A Closer Look at the Strategic Green Hydrogen Partnership in Namibia: Emphasizing its Economic, Social and Environmental Dimensions

Abstract:

In 2022, the European Union (EU) and Namibia established a strategic partnership focusing on green hydrogen. This partnership is driven by the EU’s need to diversify energy sources post-Ukraine invasion, its ambitious climate goals under the European Green Deal and Namibia’s ambitions to be a green hydrogen frontrunner. This partnership was formalised through a Memorandum of Understanding (MoU), aimed at enhancing Namibia’s renewable hydrogen capabilities, exemplified by the Hyphen project. This research paper examines the economic, social, and environmental dimensions of this collaboration, highlighting the mutual benefits and challenges. While the partnership promises significant economic growth and job creation for Namibia, it faces criticism over transparency, implementation and financial ambiguity, and potential green neocolonialism. The paper stresses the need for clear strategies and detailed socio-economic frameworks to ensure the project’s sustainability and equitable benefits for Namibia. Additionally, it calls for adherence to Sustainable Development Goals (SDGs) and increased transparency to address local skepticism and secure long-term success.

1.     General Introduction

The European Green Deal marks the commitment of the European Union (EU) to pursue a leading role in the global efforts to combat climate change. Its objective is to position the EU as the world’s first climate-neutral continent by 2050. Following Russia’s invasion of Ukraine in February 2022, concerns about energy security have been high on the European agenda. As a result, the urgency for a green energy transition within the framework of the European Green Deal has heightened. The EU has since implemented the REPowerEU plan, which aims to save energy, diversify energy sources, and accelerate the renewable energy transition (European Commission, 2022a). In this plan, green hydrogen has been identified as a crucial solution to reduce dependence on Russian fossil fuels. The EU’s objective is to produce 10 million tonnes of green hydrogen domestically, and import an additional 10 million tonnes by 2030.

In this context, the EU is increasingly seeking strategic partnerships worldwide, with a particular focus on Africa. Given its geographical proximity to Europe and its significant potential for renewable energy production, Africa is an appealing partner for the EU. Consequently, the EU has entered strategic partnerships in the southern Mediterranean with Morocco (European Commission, 2022b) and Egypt (European Commission, 2024), and in Sub-Saharan Africa with Namibia. 

Recognising Namibia’s role as a strategic hydrogen import corridor in Sub-Saharan Africa, this article will focus on analysing the potential for cooperation between the EU and Namibia. The analysis will review the Memorandum of Understanding (MoU) establishing a strategic partnership on sustainable raw materials and renewable hydrogen, signed by the EU and Namibia at COP 27 (European Commission, 2023). The article will also evaluate an ongoing project in Namibia, known as the Hyphen project, which was recently recognised as a Low Carbon Hydrogen Energy Transition Change Maker at COP 28 (Hyphen, 2022). 

The potential for cooperation between the EU and Namibia will be analysed through the theoretical lens of Robert Keohane (1984). Keohane defines intergovernmental cooperation in the political-economical context as follows: “intergovernmental cooperation takes place when the policies actually followed by one government are regarded by its partners as facilitating realization of their own objectives, as the result of a process of policy coordination” (Keohane, 1984, pp. 51-52). This definition emphasises the need for mutual interests for cooperation to arise. This article will examine if the mutual interests of the partnership countries are sufficient for successful cooperation.

Furthermore, this paper aims to assess the MoU and the Hyphen project by analysing the mutual benefits, risks, and challenges for both the EU and Namibia. After the environmental and economic benefits for both parties are laid out, emphasis will be put on analysis of the economic, social, and environmental risks and challenges. The challenges include ambiguity in the MoU, the funding and future of the Hyphen project, the risk of green neocolonialism and the general lack of transparency from the EU. This research will provide a comprehensive understanding of the dynamics of green hydrogen cooperation between the EU and Namibia, as well as recommendations to ensure its long-term sustainability and feasibility.

