Sub-Saharan African countries are major producers of commodities used around the world, from oil and gas to copper, coffee and cotton. Hydrogen has not featured among the region’s exports, but as global interest in hydrogen surges, that could be about to change. Yet, while the region has considerable hydrogen production potential, the challenges facing hydrogen exports should not be underestimated. Ultimately, sub-Saharan Africa may be better off using its hydrogen potential to power its own clean industrial development rather exporting than it.
Until now, the region has not been a significant player in the development of the hydrogen economy. Of 444 projects in the International Energy Agency’s (IEA) hydrogen project database, only one (an initiative to use hydrogen in mining vehicles in South Africa) is located in the region. However, growing expectations for a global market in low-carbon hydrogen are changing this picture.
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By GlobalData
As countries around the world commit to reach net-zero greenhouse gas emissions, many are looking to hydrogen as a solution for hard-to-decarbonise sectors such as heavy industry, aviation and shipping. When produced using renewable electricity or carbon capture and storage (CCS), hydrogen can dramatically reduce emissions from these sectors.
Over the last three years, Australia, the EU, France, Germany, Japan, New Zealand, Norway, Portugal, South Korea and Spain have all launched strategies or made major announcements on hydrogen.
As a result of this political backing, analysts are expecting rapid growth in low-carbon hydrogen markets. The global market could grow from 450,000 tonnes in 2020 to 18 million tonnes in 2030 under a “sustainable development” scenario or to 40mt by 2030 under a scenario where the world reaches net-zero emissions by 2050, projects the IEA. Bloomberg New Energy Finance estimates low-carbon hydrogen could represent between 7% and 24% of global final energy consumption by 2050.
In response to this expectation of a fast-growing global market, a wave of new initiatives are seeking to tap the potential for sub-Saharan Africa to become a low- carbon hydrogen producer. A new African Hydrogen Partnership was launched last year to bring together companies and associations active in the development of hydrogen markets and infrastructure. Mapping for an ‘atlas’ of potential green hydrogen sites in Africa has begun, supported by Germany’s international development agency. A proposal to produce green hydrogen from the massive Inga 3 dam in the Democratic Republic of the Congo for export to Europe is attracting international attention.
Theory versus reality
Hydrogen exports from sub-Saharan Africa could come in two forms – “green” or “blue” – but both pathways face hurdles.
Green hydrogen is produced from renewable electricity, using electrolysers. For green hydrogen, the large-scale solar and wind resource in sub-Saharan Africa means that in much of the region it can be produced significantly more cheaply than in most of Europe, North America or Japan. A new report from PwC pushes for a new national hydrogen strategy for South Africa and argues “given its immense renewable energy potential, South Africa could become an exporter of cost-effective green hydrogen to the world”.
However, theoretical potentials will not always translate into the actual build-out of green hydrogen production. While sub-Saharan Africa has strong solar and wind resources, investment in wind and solar power in the region has been lacking. Only 2% of global renewable generation capacity in the past ten years was installed in Africa, due to exorbitant financing costs, infrastructure limitations and political challenges. A global market for green hydrogen may provide an additional incentive to develop these renewable resources, but may not be enough to overcome the underlying barriers.
The other route for hydrogen exports from sub-Saharan Africa is blue hydrogen, produced from re-formed natural gas combined with CCS.
The hope is that producing blue hydrogen will provide a lifeline to African gas-producing countries such as Mozambique, Angola and Nigeria – as their resources would otherwise become stranded as the world shifts to a low-carbon pathway.
Blue hydrogen is expected to be cheaper than green hydrogen in the short term. However this cost advantage could be short-lived, as the costs of both the electrolysers and renewable power generation needed for green hydrogen are coming down fast. BNEF expects green hydrogen to outcompete blue hydrogen on cost by 2030.
The CCS used for blue hydrogen production is an established technology, but it has not yet been widely deployed anywhere in the world and is not yet economically viable without subsidies or a high price on carbon. Capturing carbon dioxide and then permanently storing it in underground geological foundations is beset with legal and governance complexities – including liabilities if the captured gases escape decades down the line.
Only two sub-Saharan African countries (Botswana and South Africa) have legal frameworks in place for CCS, says the Global CCS Institute (GCCSI). Little CCS development is under way anywhere in sub-Saharan Africa as a result of these economic, legal and technological reasons: of 100 CCS projects under development globally mapped by GCCSI, only one – a pilot project in South Africa still in the planning phase – is located in the region.
