Government has cast its net on the benefits it intends to derive from the hugely anticipated green hydrogen endeavour, with a draft local content policy having been finalised amid stakeholder engagements to frame a Synthetic Fuels Act.
This was last week revealed by Carlo McLeod, Deputy Director, Compliance, Regulations and Economics, Ministry of Mines and Energy at the Invest in Namibia Roundtable, which was a side event of the recently held Africa Energy Indaba, at the Cape Town International Convention Centre.
“We don’t want to depend on taxes and royalties but gain more value from backwards, forwards, and sideways integration. The policy will spell out obligations that companies must meet regarding investments, value creation, skill creation, and knowledge transfer,” he said.
Similarly, Frans Kalenga, Senior Manager, Sustainable Energies, NAMCOR said stakeholder engagements to frame a Synthetic Fuels Act have already commenced, and the details are expected to be finalised by the second quarter of this year.
“The Act will spell out details regarding incentives, corporate tax, royalty, and competitive advantages with other jurisdictions, etc.”
Benedict Libanda, CEO of Environmental Investment Fund at the same event also said 30 percent of the procurement would be reserved for local industries.
Business Express also reported that Namibia expects to sign the implementation agreement for its US$10 billion (approximately N$190 billion) green hydrogen project in the second quarter of 2023 and commence feasibility studies.
Last month, the project promoter, Hyphen Hydrogen Energy, signed two memorandums of understanding (MOUs) with a major chemical company, name withheld, and South Korean hydrogen producer Approtium for a total annual offtake of 750,000 million tonnes of green ammonia.
At full development, the project will produce 300,000 metric tonnes of green hydrogen annually from 5-6 gigawatts (GW) of renewables and 3GW electrolyser capacity.
“We believe that our energy mix will be predominantly green by 2040. Namibia has high, constant wind speeds, particularly on the south coast. It has the highest potential [in the world] for PV [photovoltaic solar] output,” Namibia Investment Promotion and Development Board (NIPDB) executive director: investments and new ventures François van Schalkwyk said.
One key function of renewable energy in Namibia would be to produce green hydrogen and ammonia, stressed Van Schalkwyk. Initial production of green hydrogen was expected to begin in 2026. The first full-scale plant should be completely operational by 2030.
“We are really confident that we can produce green hydrogen for between N$25 and N$33,” he stated. “We’re quite confident we’ll be one of the cheapest locations, alongside, perhaps, Chile, to produce hydrogen,” van Schalkwyk further said.
In August 2022, it was reported that four German-funded pilots worth €30 million for hydrogen dual fuel locomotives, refuelling stations, and agriculture and port applications are underway in Namibia.
Although the green hydrogen sector currently represents less than 1% of global hydrogen production, African countries including Egypt, Morocco and South Africa are all attracted to its potential in a world shifting towards renewable energies.
The World Platinum Investment Council estimates that the sector will be worth US$2.5 trillion by 2050, supporting 30m jobs. Japan alone is planning to import up to 800,000 tonnes of the product annually from 2030.
At present, global hydrogen production is based on stripping hydrogen from fossil fuels such as methane, natural gas or coal. In contrast, green hydrogen energy is produced using electrolysis, a process that separates hydrogen molecules from desalinated water using wind turbines or solar energy.
This process converts electrical energy into chemical energy without carbon emissions. The hydrogen recovered makes it possible to obtain energy in two ways: through its direct combustion with oxygen or in the form of electricity via a fuel cell.
Green hydrogen may be used to decarbonise sectors which are hard to electrify, such as steel and cement production and has widespread possible applications in the transport sector, thus helping to limit climate change.