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The scramble for green hydrogen is reshaping the continent

Every month the H2 silver bullet grows and grows, raising hopes across Africa. Here is how to ensure it hits the target

Hello – once in a while a shiny big new thing comes along with lots of hype… and when you strip away the hype you realise… it’s still a really big thing. That’s what green hydrogen in Africa looks like to us.

There is indeed a lot of hype. But there are also big international players making major commitments. Doing so doesn’t guarantee success. But it is real.

Green hydrogen has earned the right to be taken seriously as a potential mainstay of Africa’s green economy. It deserves constructive support. Now for the hard part: Creating facilities, jobs and returns.

Today’s reading time: 4 mins

LOGISTICS UPDATE | Thursday 4 April

🔎 Report: African climate services critically need more investment

🖥️  Webinar: Africa’s roles in tackling global climate change (April 8)

⚙️  Job: Zutari is looking for a Lead Structural Engineer (Joburg)


📚  Other report: AfDB Climate Change and Green Growth - 2022

🦍 Other job: IUCN seeks a Regional Comms Officer (Nairobi)

1.🚁 Heli view: The triple hurdle green hydrogen must clear to power Africa 

Western business has decided to double down on African green hydrogen in a big way.

Top guns: The Hydrogen Council, a club of global industry giants (see our Cheat Sheet below), this month got McKinsey to make the case for hydrogen’s potential on the continent. 

  • The significance is not just in what the report says – but also who says it.

  • This blueprint for industrialisation based on billion-dollar investments was commissioned by players with the necessary capital. 

A few details: McKinsey analysts chart the sector’s potential as follows.

  • African hydrogen exports could be worth more than $15 billion annually by 2050.

  • The sector can create 13 million job-years for African countries by mid-century.

  • Projected African exports: 7 million tons pa (2030), 32 Mtpa (2040) and 72 Mtpa (2050).

  • In South Africa, it could add 3.6% to GDP by 2050 and create more than 370,000 jobs.

Quick recap: What is green hydrogen? Using renewable energy to create hydrogen, a major ingredient in industry, transport and energy.

  • Over the past year, green hydrogen has become perhaps the most dynamic part of Africa’s green economy. 

  • More than $100 billion in projects have been announced across a dozen countries. 

Yes but: Before green hydrogen can take off in Africa, it needs to clear three major hurdles: Securing capital, ensuring demand, and finessing the local landscape. 

Securing capital: Access to funds and actual investment can be different things. 

  • More than $400 billion may need to be invested (equivalent to South Africa’s GDP). 

  • $40 billion will be invested by 2030 but over 90% of capital will only be deployed later.

  • Highly variable perceptions of risk in Africa mean financing is subject to uncertainty.  

  • A 6% increase in the cost of capital could increase hydrogen costs (LCOH) by 50% or more. 

Ensuring demand: Africa is not exactly early to the party.

  • Only 5% of African projects are at the advanced planning stage and 1% have final investment decisions, compared to 20% and 7% globally.

  • Europe and parts of Asia are the primary market as North America, Australia and Latin America are already building plenty of capacity.

  • Potential government subsidies for American green hydrogen may exacerbate demand challenges in Africa.

Finessing the local landscape: Some African governments are struggling with hydrogen policies, though Kenya recently established its regulatory framework.

  • Transport infrastructure, land rights, water access and human capital are also potential bumps in the road. 

Not stopping: The first quarter of the year has nonetheless seen a further stampede of interest.

Serious players: Conservative western industrial countries are now focusing on African green hydrogen. These are not your usual speculators. 

  • Japan has struck a partnership with South Africa that may be worth $15 billion.  

  • Germany supports a $10 billion project in Namibia, which will soon produce its first green hydrogen.

Action stations: Mid-size African countries are emerging prominently in the sector.

  • Morocco will dedicate 2% of its landmass (1 mln hectares) to green hydrogen projects.

  • Algeria wants to supply 10% of Europe's hydrogen demand by 2040 via a subsea pipe.

Big brothers: Some of Africa’s major economies are also keeping up with new announcements.

New entries: Laggards no longer want to be left behind.

  • Uganda signed a $400 million deal for a green hydrogen-based fertiliser plant, aiming to enhance its food production and reduce imports.

Use cases: It’s no longer just about trade. Domestic applications are trialled.

  • BMW launches a hydrogen test car for South African consumers.

What it means: This is different from what raised up Asia’s economies. It’s less about (labour-intensive) manufacturing than green industrial applications.

  • Still, serious players are making the case for how hydrogen can reshape the continent, including forgotten places such as Mauritania

  • Namibia may double its GDP, grow the labour force by 10% and reduce CO2 emissions by 45-60 million tons per year by 2040. 

2. Cheat sheet: 24 big names betting on green hydrogen in Africa

…of the new capital invested in African startups in the first quarter of this year went to ClimateTech (cutting across multiple sectors). That amounts to $126 million, or 31% of the deals worth more than $100,000, according to Africa: The Big Deal.

4. Network corner

BasiGo raises $3 million to boost bus production in East Africa

Roam and Mogo enter a strategic partnership to offer flexible financing options for electric motorcycles, starting in 20 in-store locations

VC firm Satgana closes its first fund to support early-stage climate-tech startups in Africa

5. Q&A: Climate leaders with answers

Michael Sakala is the energy lead at World Wide Fund and a leading member of Zambian Electric Mobility and Innovation Alliance.

Q: What are the main challenges for Zambia’s green transition? A: I would say government policies and financing. The politicians are focused on short-term goals. After every election, changes in the government impact the implementation of energy adoption policies.

Q: Is electric mobility making progress? A: At the end of 2023, we had only 94 registered electric two-wheelers. We have a long way to go. However, the government has partnered with UNEP to fund electric buses for public transport. 

Q: That’s heading in the right direction then, no? A: The green economy in Zambia is struggling. There are no distinct regulations, so investors think the environment is not conducive.

Q: What worries you most? A: We rely heavily on hydroelectric power from Kariba Dam, and climate change has reduced water levels. Yet the government still thinks that hydropower is the only solution. We are over-reliant on one source, even if it’s a good one.

Q: So the government is lagging? A: We note increases in deforestation and use of charcoal as a source of energy for cooking, even in hospitals and schools, despite knowing of alternative sources.

6. Media monitoring

  • Big bucks: IMF approved $1.2 billion for Egyptian climate projects.

  • Disappointment: Geneva has been selected instead of Nairobi as the headquarters of a new loss & damage hub.

  • Solar: The forced shutdown of Noor III thermodynamic solar power plant in Morocco could cost $47 million.  

  • Sustainable coffee: Nespresso announced a $20 million investment in DRC.

Don’t have time to read 100+ media sources every day? We’ve done the reading for you. Check out our full media monitoring here 

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Thanks to the Green Rising team for putting this together.

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