Options
2024
Report
Title
Towards a Green H₂ Economy: Algeria Country Report
Abstract
Hydrogen is a promising environmentally friendly alternative to fossil-fuel-based energy carri-ers if it is green hydrogen (GH2), i.e. produced using renewable energy sources. Green hydro-gen has been identified as a key element of the European as well as the global energy transi-tion. Moreover, it is at the top of Germany’s agenda for international cooperation, due to the huge demand for GH2 projected in the future. This report provides a socio-economic analysis of Algeria as one of the potentially strategic partners of Germany in the field of hydrogen supply. The analysis focuses on Algeria’s overall conditions, opportunities, and challenges and is complemented by an investigation of the po-tential societal acceptance of hydrogen production and use (both locally and for export). Algeria is endowed with huge renewable energy and GH2 potentials. The country enjoys one of the highest solar irradiances worldwide. It also has a relatively well-developed gas infrastruc-ture connecting it to Europe, which could be used alternatively for the transport of hydrogen or hydrogen derivatives in the future.
At present, (green) hydrogen does not seem to be at the top of Algeria’s policymakers’ agenda. The country is a latecomer to the race for hydrogen investments in the MENA region. The Algerian government has just recently published its National Hydrogen Development Strategy and signed a limited number of cooperation agreements with Germany, Italy, and other inter-national partners for the eventual exploration of hydrogen production opportunities. In light of the country’s slowdown in gas production and increasing energy consumption, hydrogen could contribute to increasing Algeria’s energy security, diversifying its energy mix, decarbonizing carbon-intensive sectors, and helping to realize the country’s commitments to fight climate change. However, several economic, technical, and, above all, politico-economic challenges arise from the potential investment in a hydrogen economy. Industrial development and diversification and a strong private sector are largely lacking. Institutional and market re-forms are necessary to increase transparency, encourage market entry, and level the playing field for domestic as well as international investors along the hydrogen value chain. Most im-portantly, the shift from a fossil fuel-based economy to a new model with uncertainties regard-ing rent creation appears to be a risky choice for the different centers of power in Algeria, such as the business elites, state-owned oil, and gas enterprises.
At present, (green) hydrogen does not seem to be at the top of Algeria’s policymakers’ agenda. The country is a latecomer to the race for hydrogen investments in the MENA region. The Algerian government has just recently published its National Hydrogen Development Strategy and signed a limited number of cooperation agreements with Germany, Italy, and other inter-national partners for the eventual exploration of hydrogen production opportunities. In light of the country’s slowdown in gas production and increasing energy consumption, hydrogen could contribute to increasing Algeria’s energy security, diversifying its energy mix, decarbonizing carbon-intensive sectors, and helping to realize the country’s commitments to fight climate change. However, several economic, technical, and, above all, politico-economic challenges arise from the potential investment in a hydrogen economy. Industrial development and diversification and a strong private sector are largely lacking. Institutional and market re-forms are necessary to increase transparency, encourage market entry, and level the playing field for domestic as well as international investors along the hydrogen value chain. Most im-portantly, the shift from a fossil fuel-based economy to a new model with uncertainties regard-ing rent creation appears to be a risky choice for the different centers of power in Algeria, such as the business elites, state-owned oil, and gas enterprises.
Author(s)
