Prof Michael Tanchum is a non-resident fellow with the Middle East Institute's Economics and Energy Programme and teaches at Universidad de Navarra in Spain
December 13, 2023
At Cop28, green hydrogen has featured prominently in talks about renewable energy. As discussions veer towards embracing cleaner energy sources, the African continent is poised to become the world’s leading green hydrogen producer.
Africa has the potential to generate a trillion dollars’ worth of green hydrogen by 2035. As hydrogen's rising role in the global energy transition meets Africa’s growing supply capacity, maritime highways are being formed to transport this climate-smart energy carrier from Africa to Europe and Asia.
European and Asian nations have already made multibillion-dollar commitments to green hydrogen strategies to achieve energy transition, and they are now looking to Africa as one of the main suppliers. Africans themselves are eyeing the continent’s potential to power their own development and regard exports as a means of developing renewable energy infrastructure that will also serve domestic needs.
Why has green hydrogen risen to prominence as a component of the global energy transition? For one, it differs from conventional industrial hydrogen, which is produced from natural gas, emitting large volumes of carbon dioxide and earning the label “grey” hydrogen.
When a carbon capture mechanism is used, the resulting lower carbon footprint hydrogen is termed “blue” hydrogen. Instead of using natural gas, green hydrogen is produced by using electricity generated from renewable sources to split water into its hydrogen and oxygen components, creating a virtually carbon-free (hence, “green”) energy carrier. Reversing the process in a fuel cell by recombining green hydrogen and oxygen back into water generates electric current, providing on-demand, climate-smart power.
A bus powered by green hydrogen carries passengers in the city of Palma, Mallorca. AFP
Major Asian economies could turn to Africa’s green hydrogen to fuel their power plants
The most cost-effective way to store and transport green hydrogen is in the form of green ammonia. Since ammonia is a basic input for fertiliser production (70 per cent of global ammonia consumption is for fertilisers) there is already demand for green ammonia.
The importance of making fertiliser with natural gas-free ammonia became clear when Covid-19-related supply shocks in 2021 caused a 400 per cent jump in European natural gas prices, which subsequently shot up the cost of fertilisers. As gas prices skyrocketed further as a result of the Russia-Ukraine war, ammonia and fertiliser plants were shut down in the UK, Spain, France, Italy, Germany and Poland. Understandably, Europe sees investing in green ammonia as a must in order to ensure resilient, sustainable agri-food production.
Green hydrogen can also be a fuel or an electricity source for manufacturing processes, including metals processing. In 2023, Sweden opened Europe’s first green steel production plant. Similarly, green steel complexes are under construction in Spain, France and Germany, as well as South Korea and Japan.
As discussions at Cop28 have emphasised, meeting global 2050 climate targets is non-negotiable. It will require 6.5 billion tonnes of materials – 95 per cent of which will be steel, aluminium and copper. In 2021, the UAE initiated the world’s first green aluminium production when Emirates Global Aluminium produced its trademark CelestiAL aluminium using power from the Mohammed bin Rashid Al Maktoum Solar Park. Solar and wind power from Africa transported as green ammonia would enable European and Asian aluminium manufacturers to do the same. Germany’s metals giant Aurubis has started trial copper wire production powered with ammonia.
Major Asian economies could turn to Africa’s green hydrogen to fuel their power plants. Already Asia’s coal-burning regions are moving towards “co-firing”, using both ammonia and coal in coal-fired power plants. Japan is conducting co-firing test runs with a mix of 20 per cent ammonia and 80 per cent coal.
Japan eyes moving to a 50-50 mix during the 2030s on the way to phasing out coal in favour of 100 per cent ammonia by the 2050s. Japan has signed bilateral agreements to develop an East Asian fuel ammonia ecosystem, including with Indonesia – which burns coal for 62.5 per cent of its power, Singapore – which aspires to be a hydrogen trading hub, and Thailand. To decarbonise by pivoting to fuel ammonia, Asia will need to import African-produced green ammonia.
Africa’s ability to become a green hydrogen powerhouse is due primarily to its deserts. The Sahara, covering 10 nations in North Africa and the Sahel region, possesses the world’s largest solar resources. The solar energy striking the Sahara is 7,000 times greater than the power requirements of the EU at any given moment. Africa’s enormous solar resources are supplemented by vast wind power resources.
Morocco and Egypt are the early leaders in Africa’s drive for green hydrogen. Morocco began its development of green hydrogen production in partnership with Germany in 2018, and it has since moved on to multiple private sector development projects, involving investments from the Netherlands, Italy, Portugal and the EU.
Its largest green ammonia project to date, the Irish-Portuguese Hevo facility, is slated to have an initial annual capacity of 183,000 tonnes by 2026. With the country’s total production of green ammonia rising to 1 million tonnes by 2027 and reaching 3 million tonnes by 2032, Morocco could export 1-3 million tonnes annually.
Namibian President Hage Geingob, right, and Belgian Prime Minister Alexander De Croo visit the Port of Antwerp and its hydrogen filling station in February 2022. AFP
Egypt, Africa’s second-largest natural gas producer, is the world’s seventh-largest producer of conventional ammonia. Cairo aims to use part of Egypt’s solar and wind power generation capacity to capture 5-8 per cent of the global commercial market for green hydrogen. Egypt has signed framework agreements to build green hydrogen plants with the renewable energy subsidiary of Australia’s iron ore producer Fortescue along with firms in India, the UAE, Saudi Arabia, the UK and France. The agreement signed with a Masdar-led consortium is ambitious, committing to build two green hydrogen plants.