2.     Empowering Sustainability: The Synergies of EU-Namibia Green Hydrogen Collaboration

In October 2022, the EU and Namibia agreed on signing a Memorandum of Understanding establishing a strategic Partnership on Raw Materials Value Chains and Renewable Hydrogen. The MoU represents a crucial step for the EU in reaching its green hydrogen targets. To fulfil its own targets, the EU needs to establish international partnerships. Following the war in Ukraine, the EU decided to accelerate its green hydrogen ambitions. Fulfilling EU’s green hydrogen ambitions will be partially dependent on external actors. In its “EU External Energy Engagement in changing world” strategy, the EU identifies African countries, including Namibia in Sub-Saharan Africa, as key strategic partners (European Commission, 2022c). In that sense, the MoU actualises the EU’s targets and strategy up to that point, transitioning from a broad framework to a concrete agreement with Namibia. It moves the REPowerEU plan one step closer to reaching its objectives.

More significantly, the Memorandum of Understanding recognises and could unlock Namibia’s incredible green hydrogen potential. As highlighted by Ursula von der Leyen, “thanks to its abundant renewable energy potential, Namibia is becoming a front-runner in the green hydrogen space.” (European Commission, 2023). The choice of Namibia is strategic due to its natural specificities: with an average of ten hours of sunshine per day, Namibia is one of the world’s sunniest countries, as well as one of the windiest countries in the world (NewClimate Institute, 2023). Nevertheless, Namibia’s renewable energy potential is not its only asset; its geographical location is also crucial to its strategic importance. Bordered by the Atlantic Ocean, Namibia could readily be connected to European ports, facilitated by the intended development of Port Walvis Bay, strategically situated halfway down Namibia’s coast. 

For Namibia, the potential benefits of participating in this green hydrogen cooperation are numerous. The increase in Foreign Direct Investment (FDI) associated with this project could spur job creation, economic growth, increased industrialisation and educational development in the country. On top of this, the development of Port Walvis Bay would position Namibia as an important trade and energy hub on the African continent (Nweke-Eze, 2023). Furthermore, Namibia could position itself as a leading country in green hydrogen in the world and strengthen its global environmental and economic image. This partnership between the EU and Namibia establishes a shared vision to leverage Namibia’s natural assets and transform it into a green hydrogen hub. 

The EU-Namibia agreement conveys a message to the global community, particularly the private sector, underscoring the significant role green hydrogen will play as an energy source in the future. Through the establishment of a strategic partnership with Namibia, the EU promised €1 billion public and private investment in Namibia, benefitting the green hydrogen industry (European Commission, 2023). Within the Strategic Green Partnership, the EU and Namibia have agreed on a set of actions to achieve their common ambitions. The Memorandum of Understanding not only facilitates the alignment of their ambitions but includes a delineation of the steps required to achieve their goals. Indeed, it has outlined a roadmap centred on six main pillars: integration of value chains (1), cooperation to leverage environmental, social considerations and governance criteria (2), mobilising funding for infrastructure (3), capacity building, training, and skills development (4), cooperation on research and innovation (5), and regulatory alignment (6) (European Commission, 2023). 

More significantly, the EU has declared its support for the development of the Port of Walvis Bay, as well as key infrastructure needed for renewable generation. This promising measure holds considerable significance as it marks a milestone in connecting the EU and Namibia within their green hydrogen market. This should enhance international trade and benefit the entire Southern Africa Community thanks to the improvement of the Maputo Corridor, an important trade corridor in the region (European Commission, 2023). The EU-Namibia Memorandum represents a significant step towards the concretisation of their objectives in the field of green hydrogen and beyond. How exactly the funds will be raised, is not specified. However, the funding will be part of the bigger Global Gateway Project, a strategy of the EU to invest in infrastructure projects across the world. 

