With plenty of fanfare and €1 billion in promised funding, the European Union has backed Namibia to become a key supplier of green hydrogen and help drive the bloc’s energy transition.
But the southern African nation is “unlikely” to export the clean fuel to Europe on a large scale, a government official told Follow the Money last month.
“The market has not developed as we had anticipated,” Joseph Mukendwa, acting head of the state-run Namibia Green Hydrogen Programme, said in a video call.
“Without a long-term offtake agreement, it is difficult to get a bankable project off the ground.”
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No senior Namibian official is known to have spoken so candidly about the country’s slim prospects of becoming a major exporter of green hydrogen.
The admission is likely to worry the EU, which has put forward a substantial package of loans and grants to develop green hydrogen projects in the African nation.
Green hydrogen imports from Namibia and other countries with abundant sun and wind – such as Australia, Chile, and Saudi Arabia – are meant to play a central role in Europe’s transition to a low-carbon economy.
The interview with Mukendwa follows a trip by FTM to Namibia last September for the Global African Hydrogen Summit. Foreign project developers as well as Namibian activists and a local mayor all cast doubt on the country’s green hydrogen ambitions.
Fading hopes
Green hydrogen has generated much hype in the EU, with Germany and the Netherlands helping make it a central pillar of the European Green Deal in 2019.
Among its most prominent supporters is the Port of Rotterdam Authority, which hopes to make the Dutch city a major European hub for hydrogen imports and distribution.
“Hydrogen is the new oil,” the authority’s then-CEO Allard Castelein said back in 2021.
A dirt road leading to the proposed site of the Hyphen Green Hydrogen plant outside Luderitz.
© ANP
Key to Namibia’s export ambitions is Hyphen, a flagship project that plans to harness wind and solar power to produce large quantities of green hydrogen for Europe.
Since 2021, the Port of Rotterdam has partnered with the Namibian Ports Authority (Namport) to develop a new port near the project’s proposed site in the coastal town of Lüderitz.
“We would, of course, have preferred to see things differently”
Expectations were high.
Namibia’s Ministry of Mining and Energy estimated in 2022 that the sector would create 280,000 jobs by 2030 and up to 600,000 by 2040 – in a country of just three million people.
And just last year, the European Commission said that the industry could attract €20 billion in private investment.
Reality has fallen far short of those projections. A handful of pilot projects have created only around 800 jobs overall, and major private investment has not materialised.
German energy company RWE – Hyphen’s most important potential European customer – quit last year, citing weak demand for hydrogen and ammonia in Europe.
Hyphen did not respond to FTM’s questions.
‘Drill, baby, drill’
As Namibia’s hydrogen sector stagnates, its oil and gas industry is gathering pace.
Substantial oil reserves have been discovered off the country’s coast, which also holds significant gas reserves. Preparations are in full swing, and French energy giant TotalEnergies is set to make a final investment decision on the Venus oil field this year.
With offshore oil discoveries estimated to contain around six billion barrels, Namibia could become one of Africa’s major oil producers over the coming decade.
Speaking at the Namibia International Energy Conference in the capital Windhoek in April, President Netumbo Nandi-Ndaitwah said the fossil fuel sector could bring “structural transformation, inclusive growth and sustained prosperity for all Namibians”.
“We are on the cusp of a new energy era,” she added – referring not to hydrogen, but to oil and gas.
Also addressing the conference, NJ Ayuk – chair of the fossil fuel lobby group Africa Energy Chamber – had a blunt message for Namibia.
“Produce every drop of hydrocarbon you can find and better the life of your people, and I urge the industry to do one thing and one thing only: Drill, baby, drill,” he said.
Boon for both sectors?
A large share of European funding in Namibia is earmarked for the construction of infrastructure intended to support the green hydrogen industry, including port expansions, railway lines, roads, and energy networks. The European Investment Bank is making €500 million available for this purpose.
However, the Namibian government’s growing interest in oil and gas raises a question: could European investment in Namibia also ultimately serve the fossil fuel industry?
A European Commission spokesperson told FTM that “EU support in Namibia is not targeted at fossil fuels or fossil fuel infrastructure”. But they declined to answer a question about the possibility of the oil and gas industry also reaping the benefits.
The railway by Lüderitz.
© Olivier van Breemen
“We cannot be naive and say that the oil and gas industry is unlikely to benefit,” Mukendwa of the Namibia Green Hydrogen Programme said during the interview.
However, he stressed that he saw no competition between the country’s sustainable energy and fossil fuel ambitions, and said he wanted to see both sectors benefit.
“We are unapologetic about the fact that we are going to push for the oil and gas sector. We’re also going to push for green industrialisation,” Mukendwa added.
“One of the key questions is: how do we develop infrastructure that supports Namibia’s broader development ambitions?”
Kaire Mbuende, director of the National Planning Commission (NPC), which reports directly to the president, echoed that view. He told FTM that infrastructure developed with European support for green industrialisation could be used by other sectors.
According to the NPC, roads, ports, water systems, and transport networks are supposed to support broad economic growth.
Down but not out?
Invest International, a Dutch development finance institution that has disbursed €40 million for Namibia’s hydrogen sector, expressed regret over the country’s focus on oil and gas.
“We would, of course, have preferred to see things differently,” said Itske Lulof, its head of energy and climate.
“Our approach is to keep both developments [green hydrogen and fossil fuels] as separate as possible. We are fully committed to the development and the effective implementation of the green hydrogen market and focus on green investments.”
Despite acknowledging delays to hydrogen projects in Namibia and beyond, the Port of Rotterdam Authority said it saw no reason to end its partnership.
Hydrogen remains “an important part of the energy transition”, a spokesperson said.
The Dutch authority has no involvement in oil and gas-related activities at the port of Lüderitz, they added.
The sector’s positive prospects remain intact
Ultimately, for all the setbacks and obstacles, the Namibian government has not formally abandoned its green hydrogen ambitions.
Mbuende of the NPC pointed to “significant progress” on several projects intended to produce green hydrogen for domestic use rather than export.
The EU also insists that “the sector’s positive prospects remain intact”.
But the Commission is no longer willing to make firm predictions about the timing or scale of future exports to Europe.
“Any reliable estimate of export volumes, domestic use, and timelines would still be premature,” a spokesperson said.
