NEWS & INSIGHTS
Analysis: The Metals Argument For A Green Hydrogen Revolution
The global need to decarbonise energy production, particularly for the metals production industry, is now impossible to ignore. In terms of limiting global warming to 1.5C, while progress has been made, pledges and subsequent efforts fall significantly short of achieving the ambitious climate agreement. It’s clear that fulfilling the Paris Climate Agreement requires equally ambitious solutions. One key sector to consider is the energy industry – particularly as it relates to metals production – as energy is the primary driver for the carbon footprint of metal production.
The energy sector is accountable for 75% of the world’s GHG emissions – in total (measured in 2020), CO2 in the atmosphere is 149% higher than in pre-industrial times. By transferring the entirety of energy production to renewable sources, the volume of greenhouse gases emitted each year will fall by 75%. In response to the Paris Climate Agreement, each country/ region has an accelerated capacity for renewables growth between 2020-26, above that seen between 2015-20.
The installation of renewable energy equipment has hit a patch of uncertainty: the rising cost of commodities has resulted in investments in renewables increasing by an average of 25%. In 2021, it was predicted that commodity price shocks would delay “100GW of contracted capacity” in 2021 and would “require over USD 100 billion of additional investment to install the same amount of capacity” if prices remained high through 2022. Unfortunately for global renewable energy efforts, prices of commodities remain highly volatile and in an inflationary loop: the current energy crisis raises the cost of commodity production, which raises saleable prices, which raises the cost of renewable installations, energy prices therefore remain high which increases the cost of commodity production.
Despite this, forecasts remain optimistic. The International Energy Agency reports that between 2021-2026, renewable energy capacity is predicted to increase by 60% with China leading the way with 43% renewable growth (790.5GW), followed by Europe (303.5GW) and the US (217.8GW). In these 5 years, Africa & the Middle East will account for only 65.5GW capacity growth.
Renewables Potential in Africa
These forecasts are not reflective of potential capacity: Africa “The Sun Continent” is home to 60% of the globe’s best solar resources, yet over the past 20 years, has only received 2% of total clean energy investment. In total, the African Development Bank estimates $1.6 trillion worth of investment is required for Africa to fulfil its climate action commitments. While initial capital is high, UN Secretary-General Antonio Guterres states a return on climate action could top USD 26 trillion by 2030 – a promising incentive for legally mandated climate policies.
With regards to Africa’s renewable energy potentials, it’s predicted that (due to the cost of solar PV and wind power reducing 82% and 60% respectively between 2012-19) renewables will be responsible for over half of the growth in Africa’s energy sector by 2040. However, this forecast was made in 2020 – prior to the current energy crisis and volatility in commodity prices.
One method of generating this investment is already on the table: trading carbon credits. By selling credits, Africa can fund its transition from fossil fuels to renewables, whilst also protecting its forests and natural spaces.
Whether the funding comes from carbon credits or foreign investment, off-grid solar power appears the renewable of choice for businesses and individuals. Solar power can also be used in energy-intensive industries, such as aluminium production.
While solar power is a suitable source of electricity in Africa, its production can be unreliable. Alternative sources of power have to be considered to run alongside solar. One alternative is green hydrogen.
Production of green hydrogen involves separating hydrogen from water, with the bi-product of oxygen, via the electrolysis of H2O.
Put simply: A direct current is passed between an anode and a cathode through an electrolyte consisting of H2O, salts, and minerals. The current splits the H2O into its individual components – the hydrogen ions combine with electrons to form hydrogen gas, which can then be collected and stored.
Throughout this process, no CO2 is produced or emitted, making Green Hydrogen a carbon-free and key choice in achieving a net-zero future.
The primary advantage is it is carbon-free (as long as it’s produced on renewable energy). It literally emits water when burned. However, green hydrogen has many other advantages over other, more traditional renewables, such as reducing the intermittency of generation, the ability to supply power on demand, and the removal of production limits. For example, humans can’t lengthen sunlight hours in winter to match peak demand times. Green hydrogen allows industries and individuals to reliably access energy on demand.
Regarding stored energy potential, per kg, hydrogen possesses 120MJ/kg compared to gasoline’s 44MJ/kg, meaning 173% more gasoline is required to produce an equivalent measure of energy. This comparison increases the attractive draw of green hydrogen – it’s carbon-free and more energy dense.
As with every power source, green hydrogen has its disadvantages. Given the technology is in its infancy, much of the necessary infrastructure is yet to be built, research into efficient and cost-effective production is still ongoing, and methods of storage need to be tested and advanced as current methods require high-volume gas storage.
It’s expensive. The International Energy Agency (IEA) states green hydrogen costs USD 3 – 8 per kg to produce, compared to USD 0.5 – 1.7 for production using natural gas. However, the IEA’s Net Zero Emissions by 2050 Scenario estimates costs will drop to USD 1.3; given the innovation and adoption of clean energy technologies continues to accelerate.
Realising Africa’s Sustainable Energy Potential
By channelling investment into fulfilling sustainable goals, Africa can build its industrial revolution into becoming a world leader in sustainability. The initial investment to fuel this transition may be a deterrent for investors, however, developing a solid position as a carbon credit trader is a prospective alternative for generating funds. Investing in renewable infrastructure will contribute significantly towards cleaning up the continent’s and the globe’s emission output.
With the existing and growing solar energy resources on the African continent, we believe there is great potential to build a green hydrogen economy alongside the growing renewable energy infrastructure to support the sustainable production and manufacturing boom. It’s a chance to lead the way from Africa. We can take advantage of the rich renewable resources and growing GDP — particularly in the secondary metals industry.
It’s a chance to eliminate our carbon emissions output and reliance on finite resources. A chance to build something once and build it right. A chance we think is worth taking.
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