A bold plan to create a global green center in the Namibian desert

In early May, King Philippe of Belgium was on the edge of the Namib Desert to inaugurate a project that will help decarbonize European industry and that may just enable one of Africa’s smallest economies to go big on clean energy.

It was a modest beginning for such grand projects, as Namibian President Nangolo Mbumba hosted the king at an unfinished site near the South Atlantic port of Walvis Bay, amid burning rust-colored sand dunes, silent except for the occasional truck passing by on the road.

However, Philippe was just another in a string of European dignitaries who bought into Namibia’s grandiose plans to become a so-called green hydrogen hub. It’s a technology that critics consider a commercial illusion, but whose political and corporate supporters believe it could be the answer to cleaner shipping and heavy industry.

“We are really committed to this hydrogen and green hydrogen journey,” Belgian Energy Minister Tinne Van der Straeten said in an interview at the project site, known as Cleanergy Solutions.

From humble beginnings, Namibia is committed to shaping an entirely new supply chain – from the production of hydrogen converted into ammonia for transport, to related “green” products – that will put Namibia at the forefront of emerging clean technology, and finally put it on the map.

Europe, for its part, sees a way to continue the green transition and increase energy security after the loss of natural gas from Russia. The European Investment Bank pledged a loan of 500 million euros ($544 million) for green hydrogen development in Namibia, and Dutch company Invest International contributed to a planned $1 billion hydrogen fund in Namibia.

Cleanergy, a venture between Antwerp-based shipping company Compagnie Maritime Belge SA (CMB) and local company Ohlthaver & List Group, will be the first commercial green hydrogen power plant in Namibia. Built at a cost of $30 million and partially financed by a $10 million loan from the German government, this is just the beginning: CMB intends to raise $3.5 billion to build an ammonia plant that will connect to a new storage and export facility planned by the Port of Germany. Antwerp-Bruges.

“Our customers are asking us to clean up our activities to make sure we do not emit CO2₂ no longer exists, so we need to find an alternative to diesel,” said Alexander Saverys, CEO of CMB, explaining the almost 130-year-old company’s decision to switch to green hydrogen.

Five years ago, CMB approached manufacturers about green hydrogen and ammonia. “Everyone laughed and everyone said, ‘No, it doesn’t exist,’” Saverys recalled. CMB has therefore developed its own production and is now increasing it: CMB, which operates 200 ships worldwide, has ordered 45 ammonia-fueled ships from China. This requires investment “in a country where there is plenty of cheap renewable energy, and that country is Namibia,” he said.

It’s a prospect that could transform a nation of 2.8 million with a gross domestic product of about $13 billion, or about one-third the value of Vermont, the smallest economy of any U.S. state.

If anything, Namibia is known for its desolation – it is home to one of the driest deserts in the world, the Namib, and is one of the least populated countries on Earth. It is the availability of land, combined with plenty of sun and wind, that offers such opportunities even in the face of competition from countries such as Chile, Saudi Arabia and Namibia’s neighbor South Africa.

According to a World Bank study, the southern African country has the world’s largest solar energy potential, and its abundant land is largely owned by the government, which supports the development of the industry. The South West African People’s Organization has governed the country since it gained independence from South Africa in 1990, providing investors with certainty of political stability.

The plan is to harness solar energy from the Namib Islands by erecting a wide range of panels that direct the energy to electrolyzers that break down water into its component molecules, hydrogen and oxygen, without climate-warming emissions. The product will then be converted into green ammonia, loaded onto tankers at new ports planned by the companies operating the ports of Rotterdam and Antwerp – Europe’s No. 1 and 2 ports respectively – and transported north to Europe.

While the sparse landscape is an advantage for clean energy production, profiting from the lunar void of Namibia, a country largely dependent on metals, diamonds, tourism and fishing, has historically proven to be a challenge. The government’s risk is that hydrogen production costs will fall at the same time as the European Union imposes stricter rules on the use of fossil fuels in energy sectors, such as the chemicals cluster around Antwerp and Germany’s Ruhr area.

The government in Windhoek has other options, notably a number of offshore oil fields that could be developed by TotalEnergys SE and Shell Plc, along with other oil majors willing to participate in field assessments. Early estimates ran into the billions of barrels, and any projects would have to overcome falling demand for fossil fuels. This continues to force Namibia to find new impetus for growth in the face of the country’s limited skills base and worrying vulnerability to climate change.