Just two months following the adoption of the MoU, RWE, a leading German company, and Hyphen Hydrogen Energy, a Namibian green energy company reached an agreement for a green hydrogen project in Namibia. This is commonly called the “Hyphen project” (Hyphen, 2022). It aims to produce two million tonnes of green hydrogen annually before the end of the decade for both regional and international markets. This company operating in Germany, a country in direct and urgent need for energy diversification and a big proponent of green hydrogen, was clearly influenced by the EU-Namibia green hydrogen partnership. This is an example of how EU policy can influence concrete outcomes: the EU, as a major trading and economic block, is to some extent able to influence the investment decisions of third-party actors, shaping the course of global investments. 

It is clear that the EU-Namibia partnership constitutes a tremendous step forward towards the realisation and acceleration of a green hydrogen market. Not only do the EU and Namibia possess assets important to the development of this market, now they officially decided to pool their resources to reach their respective goals. However, while the EU seeks multiple partners for its green transition ambitions, Namibia primarily wants to position itself as a global leader in green hydrogen, aiming to enhance its social and economic situation. That is the reason why, to ensure the long-term sustainability of this partnership, it is essential to attentively evaluate its social and economic impacts.

3.     Oversight and Challenges in the EU-Namibia Green Hydrogen Partnership: A Call for Social and Economic Integration

Although the Memorandum of Understanding has been lauded by von der Leyen as an ambitious accelerator for decarbonising economies (European Commission, 2023), it has so far failed to provide a concrete strategy for promoting and safeguarding social and economic rights in Namibia. 

The framework encounters a challenge due to its broad scope, encompassing both sustainable raw materials value chains and renewable hydrogen (European Commission, 2023). This expansive approach may impact the precision of the strategy, particularly for civil society and the general public. By combining these two areas within a single framework, the EU and Namibia have not yet developed separate and detailed roadmaps for green hydrogen and raw materials. This integrated approach might have missed opportunities for a more focused discussion on the specific social and economic aspects of the partnership. The text will later examine, for instance, how the allocation of a common budget to both objectives and the lack of detailed assessments on economic trade-offs may highlight the need for more targeted planning and analysis. The EU and Namibia have not worked together to develop a targeted roadmap for green hydrogen in Namibia.

The ambiguity surrounding the concrete implementation of the MoU is compounded by the lack of a clear financial framework for the partnership. Ursula von der Leyen has pledged financial support of €1 billion in investments from the EU, its Member States, and European financial institutions (European Commission, 2023). However, the allocation of this budget has not been detailed, specifically how it will be divided between the raw materials supply chain and green hydrogen. Clarifying this allocation is crucial as it enables a comprehensive assessment of the financial resources required to initiate and advance a green hydrogen economy. Contrarily, the EU has established a shared budget for both goals, likely with the expectation that the well-known “Brussels effect” – the notion that the EU’s policy will automatically lead to externalisation (Manners, 2002) – will draw substantial investments from the private sector. This approach poses risks, particularly in the green hydrogen sector, as less than 0.1 percent of hydrogen is currently produced from renewables, and it is very likely that hydrogen production will continue to rely on fossil fuels in the years to come (International Energy Agency, 2023). Many major fossil fuel companies will likely invest in blue hydrogen as an interim solution before transitioning to green hydrogen. Since blue hydrogen is primarily produced from natural gas, this will impact the EU’s green ambitions. The dependency on fossil fuels inherent in blue hydrogen production will affect the EU’s climate goals.

In her address, Ursula von der Leyen stressed a crucial point, declaring that “Together we can advance decarbonization, create jobs, and ensure a more prosperous and greener future for our societies” (European Commission 2023). But neither von der Leyen in her address nor the MoU itself made any reference to any of the 17 Sustainable Development Goals (SDGs) of the United Nations. For instance, SDG 7 (decent work), 15 (life on land) and 17 (peace, justice, and strong institutions) (United Nations, n.d.) are crucial ones when envisioning the development of a green hydrogen market in Namibia. By not referencing the SDGs, the EU and Namibia leave a significant margin of manoeuvre to the private sector in implementing the MoU, which could lead that sector to being less inclined to serve climate goals throughout the MoU’s implementation. 

