than different three creating international locations

The settlement goals to facilitate “the production and export of renewable hydrogen”, whereas providing Namibia the “possibility to achieve its own energy security and decarbonisation objectives”.

On the similar time the European Funding Financial institution pledged to present Namibia a mortgage of as much as 500 million euros to finance renewable hydrogen and renewable power investments. The EIB President stated “the development of a green hydrogen economy will bring Namibia and Europe closer together – as partners”.

The same memorandum of understanding was signed on the sidelines of Cop27 between the European Union and Egypt. The partnership is aimed at “contributing to the EU future plans to import renewable hydrogen”, whereas accelerating “the Egyptian energy sector’s transition and decarbonisation”.

The settlement doesn’t but include any binding dedication nevertheless it expects to encourage funding in infrastructure and simpler entry to financing choices.

Upon unveiling the deal, the European Fee Vice-President stated Egypt is “ideally placed” to move inexperienced hydrogen to Europe. He added that Egypt is blessed with “unlimited potential for solar and wind energy”, which works past native electrical energy wants and, subsequently, can be used for inexperienced hydrogen.

Regardless of this potential, the nation’s power sector remains to be vastly dominated by fossil fuels, with solely about 6% of the provision coming from renewables.

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Bellona’s Marta Lovisolo says the agreements are “full of nice words, but do not have any legal safeguards” to stop European pursuits come first.

She provides creating international locations are notably attracted because the European Union has signalled it might subsidise the massive premiums wanted for inexperienced hydrogen.

Extra money to return

Brussels is engaged on a subsidy scheme to carry down the costs of hydrogen for consumers. Inexperienced premiums would cowl the associated fee hole between renewable hydrogen produced abroad and the fossil fuels it might exchange.

The cash pot is predicted to be massive. The inexperienced premium to realize the 2030 targets for hydrogen might come as much as €115 billion in complete.

For the African Local weather Basis’s Godrje Rustomjee the monetary incentives are simply too good for creating international locations to disregard. “On one hand they could use renewables only for domestic consumption but this could come at extreme cost,” he says, “on the other, the nature of these export deals has the potential of doubling a country’s economy”.

The important thing, he says, it is putting the appropriate compromise and securing safeguards within the offers with wealthy importing international locations.

He believes these ought to embody safeguards for native electrical energy provision and incentives, such because the localisation of producing within the nation.