African countries are using special economic zones to grow their green hydrogen sectors.Photo source
When Egypt, a prominent player in green hydrogen development in Africa, recently announced seven new projects worth USD 40 billion to be rolled out over the next 10 years, the projects will be located in one location – Special Economic Zones (SEZs). He said that it is positioned as ).
The new project announced by the Egyptian Cabinet in February, together with ongoing developments not only in Egypt but across Africa, reaffirms Africa's position as a potential major supplier of green hydrogen, especially for Europe. It is something.
The European Investment Bank's 2023 report predicts that Africa could produce more than 50 million tonnes of green hydrogen per year by 2035. Egypt's pipeline projects are valued at US$83 billion as of August 2023.
However, an emerging trend with many African countries investing in new forms of energy is the strategic positioning of green hydrogen projects in special economic zones.
According to Penina Munyaka, a Nairobi-based commercial lawyer and green energy advocate, the reason is simple. Since the development of green hydrogen projects requires huge amounts of capital, host countries are using special economic zones to promote green hydrogen development.
“Extracting green hydrogen requires huge capital investments that are prohibitive for developing countries,” she says.
According to international energy consultancy ET Energy World, the production cost of green hydrogen in developed markets ranges from US$4.10 to US$7 per kg. However, these costs are significantly higher in developing markets such as Africa.
According to the Green Hydrogen Organization, achieving global green hydrogen targets by 2050 will require investments of between US$450 billion and US$900 billion, posing a major challenge for developing markets.
However, African countries are looking to the continent to become a source of supply to developed markets thanks to its huge green energy potential, so they are offering tax incentives and other benefits in special economic zones. We are strategically leveraging our strategic benefits to expand our green hydrogen production capacity.
In the case of Egypt, seven new projects will be established in the Suez Canal Special Economic Zone. But they are not the first in the vast economic region of more than 450 million square meters sandwiched between the Red Sea and the Mediterranean Sea.
President El-Sissi and Norwegian President Jonas Gare Store inaugurated a 100MW green hydrogen plant in the Suez Canal Special Economic Zone during COP 27 in November 2023. India's ReNew has started a 220,000 tonne project in SEZ in 2022.
The 2023 Rystad Energy report identifies more than 20 green hydrogen projects in Egypt, many of which are located within special economic zones. In January 2024, Egypt partnered with Saudi Arabia's ACWA Power on a USD 4 billion green ammonia project, a precursor to green hydrogen production. The Suez Special Economic Zone has also signed on.
A similar strategy is being pursued in neighboring Morocco, which is also rapidly developing as a green hydrogen hub, with the country targeting 1GW of green hydrogen generation capacity by 2040.
Last November, green energy company Gaia Energy partnered with automotive and e-bike cable manufacturer FIT Voltaira Morocco to launch an integrated project on the Tangier Med industrial platform that includes solar power and a green hydrogen plant . Special economic zone.
Morocco World News reported that the massive project will feature a green ammonia plant that will produce 1.4 million tons per year. It will also utilize 2GW of solar power plants and 4GW of wind power projects to supply electricity and process 320,000 tonnes of green hydrogen.
Green hydrogen projects in special economic zones strategically located around ports, such as in Egypt and Morocco, could play an important role in the transportation and export of green hydrogen.
South Africa
In South Africa, the Freeport Saldanha Special Economic Zone is “poised to become one of the pioneers in establishing a green hydrogen hub in southern Africa,” according to a December article in ESI Africa.
“There is an operational port. There is a railway line. But what is important and very compelling is that there is a steel mill. ArcelorMittal has been operating a steel mill for many years,” Freeport said. Casifa Beukas, CEO of Saldanha SEZ, is quoted in the article.
Hive Hydrogen South Africa, a subsidiary of UK Hive Energy, is working on a US$5.8 billion green hydrogen project in the Koga Special Economic Zone.
The project already has an extraction partner, Japanese partner Itochu Corporation, which will extract the green hydrogen produced from the proposed facility under an agreement in 2023.
The proposed Namaqua Special Economic Zone in the Northern Cape will include a 10GW electrolyzer park and green ammonia production plant. Transnet, South Africa's national ports authority, is developing the US$800 million deep-water port Boegoebai and a rail project that will be used to transport and export green hydrogen produced in Namaqua.
South Africa's green hydrogen commercialization strategy includes a provision to “include a GH incentive scheme for both production and local manufacturing with the benefits of appropriate SEZ development”, and the country's Atlantis GreenTech Special Zone It is in a position to provide the industrial facilities necessary for the development of green energy infrastructure. This will also include green hydrogen, said Matthew Cullinan, the zone's chief executive officer.
Meanwhile, Kenya's Green Hydrogen Strategy and Roadmap, announced at the Africa Climate Summit in Nairobi last year, provides clear direction for investors in the sector and provides incentives through export processing zones and special economic zones. providing.
The African Green Hydrogen Alliance, made up of Egypt, Kenya, Mauritania, Morocco, Namibia and South Africa, aims to produce between 30 million and 60 million tonnes of green hydrogen. According to the alliance's website, this could increase GDP by US$66 billion to US$126 billion by 2050, equivalent to 6 to 12 percent of current GDP.
“More commercial incentives should be provided, while ensuring the legal framework is stable, predictable and able to foster new industries,” Munyaka said.
– Torimogatari Agency
Useful link: https://www.reuters.com/world/middle-east/egypt-signs-7-green-hydrogen-mous-worth-potential-40-billion-2024-02-28/
https://www.bird.africanofilter.org/stories/turning-africa-into-green-hydrogen-el-dorado-gets-real-at-cop-27
https://www.bird.africanofilter.org/stories/egypt-deal-takes-africa-s-green-hydrogen-ambitions-to-the-next-level