The Lobito Corridor, another flagship Global Gateway Initiative, has been criticised for too narrowly focusing on the extraction of critical raw materials and focusing only limitedly on the development of African partner countries, therefore not adhering to SDGs (Ògúnmódedé, 2024). Since the EU’s Global Gateway Project has been criticised by external actors such as Russia and China to be a form of neocolonialism, where the African partners become too dependent on their European counterpart, it is crucial for the EU to make sure that both public and private funding adheres to SDGs and actively contributes to the development of involved African countries (Lehne, 2024). 

The MoU also lacks a specific strategy for the implementation of economic and social rights. Indeed, while the six pillars enumerated in the MoU include fundamental guiding principles, they fail to provide precise and specific actions for the development of the green hydrogen supply chain. For instance, Ursula von der Leyen has committed to fostering job creation, as highlighted by the MoU’s pillar number 4 (training and skills development). Nonetheless, the EU has not specified any training programs with the involvement of specific external actors, nor has it emphasised any specific work sector essential to the development of Green Hydrogen projects such as construction or engineering. This should have been provided to ensure that the skills required for this ambitious project are present in the Namibian labour force. Reversely, the EU has made pillar number 3 (soft and hard infrastructure) a flagship of the MoU. Not only they have emphasised the importance of upgrading primary transport corridors, but it has also explicitly announced plans for the development of the Port of Walvis Bay, with the collaboration with the Port of Antwerp and Bruges International (European Commission, 2023). While it is an excellent initiative from the EU, clarity and precision should be consistently applied, whether dealing with mutually beneficial objectives such as the development of strategic corridors or one-sided goals like job creation in Namibia. 

Instead of relying solely on its soft power to externalise policy, the EU should have pursued a more proactive approach to ensure the effective integration of economic and social rights. For instance, it could have conducted a concrete assessment of the budget required to initiate a project in Namibia, while also detailing the minimum threshold of social and economic rights achievable through specific actions. Such an approach would have fostered transparency not only between the EU and Namibia but also with the private sector. By taking a more proactive approach, the EU could have alleviated some uncertainties and challenges surrounding the private sector’s implementation of such a project.

4.     Navigating Uncertainties: The Hyphen Project and its Economic, Social, and Environmental Implications in Namibia 

The Hyphen project was initiated in the months after the signing of the MoU. Despite being recognized with an award as a Low-Carbon Hydrogen Energy Transition Maker at COP 28, it has encountered substantial criticism from Namibians due to uncertainties surrounding its economic, social, and environmental dimensions, as explained below. 

The first noticeable aspect is that the Hyphen project is struggling to attract enough investors for its project. Indeed, Hyphen is seeking €100 million for the launch of the project. At COP 27, the European Investment Bank signed a €35 million agreement with Hyphen. As it was insufficient, Hyphen decided to make an offer to the Namibian government to sell a 24% stake (Matthys, 2023a). At COP 28, the Development Bank of Southern Africa agreed to provide €5 million for the Hyphen Project (The Staff Reporter, 2023). Diplomacy had taken place, and a precedent was set with the funding from Southern Africa. Investment from Africa for a project in Africa was promising. Right after COP 28, Hyphen announced that the Namibian government agreed to acquire a 24% stake in the Hyphen project (Matthys, 2024). However, criticism of the Hyphen Project became apparent. 

Firstly, Namibia’s history of colonisation by Germany brings back bad memories for Namibians. For them, it is unreasonable to fund a project using their own resources. If some experts argue that such a decision was necessary to attract future investments and unlock Namibia’s potential, the reality is that such an investment is almost equivalent to Namibia’s GDP and poses a serious risk of increasing the country’s debt (Eberhardt, 2023). Secondly, the Namibians became more sceptical of the Hyphen Project due to the fact that it seemed that the attraction of investment for it was a struggle. Therefore, the EU and Hyphen should work hand in hand to ensure that the project receives the necessary funds without pressuring Namibian taxpayers, whose lives are already tremendously precarious. Otherwise, the EU takes the risk of repeating the same mistake twice and losing Namibians trust and faith for good as well as the potential of the Hyphen Project to succeed. 

