Africa Needs to Prioritize the Local Consumption of Green Hydrogen
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Africa Needs to Prioritize the Local Consumption of Green Hydrogen
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By, Bamidele Adebisi, Professor of Intelligent Infrastructure Systems, Manchester Metropolitan University
May 25, 2023
The African economic landscape needs to prioritize the local consumption of Green Hydrogen to propel its energy access in addition to bolstering its energy transition journey. With over 645 million Africans lacking access to electricity, energy deficits in Sub-Saharan Africa are one of the major impediments to the continent’s economic progress and industrial growth.
For instance, load shedding in South Africa was estimated to cost 560 billion ZAR [USD 30.4 Billion] per year. While this has been a recent challenge in South Africa, similar concerns have been prevalent across different parts of the continent for decades. However, thankfully for Africa, the continent is blessed with vast swathes of renewable energy resources - over 10 TW of solar potential, 350 GW of hydroelectric potential, 110 GW of wind potential, and an additional 15 GW of geothermal potential. These resources are promising for the emerging green hydrogen industry, which has a 50 GW energy potential by 2050 in the continent. It provides a pathway to decarbonize existing industries and address the continent's energy deficit in hard-to-abate sectors such as steel, cement, aluminium, etc. However, to fast-track this impact, African countries need to prioritize localizing their energy consumption and catering to export markets.
Why Does Africa Need to Localize its Green Hydrogen Strategy?
The economic potential of the green hydrogen industry for Africa is immense. A hydrogen industry producing 30 to 60 MT per annum of hydrogen has the potential to create 1.9 to 3.7 million jobs and boost the continent's gross domestic product (GDP) by USD 60 to 120 billion by 2050. However, as depicted by Botho Emerging Market Group's Green Hydrogen Report, the majority of the announced green hydrogen projects on the continent are driven by foreign capital, to cater to the clean energy needs of export markets like Europe, rather than Africa. These investments, though beneficial, may not necessarily contribute directly to the growth of domestic markets. To fully unlock the economic potential of green hydrogen in Africa, it may be crucial for African countries to prioritize their own needs and set strategic goals accordingly. This will ensure that the emerging green hydrogen economy not only addresses pressing domestic needs, but also builds resilience against shocks characteristic of export-oriented industries.
How Can the Continent Root its Green Hydrogen Strategy Locally?
A local green hydrogen economy has the potential to address some of the continent’s most urgent concerns, including its continued reliance on fertilizer imports, its pursuit of industrialization, and its sustainable transition to a green economy. For instance, in the aftermath of the Russia-Ukraine crisis in 2022, several African countries that depended on Russia for their fertilizer supplies were left in a lurch. Ghana, Ivory Coast, and Mauritania, who purchased between 20 and 50 per cent of their fertilizer supply from Russia, felt the drastic effect of Western sanctions almost immediately. A green hydrogen industry that prioritizes local consumption could have bridged this gap, as one of the most critical uses of green hydrogen is the production of hydrogen-based ammonia fertilizer.
A green hydrogen strategy rooted in domestic concerns can also help spur industrialization. Hydrogen is used for desulphurization in the steel manufacturing process, for example. In recent years, steel global value chains have suffered a decline due to supply-related concerns. Meanwhile, African countries continue to rely on imported steel to meet their industrial needs, due to steel shortages. Green hydrogen provides countries like Nigeria, Tanzania, and Kenya an opportunity to regionalize their steel production ambitions for urbanization and infrastructure requirements through green steel. Examples like South Africa’s AccelorMittal demonstrate this potential of the dual usage of green hydrogen, as the company focuses both on decarbonizing the industry as well as using green hydrogen for manufacturing.
In light of the impending climate crisis, decarbonizing existing industries remains a crucial goal for local green hydrogen strategies. South Africa, for instance, faces a declining industrial sector and an energy deficit costing the economy USD 51 million daily. By harnessing green hydrogen, industries like mining can decarbonize their operations, as is the case of Anglo American in South Africa. Similarly, countries, such as Senegal, with relatively high solar capacity and significant fossil fuel reliance, can use green hydrogen to power their industries.
Countries like Egypt and South Africa are already aligning their existing industries with green hydrogen production for decarbonization. Other nations with carbon-based energy economies, such as Nigeria (80% of energy from hydrocarbons) and Ghana (~70% of energy from hydrocarbons), can also benefit from a decarbonization approach to meet their carbon-emission reduction goals. Additionally, Kenya, which has a robust industrial sector and an energy supply deficit, can prioritize the local consumption of green hydrogen to drive economic growth.
Lastly, the green hydrogen sector can act as a catalyst to develop input industries that have critical uses beyond green hydrogen production. One such example is the desalination sector. Considering water scarcity affects 1 in 3 Africans, a thriving desalination sector can help provide potable water to communities in the face of climate change-induced droughts.
Countries, such as Egypt, South Africa, Mauritania, Namibia and Morocco have been at the forefront of attracting large-scale investments into the green hydrogen sector in Africa. However, as foreign investors drive the industry’s emergence to cater to their own needs, African policymakers have a crucial opportunity to harness the potential of this industry for their own countries’ benefit by identifying and tapping into the specific needs and demands of their economy. They can do so with the support of capacity-building actors like the African Hydrogen Partnership, which specializes in formulating comprehensive green hydrogen national road maps, knowledge transfer and offering financial and technical stakeholder engagement guidance, aided by robust strategy consulting partners who can help navigate both domestic and international interests.
Bamidele Adebisi is a Professor of Intelligent Infrastructure Systems, and the Director of the Smart Infrastructure Research (SIR), Department of Engineering, Manchester Metropolitan University, UK. He also serves as the Director, University Board Member at African Hydrogen Partnership.