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29 Nov 2022
BY Stefanie Busch AND Nicole Tjitendero

A Look into the “Namibia Green Hydrogen and Derivatives Strategy Report”

The recently launched Namibia Green Hydrogen and Derivatives Strategy sets out the Namibian Government’s action plan leading up to March 2025 to establish Namibia as a major global hydrogen producer.

Chief among the goals of the strategy is the adoption of a fit-for-purpose legislative regime; a one-stop-shop implementation agency; and support mechanisms to ensure low costs of production, local content manufacturing, skill development and project finance. We take a closer look at these goals below.

Introduction of a regulatory framework

The strategy entails:

  • the adoption of a fit-for-purpose regulatory framework in order to maximise the potential of the nation's hydrogen resources;
  • the development of a Synthetic Fuels Act, which should include norms that adhere to international standards. These norms would seek to address operational uncertainty for developers and set quality levels to satisfy the demands of the worldwide export markets; and
  • transparent land access and permit processes for hydrogen and renewable energy, and the fair treatment of investors and residents, all while safeguarding the environment and public safety.

Establishment of an implementation authority office (“IAO”)

An IAO is envisaged to be set up as a one-stop-shop support system to create a transparent, streamlined and user-friendly process for all stakeholders in prospective hydrogen projects.

The IAO should identify and plan hydrogen projects to be developed, financed, operated and maintained by the private sector on state-owned land. It will:

  • identify and conduct due diligence on possible sites;
  • oversee the auction of state-owned land;
  • conduct regulatory reviews;
  • facilitate the preparation and submission of all permitting applications and project finance documents; and
  • engage with developers, contractors and financiers.

The IAO is envisaged to further provide developers with access to relevant data sources (eg, renewable energy resources, planned common user infrastructure).

Special economic zones

The establishment of a special economic zone (“SEZ”) which would provide for fit-for-purpose fiscal conditions is still being evaluated. According to the strategy, an SEZ would provide an enabling environment, accelerate job creation and foster private sector-led development.

Conflicting land rights

The strategy states that the government will work swiftly and pre-emptively to remove any obstacles to project development by, for example, leading conversations with holders of mining licences and exclusive prospecting licences to “free-up” land.

The strategy does not set out how any new applications for mineral licences in potential hydrogen production sites are to be dealt with by the Ministry of Mines and Energy.

Hydrogen valleys and regional green ecosystem

The strategy envisions the creation of three hydrogen valleys in the southern region of Kharas, the central region (which includes the port of Walvis Bay and the capital Windhoek), and the northern region of Kunene.

The Southern Corridor Development Initiative (“SCDI”) was launched in 2021 in respect of the hydrogen valley envisaged for southern Namibia.

Namibia also aspires to develop an integrated green ecosystem throughout Southern Africa by means of green transport corridors and shared infrastructure (such as ports, pipelines and transmission networks). Excess power exports into the Southern African Power Pool could further increase energy security and lower energy costs in the region.

Common user infrastructure (“CUI”)

The establishment of a CUI that can be accessed and used by multiple project companies in a particular hydrogen cluster is also proposed. A CUI would de-risk projects, accelerate the scale-up of production and lower costs of individual projects.

The CUI would include overland transmission lines, water infrastructure, hydrogen pipelines, ancillary infrastructure and an industrial port complex. An ownership and governance model is to be developed in respect of such CUI.

The creation of a framework for the construction and operation of CUIs for all future projects in the Kharas hydrogen valley is already being anticipated.    

Local skills and content

The domestic labour market is anticipated to grow with the creation of 280 000 jobs by 2030. To address this demand in skilled employees, a skills development and labour supply strategy is to be set up to map out the resources and develop the skills needed.

Focus will also be placed on creating an enabling environment for local content. This is to be achieved by the construction of mini-campuses with R&D stations, training facilities and fully equipped laboratories. Pilot projects will be launched to build the knowledge and capabilities of local EPC companies and deliver local component manufacturing.

SDG Namibia One

The launch of an infrastructure fund, SDG Namibia One, is contemplated, which will initially mobilise USD1- billion in concessionary and commercial capital to develop the SCDI. The funding will be provided by blending donor and development funding.

The strategy envisages forming partnerships with international development partners to make other financial instruments available, such as export credit guarantees, first-loss equity, low-cost loans and political risk insurance.

Environmental safeguards

According to the strategy, a permanent task force will be set up to assess and manage biodiversity concerns in the hydrogen industry under the framework of the Community-Based Natural Resource Management Programme, which advocates the adoption of a multi-shareholder approach and applying conflict management mechanisms to manage resource conflict among stakeholders.

Ambitions of Namibia as a global hydrogen producer

According to the strategy, Namibia is well-positioned to emerge as a major global hydrogen producer and to establish a large-scale green fuels industry in Namibia by 2050 due to its top-notch renewable energy resources.

Namibia is expected to produce and export low-cost derivatives of hydrogen, such as ammonia, methanol, synthetic kerosene, and hot-briquetted iron, to the markets of Europe, China, Japan and South Korea. The strategy indicates that green hydrogen could accelerate Namibia’s socioeconomic development by contributing as much as USD 6-billion to Namibia’s GDP by 2030.

Stefanie Busch

Senior Associate

sbusch@ENSafrica.com

Nicole Tjitendero

Intern

ntjitendero@ENSafrica.com

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