The disruptive potential of African hydrogen in the energy and chemical industry
Hydrogen gas () is mainly used in the (petro)chemical industry, with China leading the charge by consuming 23.9 million tonnes per year of the 87.2 million tonnes globally. Hydrogen can be used for the production of fertilizers, ammonia and fuel as well, having the capacity to generate heat of more than 1000°C without emitting CO2. Driven by the world’s efforts to achieve net zero emission by the middle of this century, hydrogen gas could have a big impact on the energy and chemical industry, provided it can be synthesized with green energy. Africa could be the ideal candidate and cause a disruption in these industries as we know it.
Hydrogen gas can be extracted from water () and fossil fuels by adding energy. This process can occur through methods such as steam-methane reforming or electrolysis. When using water, the source of the energy provided to create hydrogen gas, determines its ‘climate rating’. Green hydrogen is synthesized with renewable energy and has no impact on climate change throughout its entire manufacturing and use. t is not surprising that green hydrogen has captured the interest of the chemical industry as the ideal renewable alternative for their daily operations. The energy sector is intrigued as well. Green hydrogen is projected to account for between 12% and 22% of the world's final energy demand by 2050.
Hydrogen demand in 2020, million tonnes per year.
Source: IRENA (2022)
The primary barrier to producing hydrogen gas on the provider side has been the cost of renewable energy. However, technological advancements over recent decades have made the extraction of green hydrogen more economical. While challenges related to the cost of transportation, efficiency, and storage persist, there is little doubt that green hydrogen will play a significant role in shaping the future. Africa is well-placed to leverage its green hydrogen potential to jumpstart its economy.
Africa possesses immense potential for renewable solar energy, as explored in our previous weekly article, "How Exporting Solar Power Can Become a Game Changer for Africa." Consequently, the continent also has a substantial opportunity to produce green hydrogen.
Technical potential for producing green hydrogen under USD 1.5/kg by 2050 in exajoule.
Source: IRENA (2022)
Africa has the potential to become the world's leading hydrogen exporter, thereby altering the current export-import dynamic. Presently, Europe is a significant exporter, but it is likely to transition to an importer soon, shifting its focus from hydrogen production to the development and ownership of patents. The advantages for Africa in becoming the global front-runner in green hydrogen production extend beyond energy independence, which is, without question, a significant benefit. An even greater economic impact may result from industries relocating to African nations. After producing green hydrogen, the transportation of the product is necessary, either as pure hydrogen or in a transformed state, such as ammonia. Given the high transportation costs, it could prove more cost-effective for end users to move their operations closer to green hydrogen facilities. For centuries, access to energy has been a decisive factor in the placement of industrial activities. The high cost of transporting coal led steel manufacturers to establish operations near coal mines. Even if hydrogen still requires exporting, which will be the case for certain uses, the African shipping sector stands to offer tremendous opportunities for expansion.
Africa possesses all the necessary technological credentials to emerge as an important player in the pivotal green hydrogen industry. Countries such as Morocco and Namibia have already embarked on hydrogen projects. At present, the primary obstacle to realizing this transformative opportunity for Africa is the business environment. Elevated investment costs, stemming from increased risk premiums, have rendered investors hesitant. However, as global demand for green hydrogen escalates, industries may become emboldened to take the leap, thereby unlocking Africa's considerable hydrogen potential and sparking exponential growth for the continent.