Namibia’s Finance Ministry announced a collaboration between state-backed firms from the Netherlands and Namibia to establish a green hydrogen-focused sovereign wealth fund. The SDG Namibia One fund is a €1 billion ($1.1 billion) blended financing vehicle designed to drive investment in green hydrogen projects in the southern African country. Namibia’s Environment Investment Fund, as well as Climate Fund Managers BV and Invest International BV from the Netherlands, will be participants in the fund. This partnership was formed following the Dutch and Danish prime ministers’ visits to Namibia, and it aims to promote sustainable energy development.
Invest International will provide an initial grant of €40 million to kickstart the initiative. The fund’s goal is to raise additional funds from both domestic and international institutional investors. Furthermore, at COP27, the European Investment Bank and Namibia signed a letter of intent pledging €500 million, a portion of which will go towards the green-hydrogen fund. This capital infusion is a significant boost for Namibia, a country with a population of just under 2.7 million people, as it looks to expand its renewable energy infrastructure.
The favourable climate conditions in Namibia make it an ideal location for producing renewable energy from sources such as solar and wind power, which can then be used to produce green hydrogen for export. Green hydrogen is becoming an appealing alternative as global demand for clean energy sources grows, as does the need to reduce reliance on climate-damaging fossil fuels. Furthermore, Europe is attempting to reduce its reliance on Russian natural gas, which has proven unreliable as a result of political tensions arising from the Ukraine conflict. The European Union intends to import 10 million tonnes of renewable hydrogen as part of this effort by 2030.
Namibia’s transition to green hydrogen will rely heavily on the sovereign wealth fund. The government intends to use the fund to acquire a 24% equity stake in the first project awarded to Hyphen Hydrogen Energy. The project, located in Namibia’s Tsau // Khaeb National Park within the Namib Desert, is a fully vertically integrated gigawatt-scale green hydrogen initiative. The $10 billion project will be developed in phases, eventually generating seven gigatonnes of renewable energy and featuring a three-gigatonne electrolyzer. The annual production capacity of 350,000 metric tonnes of green hydrogen is expected to begin in 2028, with the initial focus being on producing one million tonnes of ammonia.
In a related development, South Africa has announced the establishment of its own green hydrogen fund. The fund, which is supported by the Development Bank of Southern Africa, the Industrial Development Corporation of South Africa Ltd., Climate Fund Managers, and Invest International, aims to accelerate the development of green hydrogen projects in South Africa.
The establishment of a green-hydrogen sovereign wealth fund by Dutch and Namibian companies demonstrates the growing global momentum towards sustainable energy solutions. Namibia has the potential to become a significant player in the green hydrogen market by utilising the abundant renewable resources available in the country, such as solar and wind power. Namibia can contribute to a greener and more sustainable future while capitalising on the economic opportunities presented by the global transition to clean energy with increased investment and partnerships.