Difficulties in sourcing funding are not its only problems. Economic and social risks extend beyond Namibia’s increasing debt burden. It was revealed that Hyphen will not pay its fair share of taxes in Namibia, instead opting to use Mauritius as a “tax haven” (Climate Home News, 2023). This decision limits Namibia’s ability to impose taxes on the project and direct the yields of the project  back to public investment (The Staff Reporter, 2023). On top of this, the job prospects resulting from the project are not impressing Namibians (The Staff Reporter, 2023). Indeed, while the Hyphen project has announced the creation of 15,000 temporary jobs during the construction phase, it has promised to provide only 3,000 permanent jobs once the project is fully developed, with 90% exclusively dedicated to Namibians (Hyphen, 2022). Three thousand long-term job prospects are a small number of jobs compared to Namibia’s 2.5 million population, especially considering the fact that Namibia invests a figure equal to its GDP in this project, generating debt that will undoubtedly strain public finances in the country, an effect which will be felt in the pockets of many ordinary Namibians. 

Another significant issue lies in the presence of a significant skill gap between the labour demanded for the project and local Namibian labour supply. According to representatives of the Engineering Council of Namibia and the Construction Industry Federation, Namibia lacks sufficient skilled local capacity in both construction and engineering to complete the project (Grobler et al., 2023). As such, training must be a key aspect of this EU green hydrogen project. If Namibia is to acquire a 24% stake in the Hyphen project funded by Namibian taxpayers, the country should, at the very least, be rewarded for the use of their own resources with long-term job creation. The EU and Hyphen should urgently collaborate to swiftly deliver a viable employment project, prioritising impactful training programs and offering a substantial number of decent, long-term jobs for the benefit of Namibians.

In addition to these considerations, sustainability and disclosure concerns add up. Ursula von der Leyen has made it very clear about the EU-Namibia Memorandum of Understanding, “Together we can further (…) ensure a more prosperous and greener future for our societies” (European Commission, 2023). While green hydrogen is a key solution to the green energy transition, it must ensure that other aspects of sustainability are not affected, such as “life on land”. For instance, the Hyphen project is located in Tsau/Khae Park, one of Namibia’s most biodiverse regions. This has raised environmental concerns related to the conservation of territorial ecosystems (Grobler et al., 2023). 

The project not only poses environmental risks but is also located in a region rich in diamonds, where past colonial atrocities occurred. Namibians are therefore reluctant to accept the exploitation of their beautiful lands, given the weak, uncertain, and unclear economic and social rewards in exchange. To counter this, enhanced communication and transparency with Namibian citizens and its civil society are key solutions, but Hyphen does not excel here either. While they argue that disclosing information would be “to the detriment of the development of the Hyphen project”, civil society is complaining about the secrecy and lack of transparency, arguing that the green hydrogen project is being forced upon Namibian people (Matthys, 2023b; Shikololo, 2023). A right balance must urgently be found between communication and secrecy, before Namibians give up on a project supposed to unlock Namibia’s green hydrogen potential. 

For the Hyphen project to be considered successful, it must effectively address social, economic, and environmental concerns. Failure to do so could lead Namibians to perceive the project as an example of green neocolonialism. In any partnership, reciprocal benefits are fundamental. If the project aims to provide 2 million tonnes of green hydrogen for regional and global markets, it is imperative to ensure that Namibians receive tangible benefits from it. This is crucial not only for the project’s long-term sustainability but also for maintaining the EU’s reputation in Namibia. Although the project is led by a German company, the EU’s involvement, as demonstrated by the MoU, will impact Namibians’ opinions of Western policies and intentions. The stakes are high, as the EU risks permanently losing the trust of Namibians, which could impact not only current but also future partnerships. In an increasingly divided geopolitical world, the EU must deliver and act accordingly.

