Importing Sun

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    Up here in the sun-worshipping North, we have always known to appreciate the gifts of the mighty celestial body. Even more so this time of the year, as we move towards the inevitable darkness of winter. We clutch desperately at the few remaining pale rays and blatantly disregard the advice of dermatologists, eager to absorb as much of the vital commodity as possible. Not so in the sunny South. People there are preoccupied with protecting themselves from the scorching heat and blocking the blinding light. The solar bonanza is wasted on them, mostly.

    If only there were a way to level the field! Imagine being able to capture the abundant energy of the southern sun, package it neatly and ship it over to the sun-starved north. Wouldn’t that be awesome?

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    Naturally, I am excited to read in the news this week about a “green hydrogen corridor”, the first of its kind, opening up between the ports of Algeciras in sunny Andalucía and Rotterdam. Spanish energy company Cepsa has just signed an agreement with the Dutch port authorities that means they can soon start shipping their sun-imbued green fuel northward.

    As you know, hydrogen, which releases energy when burnt but emits no carbon, is the dream fuel (or battery, rather), carrying the potential to play a prominent role in decarbonising the global energy system. The trick is, of course, to produce it while keeping on the green side of the hydrogen taxonomy rainbow[1], i.e., to use only renewable energy when splitting water into hydrogen and oxygen. And that is where the sunny (and windy) parts of the world have an obvious advantage.

    Spain is already well on track to produce more than 4 GW of green hydrogen by 2030. For an increasingly energy-hungry Europe, however, this would hardly suffice. The bloc’s ambitious REPowerEU plan calls for importing ten million tonnes of renewable hydrogen by 2030. It looks like it is time to look further south.

    Enter Africa. Basking in the sun, and in the world’s attention ahead of COP27, Egypt, for one, has managed to attract billions of dollars in green hydrogen investments. There is no lack of suitors. The EU is there, obviously, and so are Australian Fortescue Future Industries, India-based Acme Group, and UAE-based Alcazar Energy. “Egypt is on the way to becoming a global powerhouse in the green energy value chain,” asserts Andrew Forrest, the executive chairman of Fortescue.

    Taking the regional lead, however, is another African country, Mauritania. The Islamic republic has quickly stolen the spotlight as one of the world’s top five locations for producing green hydrogen with its 40 GW AMAN project that dwarfs the country’s overall economy. Meanwhile, in Latin America, Chile aims to become a major green hydrogen exporter with a capacity of 24 GW by 2030, and in Central Asia, Kazakhstan is planning a 30 GW facility. And so it goes…

    So, the sun is starting to stream over to us, albeit temporarily transformed into somewhat less attractive looking (and smelling) green ammonia. And although it might not be as brilliant as the real thing, I am already feeling warmer just at the thought.

    [1] You might have heard of grey, blue and turquoise hydrogen, which are all produced from methane or coal and hardly qualify as environmentally friendly.

    Image courtesy of Selvan B on Unsplash
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.
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