Mauritania is the green hydrogen powerhouse of the Sahel. Possessing solar and wind resources similar to its North African neighbours, Mauritania’s population is seven times smaller than Morocco and 20 times smaller than Egypt. Sparsely inhabited Mauritania can more easily serve export markets while using the same infrastructure to provide for the needs of its own five million citizens. Firms from the UAE, Egypt, Germany, France and the UK have invested in constructing green ammonia plants in the country while the Port of Rotterdam has already signed an MoU with one of those Mauritanian facilities to offtake up to 600,000 tonnes of green hydrogen annually.
South of the Sahel, Namibia has become Africa’s green hydrogen leader, enjoying strong German and EU support. With 2.7 million citizens, sparsely populated Namibia, like Mauritania, can satisfy its own domestic needs while supporting a robust export market. South Africa aspires to leverage its pre-existing mining export industries to develop a green hydrogen export sector, perhaps forming a southern Africa green hydrogen hub with Namibia. Centred on a cluster of key projects, the largest is slated to produce 780,000 tonnes of green ammonia annually.
In East Africa, Kenya holds the potential to lead green hydrogen exports to European and Indo-Pacific markets. Beyond solar and wind, Kenya is the world’s seventh-largest geothermal power producer and has signed an agreement with Fortescue’s renewable arm to create a green ammonia plant powered by geothermal energy.
By 2050, global hydrogen demand is forecast to reach 500-680 million tonnes. Global trade in hydrogen by 2050 is projected to generate more than $280 billion in annual export revenues. Beyond helping to de-carbonise the planet, African nations and their international partners leading the creation of Africa’s green hydrogen highways to Europe and Asia will stand to reap enormous economic rewards.
Prof Tanchum would like to thank Emilija Zebrauskaite for her research assistance.
UAE currency: the story behind the money in your pockets
Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
Premier League-standard football pitch
400m Olympic running track
NBA-spec basketball court with auditorium
600-seat auditorium
Spaces for historical and cultural exploration
An elevated football field that doubles as a helipad
Specialist robotics and science laboratories
AR and VR-enabled learning centres
Disruption Lab and Research Centre for developing entrepreneurial skills
Get inspired
Here are a couple of Valentine’s Day food products that may or may not go the distance (but have got the internet talking anyway).
Sourdough sentiments: Marks & Spencer in the United Kingdom has introduced a slow-baked sourdough loaf dusted with flour to spell out I (heart) you, at £2 (Dh9.5). While it’s not available in the UAE, there’s nothing to stop you taking the idea and creating your own message of love, stencilled on breakfast-inbed toast.
Crisps playing cupid: Crisp company Tyrells has added a spicy addition to its range for Valentine’s Day. The brand describes the new honey and chilli flavour on Twitter as: “A tenderly bracing duo of the tantalising tingle of chilli with sweet and sticky honey. A helping hand to get your heart racing.” Again, not on sale here, but if you’re tempted you could certainly fashion your own flavour mix (spicy Cheetos and caramel popcorn, anyone?).
Starring: Mads Mikkelson, Eddie Redmayne, Ezra Miller, Jude Law
Classification of skills
A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation.
A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.
The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000.
Fourth-round clashes for British players
- Andy Murray (1) v Benoit Paire, Centre Court (not before 4pm)
- Johanna Konta (6) v Caroline Garcia (21), Court 1 (4pm)
MATCH INFO
Manchester United 1 (Rashford 36')
Liverpool 1 (Lallana 84')
Man of the match: Marcus Rashford (Manchester United)
The biog
Most memorable achievement: Leading my first city-wide charity campaign in Toronto holds a special place in my heart. It was for Amnesty International’s Stop Violence Against Women program and showed me the power of how communities can come together in the smallest ways to have such wide impact.
Favourite film: Childhood favourite would be Disney’s Jungle Book and classic favourite Gone With The Wind.
Favourite book: To Kill A Mockingbird for a timeless story on justice and courage and Harry Potters for my love of all things magical.
Favourite quote: “We make a living by what we get, but we make a life by what we give.” — Winston Churchill
Favourite food: Dim sum
Favourite place to travel to: Anywhere with natural beauty, wildlife and awe-inspiring sunsets.
Dust and sand storms compared
Sand storm
Particle size: Larger, heavier sand grains
Visibility: Often dramatic with thick "walls" of sand
Duration: Short-lived, typically localised
Travel distance: Limited
Source: Open desert areas with strong winds
Dust storm
Particle size: Much finer, lightweight particles
Visibility: Hazy skies but less intense
Duration: Can linger for days
Travel distance: Long-range, up to thousands of kilometres
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Russ Mould, investment director at online trading platform AJ Bell, says almost every major currency has challenges right now. “The US has a huge budget deficit, the euro faces political friction and poor growth, sterling is bogged down by Brexit, China’s renminbi is hit by debt fears while slowing Chinese growth is hurting commodity exporters like Australia and Canada.”
Most countries now actively want a weak currency to make their exports more competitive. “China seems happy to let the renminbi drift lower, the Swiss are still running quantitative easing at full tilt and central bankers everywhere are actively talking down their currencies or offering only limited support," says Mr Mould.
This is a race to the bottom, and everybody wants to be a winner.