“Either we sit back and let you try to decarbonize your factories, or we also use the natural resources that we have, our great wind, our great sun or our minerals, to actively contribute to reducing this existential threat to our people,” said James Mnyupe, Namibia’s commissioner for . green hydrogen that is on a first-name basis with EU energy ministers thanks to a flurry of fundraising visits.

The government estimates that the size of the economy could double as a result. Moreover, “excess electrons” can be exported, alleviating regional energy insecurity, Energy Minister Tom Alweendo said at the World Hydrogen Summit in Rotterdam.

The planned location of CMB’s main facility, approximately 50 miles northeast of Walvis Bay, reflects the race of global economic powers for Africa’s resources.

Situated on the desert plains that cover most of the central Namib, the site is near Arandis, an almost abandoned settlement whose name in the ancient Khoekhoe language means “the place where people cry.” Arandis lies between Husab and Rossing, the world’s No. 2 and No. 6 uranium mines, both owned by Chinese companies. Chinese investors also purchased Namibian gold assets.

Europe’s attempt to profit from Namibia’s resources is not without sensitivity, given its colonial past: Germany, the former colonizer, has admitted to committing genocide against the Herero and Nama people in the early 20th century, and issues of reparation are still under discussion.

This does not stand in the way of a development that could radically change Namibia’s prospects – the $10 billion Hyphen project in which Germany’s Enertrag SE is investing. German Foreign Minister Annalena Baerbock praised the event as “a further impetus for our cooperation on hydrogen, the fuel of the future.” In March, the government said it planned to grant Hyphen status of strategic importance, paving the way for greater state support.

In the first phase, the Hyphen facility will be powered by 3.5 gigawatts of power from wind and solar projects, more than half the capacity of large renewable plants being built in South Africa, the continent’s most industrialized country.

Lüderitz, a remote seaside outpost south of Walvis Bay at the end of a decommissioned railway line, is the site of an entire vertically integrated industry whose operations until recently included processing sealskins, and the nearby ghost town is a testament to the rise and fall of the diamond trade.

This is where Hyphen plans to employ 15,000 workers for at least four years to build a factory that will produce enough hydrogen to produce one million tonnes of ammonia a year, then doubling that number in a second phase. This would represent a significant portion of the up to 15 million tonnes of “green ammonia” that the International Energy Agency predicts will be produced globally by 2030.

The Port of Rotterdam is supporting Hyphen and state-owned Namport to identify the infrastructure needed in Lüderitz to enable the import of massive wind turbine blades and other equipment. He also pledged to help find the necessary financing.

Namibia takes over 24% of the share capital and has even greater plans. With the help of McKinsey & Co. has developed a strategy that envisages three hydrogen production zones along the coast in a plan that includes mineral refining and renewable energy equipment production, as well as pilot programs for hydrogen-powered trains and utilities.

Hyphen, says CEO Marco Raffinetti, will be “the catalyst for the first hydrogen valley.”

However, none of this will leave the drawing board without secure financing, which means lining up customers who agree to binding contracts to purchase the green hydrogen produced. The high level of concessional financing may play a role, according to Raffinetti, who said Belgians, Dutch, Japanese and South Koreans have shown interest.

“It’s not a complete fantasy. There are some advantages to what Namibia is doing,” said Martin Tengler, an analyst at BloombergNEF. “The most important thing for them will be to find a buyer for the hydrogen they will produce.”

Germany is pushing hard to create a global hydrogen market, paying €3 billion in direct subsidies to help steelmakers go green and launching a large-scale financing program to boost demand in Europe’s largest economy. On May 29, the government, under the aegis of the Minister of Economy, Robert Habeck – another guest in Namibia – adopted a bill aimed at accelerating hydrogen projects, including facilitating the creation of import and storage infrastructure.

Even though the technology is still developing, European industries facing stringent climate regulations may have no other options.

“You can’t electrify these industries,” said Jacques Vandermeiren, director general of the port of Antwerp-Bruges. “You’ll have to bring the green particles.”

If Namibia’s green hydrogen gambit actually pays off, it could foster decades of development. According to Trevino Forbes, mayor of Walvis Bay, Namibia needs development wherever it can. The goal must be to “use this resource of ours,” he said.

Bloomberg News 2024 Distributed by Tribune Content Agency, LLC.