Staff Reporter
WINDHOEK, November 25 — The collaboration between the European Union (EU) and Namibia to drive green industrialization and decarbonization through renewable hydrogen production and raw materials is a promising endeavour. This partnership not only addresses the EU’s energy security needs but also supports Namibia’s economic growth and sustainable development. However, for its effectiveness and long-term success, the roadmap for this partnership needs clearer planning, more realistic conditions, and a focused approach to unlocking market potential.
Defining Trade Conditions: Striking a Balanced Approach
The existing trade conditions for hydrogen within the partnership lack clarity, leading to ambiguity for market participants. The EU aims for energy security and technological leadership, while Namibia emphasizes sustainable development through energy access and economic growth. Bridging this gap requires the integration and clarification of trade criteria within an import-export framework.
This framework should not only align with the EU’s decarbonization goals but also evaluate hydrogen production and trade’s contribution to Namibia’s economy, encompassing job creation, innovation, and economic growth. Achieving this balance mandates the enforcement of relevant frameworks, policies, regulations, and quota regimes at both EU and Namibian national levels.
Making Risk Capital Available: Resolving the ‘Chicken-or-Egg’ Dilemma
Hydrogen development faces a ‘chicken-or-egg’ problem, necessitating the simultaneous development of demand and supply. While EU demand is emerging, Namibia’s supply of large-scale renewable hydrogen for domestic use and export is still in its early stages.
Addressing this challenge requires more certainty over financing sources, investments, and infrastructure for Namibia. The EU can contribute significantly by providing concessional loans, grants, blended funds from EU Development Finance Institutions (DFIs), and export credits from Export Credit Agencies (ECAs), especially during the early construction stages of projects.
Maintaining Affordability and Price Competitiveness
Affordability and market ramp-up are intertwined: high hydrogen prices could hinder competitiveness and industrialization, while low prices incentivize sectors to adopt hydrogen. Therefore, ensuring the affordability of Namibian renewable hydrogen is crucial.
Namibia’s abundant renewable energy resources position it to produce clean hydrogen at competitive prices. However, insufficient attention has been given to planning and constructing transport infrastructure for hydrogen exports. The feasibility of shipping derivatives is still under research, and transporting hydrogen in the form of ammonia or through pipelines could increase costs.
Given Namibia’s distance from Europe, factoring in transport costs for exporting clean hydrogen derivatives is essential to meet the EU’s demand at affordable prices.
Conclusion: Navigating the Roadmap to Success
The EU-Namibia renewable hydrogen partnership holds immense promise for both regions. Addressing key areas such as trade conditions, risk capital availability, and affordability will enable the partnership to unlock market potential, foster sustainable development, and achieve its ambitious goals.
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