As countries in the developing world strive to position themselves in the new global energy economy, it is imperative for them to carefully assess how hydrogen as an energy carrier fits into their overall economic, social, environmental and political strategies. They must evaluate the maturity of their energy sector, the current level of economic competitiveness and the potential socio-economic, geopolitical and geostrategic effects of the choices they make.  

As far as developing economies are concerned, hydrogen is not simply an energy transition opportunity; it is a strategic industrial, economic and geopolitical opportunity that can drive energy security, export competitiveness, job creation and infrastructure development if execution and implementation barriers are addressed, managed and overcome early and effectively. Hydrogen presents developing economies with a rare opportunity to participate earlier in the value chain of the next global energy system.

For successful hydrogen deployment, holistic planning is imperative to identify the best pathways. In the short and medium term, the blue hydrogen production route (hydrogen produced from natural gas reforming, with carbon capture) will appeal to countries with vast and abundant natural gas reserves. While blue hydrogen is far from the perfect solution, among other options such as green hydrogen (produced by renewable energy) and turquoise hydrogen (produced by methane pyrolysis), it will be essential in the industry’s evolution towards clean hydrogen.

The only challenge is that blue hydrogen is susceptible to the volatility of natural gas prices. Liquid organic hydrogen carrier (LOHC) technology shows promise for efficient inter- and cross-border hydrogen transport, especially for regions abundant in renewable energy.

Hydrogen demand in the early years is tied to industrial offtakers (primarily refining, petrochemicals, fertiliser, steel and ammonia). Emerging economies need to learn by doing and by studying the lessons of the past. The history of the natural gas market may be instructive in this regard.

Hydrogen presents developing economies with a rare opportunity to participate earlier in the value chain of the next global energy system. 
 

Massive government support is needed to accelerate the adoption of hydrogen, especially in industrial applications and the creation of export markets. In the near term, policy attention should be given to more mature and centralised hydrogen solutions. Efforts should be centred on high demand use cases for which hydrogen is clearly the best option.

The Hydrogen Council proposes several pockets of demand that could be unlocked with infrastructure development. They cover energy-intensive sectors (chemicals, refining, power generation) and transport (maritime, trucking, aviation). Given that most investment decisions are long-lived, and the risks and costs of stranded assets are high, plans and investments for infrastructure should be carefully assessed. Pipeline infrastructure, for instance, should be amenable to repurposing to move green gases such as hydrogen and biomethane. The economic drawbacks and technical complications of repurposing should be accounted for from the outset.

Nigeria case study

Nigeria is taking big leap in the transition to hydrogen. The Foundation for Sustainable Social Responsibility in Emerging Africa (FOSSREA), in collaboration with the Nigerian Ministry of Petroleum Resources, hosted an inaugural ‘Nigeria international conference on hydrogen’ in November 2024 which garnered support from the African Hydrogen Partnership, Japan International Cooperation Agency, the German state-owned development agency GIZ and others.  

The Nigerian government has pledged to create a gas-centred economy; there is growing political will. A national hydrogen framework and strategy is currently in the works which covers technical, economic and policy for hydrogen adoption using data-driven methods. The country’s vast natural gas reserves, renewable potential and land resources make it a prime location for clean hydrogen production.

Steel, fertiliser and cement industries were identified as the top consumers of hydrogen by the author using AI tools. Other work suggests depleted oil reservoirs as the most viable means of storing hydrogen; in particular, Nigeria’s Benue Trough has favourable geological conditions for natural hydrogen generation and accumulation. The Obiafu-Obrikom-Oben (OB3) and Ajaokuta-Kaduna-Kano (AKK) gas pipelines provide potential hydrogen transport routes.

Africa enjoys world-class renewable resources, with capacity factors up to 69% for wind power and 25% for solar power, as well as excellent geothermal and hydro resources, coupled with abundant land area. Consequently, the continent is strongly positioned to become a renewable hydrogen and derivatives producer and exporter. Using these renewable resources to produce hydrogen for both the domestic market and export (either as pure hydrogen or as derivatives – ammonia, synfuel, hot briquetted iron, and others) could create a win-win opportunity for all stakeholders.

Although there are projects on the continent in the announced and planning stages that correspond to investments of $50bn+ by 2030, the African hydrogen project pipeline is less mature than the global average. In Africa, only about 5% of project investment volume is at the front-end engineering design and further (FEED+) stage, compared with 20% globally. What’s more, only 1% is past the final investment decision (FID), compared with 7% globally. There is therefore an opportunity for stakeholders to realise Africa’s hydrogen potential for its citizens and for the world.  

Actions that reduce the cost of financing could lead to increased chances of project success. These include securing offtake agreements, securing hardware supply, putting in place shared infrastructure, identifying and working with capable engineering, procurement and construction (EPC) suppliers, making use of political risk insurance, and structuring and making available concessional finance.

Crucial enablers for a hydrogen economy include a comprehensive and transparent regulatory framework backed by policies for demand creation, domestic utilisation (imposing green hydrogen quotas may help scale green hydrogen production), incentives (tax credits, subsidies), standards, and certifications. (Certificates of origin rooted in a transparent and credible international system will be critical to monitor and manage the contribution of hydrogen to climate change efforts.)

In addition, leveraging existing bilateral government-to-government relationships for hydrogen diplomacy could accelerate the growth of a domestic ecosystem. Technological cooperation could promote best-in-class technology through strategic partnerships, local and domestic research and development structure. Utilisation of readily-available land and infrastructure resources would support domestic generation and production, transportation, storage and utilisation. Finally, affordable financing and access to international capital markets will also facilitate hydrogen development.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the Energy Institute.

• Further reading: ‘Africa needs a period of ‘carbon on credit’. A small, strictly time-limited emissions overdraft for Africa on its journey to end energy poverty is justified, argues Louis Strydom, Director of Growth and Development for Africa and Europe at Wärtsilä Energy.

• 'Hydrogen and ammonia in Europe – from hype to maturity in 2026?’. The long-term outlook for clean hydrogen and ammonia projects in Europe looks promising, but last year saw several setbacks around commercial viability and competition from oil and gas. However, the regulatory environment remains positive, writes Massimo Amoruso, Partner and energy law specialist at Mayer Brown.