The role countries will play in future green hydrogen industrial market are mainly focussed on three key applications: ammonia, methanol, and steel production.
These sectors are among the largest consumers of hydrogen, accounting for about 41% of global demand, and are expected to increase their shares due to global decarbonisation efforts.
However low-carbon transition in existing energy value chains will also give rise to new market and geopolitical dynamics and dependencies. Key geopolitical trends will shape international relations in the upcoming decades, with countries competing for industrial leadership, markets, and opportunities for job creation.
Only a partial quantity of countries, including China and the United States, will arise as indistinct frontrunners, since these nations have vast resource endowments and substantial market stakes in today’s hydrogen industrial applications that would enable them to assimilate the green hydrogen value chain segments of production and industrial applications.
Most countries that currently have highly developed ammonia, methanol, or steel industries, such as Saudi Arabia, Japan, and Germany, are natural resource constrained and would be contingent on green hydrogen imports in order to meet their hydrogen demands. Hence, from a geopolitical viewpoint, reliance and supply disruption risks will likely persevere in a low-carbon energy world, but will be dissimilar from those of today. These new geopolitical dependencies will construct novice alliances and will also be a function of upcoming market arrangements.
Many developing countries in Africa, will be fractional to green hydrogen exports since they are muscled to not compete in value-added segments of the value chain, because setting up these industries are capital intensive that requires huge financial inputs. The assurance of sustainable development and green industrialization, often linked with the energy transition can only be met with bilateral agreements that carefully ruminates mutually beneficial gains.
The hydrogen business will most likely be more competitive and less lucrative than oil and gas in the interim, because the distinct difference is Hydrogen Production being a conversion which is not an extraction business such as oil and gas, plus it has the potential to be produced in many places globally. Moreover, as the costs of green hydrogen fall, because it must to gain sustainability, new and diverse participants will enter the market, making hydrogen even more competitive.
Hydrogen trade and investment movements will brood novice avenues of interdependence, which will influence bilateral relations. These bilateral deals will be different from the hydrocarbon-based energy relationships, because the economic ties between countries will transition, so will their political positions and affiliations.
Self-Sustaining Green Hydrogen Economy where by fostering growth and innovation through domestic uptake will reduce their reliance on exports, create job opportunities to withstand global economic fluctuations and ensure long-term stability. At the same time, while the idea of autarky may seem appealing, it is essential to strike a balance between self-sufficiency and international trade.
Engaging in global markets can bring benefits such as access to new technologies, diverse sources of capital, and a broader customer base. But regardless of the favourable prospects, shipping of green hydrogen remains challenging mainly due to the high cost of production and transportation when compared to Natural Gas and Fossil Fuels.
While it can be transported through pipelines, the associated costs remain significantly high, hence Green Hydrogen Industrial Cluster Model (GHIC) which facilitates local utilization of produced H2. This model aims to enhance the feasibility of green hydrogen applications and underwrite to the overall success of Green Hydrogen Industrial Clusters (GHIC). GHIC boosts partnerships and synergies among industries within a joint geographic zone, by leveraging synergies with other manufacturing companies, sharing infrastructure and crafting a more cohesive, sustainable industrialised ecosystem.
For African countries such as Namibia which is endowed with vast renewable energy sources, the next move must be to attract further foreign direct investment to setup manufacturing industries that are energy intensive which runs on the backbone of Mega Green Energy plants such as the Hyphen Green Hydrogen Plant.
By localising industrial facilities near to low-cost green hydrogen production, will create value by increasing Namibia’s control over its supply chains in the event drastically abate green hydrogen transportation costs and stimulate industrious economic activity within the country as oppose to core focus on hydrogen exports.
One such Industry that can momentously benefit from the GHIC in Namibia, is steel manufacturing. As per Volza’s import data, Steel import shipments in Namibia stood at 110.5K, imported by 4,491 Namibia Importers from 9,899 Suppliers. Namibia imports most of its Steel from Vietnam, South Africa and China. Now Lodestone’s Dordabis iron ore mine is a small mine that produced 4,000 tons of low-grade iron ore when it started. It is Namibia’s only iron ore mine and also produces magnetite and hematite products.
Ohorongo mine procures magnetite from this mine for cement manufacturing. Now Namibia can equally create massive employment opportunities and produce high quality steel for both domestic and international markets. Hydrogen provides the possibility to completely redesign the process of steelmaking. The magic of green hydrogen is that it can make the entire process almost carbon-free.
As high-grade iron ore reserves continue to deplete globally, as per recent data, steel industries are compelled to use low-grade iron ores such as that of Lodestone Mine in order to meet consistent raw material inputs.
The Steel Manufacturing can also procure iron ore from neighbouring countries in Africa such as South Africa in order to manufacture steel sustainably and make significant contributions to Namibia’s GDP.
*Quinton Amen-Ra Chinuru Adolf is a Published Author of 2 Books, Social Entrepreneur, Thought Leader of “Green Economy 4 Africa” and Project Manager of B1MNP
