Not simply scorching air: Realising the potential of the EU-Namibia inexperienced hydrogen partnership

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Renewable hydrogen is anticipated to be a key gasoline within the inexperienced transition –  the European Union estimates that it might make up 20 per cent of its power combine by 2050. As such, the EU is strengthening its strategic renewable hydrogen partnership with Namibia, a rustic wealthy in renewable power assets and capable of produce clear hydrogen at aggressive costs. This partnership hinges on their completely different priorities: the EU must safe entry to various power sources, partially, by means of importing renewable hydrogen from value aggressive sources whereas upholding sustainability requirements. Namibia, alternatively, desires the export of renewable hydrogen to result in elevated industrialisation, financial development, and improvement by means of larger entry to power and water, job creation, and abilities coaching.

The partnership turned extra concrete with the current launch of the operational roadmap in October, making Namibia the one African nation with such settlement. The roadmap particulars the steps required between this 12 months and 2025 for the event of inexperienced industrialisation and decarbonisation by means of renewable hydrogen and uncooked supplies. Whereas this progress is laudable, the general situations and priorities which is able to information the plan’s implementation ought to be clearer and extra life like to keep away from market gaps and wasted manufacturing. This contains defining the situations for commerce, making extra danger capital obtainable, sustaining affordability and competitiveness, and making certain a steady regulatory surroundings.

Unlocking the roadmap

Defining buying and selling situations

Because the partnership stands, its commerce situations for hydrogen are ambiguous and the buying and selling criterion is cut up between their respective priorities: the promotion of sustainable improvement by means of power entry and financial improvement in Namibia, and the EU’s need for decarbonised power safety and expertise management. As a substitute, the European and Namibian governments ought to work collectively to combine and make clear the buying and selling criterion in an import-export framework. Other than attaining power safety and decarbonising the EU, hydrogen manufacturing and commerce also needs to be assessed on its contribution to Namibia’s economic system, for instance, by means of stimulating financial development, job creation, and innovation. Attaining this depends on the correct enforcement of related frameworks and their supporting insurance policies, rules, and quota regimes on the EU and Namibian nationwide authorities ranges.

Commerce also needs to work in the direction of attaining common power entry and financial progress. This may require that renewable hydrogen can be utilized in Namibia’s power combine to help electrical energy provide and for industrial processes, like inexperienced metal manufacturing. To attain such situations, the EU ought to additional help Namibia by offering the wanted gear, investing in coaching in order that Namibia has the fitting native labour for the tasks, and supporting analysis and improvement. For the EU, establishing further frameworks for quantifying its mitigated CO2 are additionally necessary in discounting local weather mitigation efforts.

Making extra danger capital obtainable

Hydrogen presents a ‘chicken-or-egg’ downside, the place each demand and provide should be developed concurrently. EU demand is rising to be fairly concrete, with the European Fee planning to import 10 million tonnes of hydrogen yearly by 2030 (out of 20 million tonnes estimated consumption) to gasoline sectors equivalent to transport and manufacturing. However, Namibia’s provide of large-scale renewable hydrogen for native use and for export into the EU isn’t but firmly established. It requires extra certainty over sources of financing, funding, and infrastructures equivalent to roads and ports. The excessive funding danger of renewable hydrogen improvement signifies that finance from the EU within the type of concessional loans, grants, and blended funds from EU Growth Finance establishments (DFIs), and export credit from Export Credit score Companies (ECAs) will play a significant position, particularly on the early building phases of the tasks. The EU has already promised to mobilise €1 billion of private and non-private funding for renewable hydrogen and uncooked supplies infrastructure in Namibia. The German authorities has already agreed to speculate €40m in Namibia’s renewable hydrogen manufacturing and supply technical and monetary help. State-backed corporations within the Netherlands have additionally created a €1 billion sovereign wealth fund in partnership with the Namibian authorities for renewable hydrogen improvement within the nation. Whereas these commitments increase developer confidence, they need to be redeemed in good time to unlock additional financing from industrial banks and the non-public sector and to scale back the time lag on reaching remaining funding choices to make sure long-term provide.

Sustaining affordability and value competitiveness

Affordability and market ramp-up are interlinked: exorbitant hydrogen costs might jeopardise competitiveness and industrialisation. Low costs, alternatively, create further incentives for sectors to modify to hydrogen. The affordability of renewable hydrogen from the Namibian facet is subsequently a significant goal. Import costs are primarily pushed by manufacturing and transport prices. Namibia has excessive wind speeds and greater than 3,500 hours of sunshine per 12 months, coupled with huge unused area for scale-up, it’s potential to supply clear hydrogen to for round €1.50 to €2.00, probably the most aggressive value globally. Nonetheless, not sufficient consideration has been paid to the planning and building of transport infrastructure for export. The feasibility of delivery derivatives continues to be being researched, whereas transporting within the type of ammonia or by means of pipelines might elevate prices. Given Namibia’s distance from Europe, the transport price for exporting clear hydrogen derivatives to the EU must be factored in and can want be aggressive as a way to meet the EU’s demand at reasonably priced costs.

The EU ought to make sure that its rules are sensible, adaptable, clear, and evidence-based to successfully govern renewable hydrogen commerce with Namibia

Sustaining a steady regulatory surroundings

Other than the present world financial uncertainty, disruptions to commerce can even stem from the  EU’s at occasions rigid rules and extreme bureaucratic procedures. As such, the suitability and adaptableness of rules, financial and funding insurance policies, and commerce routes from Namibia to Europe are necessary situations for unlocking the partnership’s objectives. The EU ought to make sure that its rules are sensible, adaptable, clear, and evidence-based to successfully govern renewable hydrogen commerce with Namibia. On the identical time, Namibia might want to keep its political stability by means of inclusive authorities insurance policies and truthful political energy transitions, whereas working in the direction of attaining dependable exports, and steady transport corridors to proceed commerce with the EU. To help this, Namibia might want to amend sure legal guidelines and acts to replicate present plans for clear hydrogen improvement and export, together with the water useful resource administration acts of 2004 and 2013, the electrical energy act of 2007, the requirements act of 2005, and the equitable financial empowerment invoice of 2016.

Marching on with the partnership

The present enthusiasm within the improvement of fresh hydrogen presents a as soon as in a lifetime, alternative for large-scale cooperation between the EU and Namibia. Namibia is presently amongst international locations within the Africa-Europe Funding Bundle of the EU’s International Gateway technique, which offers a leveraging alternative to actualise the partnership’s ambitions. The EU’s help is essential, particularly in delivering wanted co-investment and danger financing to Namibian builders and traders to scale back dangers and monetary burden on mission improvement and to keep away from further prices and delays in manufacturing and export. The EU’s reluctancy or delay in delivering these commitments will danger making room for different traders who might not have sustainability as their main intention, whereas additionally placing the EU’s cordial and longstanding relationship with Namibia in danger. And for the EU, it might lose out on an enormous alternative to pursue its decarbonisation objectives at aggressive costs.

Total, whereas some progress is already being made in implementing the partnership’s motion plan,  extra efforts to match promised funds and investments with precise disbursement, make clear buying and selling phrases, plan infrastructures to make sure affordability, and keep rules on each side, have to comply with go well with.

The European Council on International Relations doesn’t take collective positions. ECFR publications solely signify the views of their particular person authors.


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