5.     Conclusion  

In theory, cooperation between Namibia and the EU in the realm of green hydrogen is mutually beneficial. The EU could benefit from Namibia’s renewable energy capacity. The “EU effect” could benefit Namibia. The EU-Namibia Memorandum is a significant achievement in this regard. Therefore, intergovernmental cooperation through the lens of Keohane (1984) is possible. However, this article shows that there are several risks and ambiguities in the current cooperation framework. 

This framework has lacked a precise and concrete strategy, failing to ensure the effective integration of economic, social, and environmental rights. As exemplified by the Hyphen project, this impacts how the private sector will implement the green hydrogen project in Namibia. It affects not only industry in the country, but also impacts Namibians directly, who are uncertain about what they could reasonably expect from the EU and Hyphen in terms of integrating human rights. Hence, there is a necessity for the EU to adopt a more proactive stance. Relying solely on soft power is no longer sufficient; the EU must become a more engaged player on the international stage. To achieve this goal, the EU should collaborate with various stakeholders, establish clear and transparent socio-economic and environmental standards, and develop a precise and effective strategy to achieve them.

More precisely, the EU should address decent work and economic growth, as well as life on land throughout the EU-Namibia cooperation. For the achievement of these goals, the EU must transform the Hyphen project into a robustly economically sustainable project. That way, it could better address aspects such as decent work, economic growth, and biodiversity. Thus, the EU must focus on two key priorities: financing, and ensuring affordability (Nweke-Eze, 2023). However, as of today, despite efforts from the international community, the Hyphen project struggles to secure all the necessary funding to kick off their project. 

The EU must urgently assess Hyphen’s financial needs and provide significant financial support. Otherwise, the project will continue to face prolonged challenges in attracting investors. Only efficient production at a low cost will encourage other companies to invest in strengthening or expanding the Hyphen project. Competitiveness is the second main aspect that the EU must address. In that regard, expensive hydrogen hinders competitiveness, while accessible prices provide strong incentives for industries to engage in green hydrogen projects in Namibia (Nweke-Eze, 2023). Even if Namibia can utilise its abundant renewable resource to produce affordable green hydrogen, its distance from the EU will contribute to transportation costs. The EU must focus on the planning and construction of transport infrastructure to reduce these costs. On top of this, investing in research and innovation is key to ensure that Namibian green hydrogen is competitive on the market.

In addition to constituting a solid economic green hydrogen project, the EU, the Hyphen company, and Namibia must prioritise transparency. As previously highlighted, civil society has emphasised that the project is being imposed on Namibians. Given Namibia’s colonial past, the success of the Hyphen project hinges precisely on the ability of all three actors  to inform clearly. To begin, the EU must refer to the SDGs in its regulations and discourse, more specifically, decent work and economic growth (SDG 8), as well as life on land (SDG 15). Besides that, it must also ensure that their ambitions are practical, adaptable, and evidence-based (Nweke-Eze, 2023). 

Moving forward, it is imperative for the EU to engage in close collaboration with Hyphen so official public plans concerning the feasibility and the implementation of the project will be disclosed. However, not everything hinges solely on the intentions of the EU and Hyphen; the Namibian government also bears its share of the work and responsibility. Therefore, it needs to adopt and amend certain regulations essential for the implementation of the project (Nweke-Eze, 2023). This action will contribute significantly to upholding peace and stability among Namibians and the government, particularly as citizens are concerned about corruption.

The success of the EU-Namibia partnership is crucial. If this cooperation is to help both actors achieve their respective objectives, there are other broader considerations that must be taken into account. Indeed, given Africa’s colonial past, a failure of the EU-Namibia partnership will not only impact existing partnerships but also impede future collaborations between the EU and Africa. In an increasingly geopolitical world, such a scenario will significantly affect the EU’s interests in the region. If the EU-Namibia partnership represents a significant opportunity, the stakes are high, and the EU must act accordingly. Making a positive difference in Namibia is imperative.

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