Another challenge facing blue hydrogen is its residual emissions. Upstream and process emissions of natural gas add 25% to its emissions footprint, meaning significant emissions are released even before gas gets converted to hydrogen. The CCS process itself typically only captures 60–90% of emissions.
The net result is that blue hydrogen is definitely lower-carbon than gas (or coal) but far from zero carbon. This could limit its export potential. As countries and companies around the world adopt net-zero commitments, it is unclear whether they will be willing to import ‘lower-but-not-zero-carbon’ hydrogen – or how long that market will last once the costs of fully zero-carbon green hydrogen start to plunge.
Market uncertainty
Both green and blue hydrogen face large uncertainties. The main question is whether and when the market for low-carbon hydrogen will actually materialise. There have been waves of policy enthusiasm for hydrogen before, without achieving much of a breakthrough. During the last hype cycle on hydrogen in 2008, South Africa published a national hydrogen strategy focused on transport and research. This time round there is more momentum and more investment, but much will depend on whether policy measures are sustained and whether the expected cost reductions are realised.
A further uncertainty is whether there will be scope for global trade in hydrogen, or whether hydrogen production will be localised. Countries such as Portugal are concentrating on producing hydrogen domestically, and see hydrogen as an opportunity to reduce dependence on expensive energy imports. Some other countries, however, are actively pursuing the import route. Germany’s hydrogen strategy is blunt: “in the medium to long term, Germany will import substantial quantities of hydrogen”. The EU’s hydrogen strategy foresees at least 40GW of renewable hydrogen electrolysers within the EU by 2030, coupled with a further 40GW developed outside Europe.
Even where hydrogen is imported, the costs are prohibitive if it needs to travel long distances to reach the end consumer. To be transported by ship, hydrogen needs to be highly pressurised, chilled to -253°C, combined with an organic compound or converted to ammonia. These conversion processes (and re-conversion at the destination) all come with an energy penalty and therefore higher costs.
The costs of transport, conversion and storage could be two or three times higher than the cost of green hydrogen production itself. Unless these costs can be brought down, this negates the advantage of producing green hydrogen in sub-Saharan Africa. Consumers in Europe instead will look to domestic resources and hydrogen from neighbouring regions connected by pipeline (such as North Africa and Ukraine).
There are also political and equity concerns. Exporting electricity in the form of green hydrogen from countries where the majority of the population lack access to electricity is a contentious prospect. In DRC, where a plan is being developed to export green hydrogen from hydropower to Europe, only 10% of households have electricity access – suggesting the resource could be better used closer to home. As Thijs Van der Graaf and colleagues from the University of Ghent in Belgium warn in a recent academic paper on the geopolitics of hydrogen: “to the extent that developing countries are seen solely as the providers of raw materials, the hydrogen revolution carries a risk of ‘green colonialism’.”
Local industry
These factors point to one final route for developing the region’s hydrogen potential: rather than exporting hydrogen, use it for low-carbon industrial production in sub-Saharan Africa itself.
Sub-Saharan Africa is the world’s most commodity-dependent region: 89% of countries there rely on commodities for at least 60% of their exports. Adding hydrogen to the list of the region’s exports may serve to deepen economic exposure to volatile markets.
As costs of green hydrogen come down, countries in sub-Saharan Africa could instead use their low-cost hydrogen potential to develop competitive industries based on clean production.
Industrial processes such as the manufacture of ammonia use hydrogen as a key input, and hydrogen can also be used to generate industrial high-temperature heat. Steelmaking using clean hydrogen is expected to be cost-competitive with coal by the end of the decade.
By exporting low-carbon materials and finished goods rather than hydrogen alone, sub-Saharan African countries create far more added value and high-quality jobs.
For this low carbon industrialisation model to materialise, a change in approach is required, in both the industrial strategies of national governments and in the policies of sub-Saharan Africa’s trading partners. It requires governments to go beyond narrow thinking about how clean hydrogen can be promoted and move to a wider focus on how clean production can be valued, including via international trade. It also requires businesses to prioritise low-carbon goods and materials throughout their supply chains.
The development of the international hydrogen economy is still in its infancy. Due to its plentiful solar and wind resources, sub-Saharan Africa has the potential to be an important actor in low-carbon hydrogen. However, the barriers to exporting hydrogen as a raw commodity are high. Instead, attention should shift to how the region can make use of its green hydrogen resources to power its own economic and industrial development.
