Europe’s plans to massively import green hydrogen from Morocco, Algeria, and Egypt can cost up to 11 times more than natural gas imports, new study finds.
According to the Dutch think tank Transnational Institute and the Corporate Europe Observatory (CEO), although in good faith, the exchange does not make sense economically, as it would be far more expensive than other forms of acquiring clean energy.
⚡EU’s plan to drastically increase the use of renewable hydrogen is not only irrealistic, but also it will hurt North African countries’ economy
???Read our study, commissioned in collaboration with @TNInstitute & written by energy expert @mbarnardcahttps://t.co/6i8xHJg4Rb— CEO (@corporateeurope) May 16, 2022
While Morocco, Algeria, and Egypt have formed partnerships with several European countries to produce and export hydrogen to Europe, a study conducted by two research centers highlights the inconsistencies and “dangers” of this option for countries on the southern shore of the Mediterranean.
Capitalizing on their geographical proximity to Europe and their large resources of low-cost renewable energy, North African countries are positioning themselves as the ideal partner of the European Union (EU) in the field of green hydrogen production.
But the study, published on May 15, reveals that “using renewable electricity (solar and wind) in North Africa and sharing it with neighboring countries in the continent and, possibly the Middle East, through interconnections would be a much more efficient option than trying to create an export market for very expensive chemicals.”
The study’s authors also cast doubt on the “possibility of ever exporting green hydrogen at sufficiently attractive prices,” given its high production and transportation costs.
“Green hydrogen could cost up to 11 times more than natural gas per unit of energy at pre-Ukraine invasion prices, even before storage and transportation, it is still three times more expensive than today’s highest [gas] prices per unit of energy,” they argue.
According to the study, titled “Assessing EU Plans to Import Hydrogen from North Africa,” it makes little sense for Morocco, Algeria or Egypt to use their renewable electricity to make hydrogen and hydrogen products, then ship them to Europe with a lot of energy loss, “just so that the EU can achieve climate emissions reductions.”
Morocco has set an ambitious 52% clean energy goal by 2030, while Algeria and Egypt’s goals are set at 27% and 42% respectively for the same year.
But the three countries currently produce most of their electricity needs from fossil fuel sources. While Morocco gets the overwhelming majority of its electricity from coal, nearly 100% of Algeria’s electricity is generated from natural gas, and more than 90% of Egypt’s electricity comes from both oil and gas.
But Morocco is strongly betting on its clean energy exporting capabilities. Earlier this month, The Kingdom announced an ambitious and “positive” joint assessment with Dutch experts regarding a bilateral green hydrogen production project.
Expected to be “of a highly competitive cost,” Moroccan produced green hydrogen garnered significant interest, as RVO’s energy advisor, Claire Hooft Graafland had declared that “Morocco has a lot of solar and wind potential to invest in, and we believe that the conditions are right for the production of green hydrogen.”
The benefits of such cooperation, especially with world-leading, producing countries such as the Netherlands, will be mutually felt, according to Graafland.
In recent months, several green hydrogen megaprojects have been unveiled in North Africa. France’s Total Eren announced the construction of a $10.7 billion facility on a 170,000-hectare site in Morocco, while Norway’s Scatec Group signed an agreement to build a green hydrogen plant in Egypt for a $5 billion investment.
Germany, for its part, has allocated 2 billion euros of public funds to partnerships in the green hydrogen sector in Morocco, Namibia, the Democratic Republic of Congo (DRC), and South Africa.
German giant Siemens has also signed a memorandum of understanding with Egypt in 2021 to develop large-scale green hydrogen projects in the country, for a total estimated investment of $23 billion.
However, assessing the costs of such projects has made the study’s author question whether the investments will be able to generate the expected income.
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