African countries could meet 22pc of the expected international cross-border hydrogen and derivatives trade by 2050, according to a report from the Africa Green Hydrogen Alliance (AGHA), a group of six African countries looking to promote regional development of the fuel.

A separate report by consultancy Mckinsey found global hydrogen demand could reach 607mn t/yr by 2050, although this is at the higher end of a range of demand figures published by other organisations.

Local supply will mee the bulk of global demand. But international cross-border trade for hydrogen and its derivatives is expected by Mckinsey to reach 100–180mn t/yr by 2050, with the majority of growth occurring between 2030 and 2050.

Around 20–40mn t/yr of this trade—approximately two-thirds of the 30–60mn t/yr of hydrogen Africa will produce—can be met by exports from AGHA member countries, according to the report, titled Africa’s Green Hydrogen Potential. Most of this export growth will come in the 2030–50 period, with production in the region forecast by the AGHA report at just 6mn t/yr in 2030. 

Capturing this whole market by 2050 would require 510–975GW of renewable energy capacity and 290–560GW of electrolyser capacity.

607mn t/yr – Potential global hydrogen demand by 2050

It would also require a significant investment of $450–900bn by the target date. Approximately 70pc of the investment would be spent on renewable energy and electrolysis capacity-building.

Delivering on the 30–60mn t/yr ambition could add $66–126bn to the GDP of AGHA member countries in 2050.

“Green hydrogen offers an opportunity to develop clean energy-intensive industries in AGHA member countries that are competitive in the European markets, in particular those with high carbon prices,” says the AGHA report.

Overcoming barriers

To meet these targets, African countries must overcome interlinked challenges that include climate change, low economic growth and difficulty securing investment.

Funding would likely need to be made available at the national level to develop critical infrastructure, and access to financing for private ventures would need to be facilitated. As much as 70pc of the required funding is likely to need to come from foreign direct investment.

While this is possible, it would require political stability and relationship-building with investors.

The AGHA report projects that green hydrogen production costs will fall to below $2/kg for Morocco, Mauritania, Egypt, Namibia and South Africa by 2030 and below $1.3/kg by 2050.

“Several AGHA members could be competitive in ammonia shipments to Europe,” says the report. “The market share would therefore not only be dictated by cost competitiveness, but also by the ability of producing nations to become credible suppliers.”

North African countries such as Egypt and Morocco would look to export to Europe, mainly through new or existing pipelines. Hydrogen and ammonia shipments from southern Africa, mainly Namibia and South Africa, will mostly be directed to the Japanese, South Korean and Southeast Asian markets.

Developing market

A raft of memorandums of understanding (MoUs) were signed to develop hydrogen projects at the recent Cop27 talks in Egypt.

But taking green hydrogen in North Africa from MoUs to production and exports at scale is unlikely without a regional strategy to meet future EU demand, according to a report from consultancy Verisk Maplecroft.

The report identifies Namibia as one of the few countries likely to become viable exporter on the continent, due to the political and economic realities of project development in the region.

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Author: Tom Young