The European Commission has pledged to provide €12m ($12.9m) in grants for green hydrogen and its derivatives such as H2-based fertilisers in Kenya under its Global Gateway fund, as part of a wider €3.4bn package for climate and nature in the country.
Kenya currently imports the vast majority of its fertilisers, exposing the country’s farmers to extremely volatile prices over the past two years due to rising prices of fossil gas (used to produce hydrogen for ammonia-based fertiliser) and disruption to exports owing to the Russia-Ukraine war.
The EU and US had excluded food and fertilisers from their sanctions against Russia and Belarus.
But analysis published in November last year by think-tank International Food Policy Research Institute suggests that sanctions on individuals heading these businesses, retaliatory export taxes, a standstill in shipping, and the inactivity of major infrastructure such as an ammonia pipeline between Russia and Ukraine, all took a toll on fertiliser exports in the first four months of 2022. Only phosphates, which do not require hydrogen, recovered beyond 2021 levels in subsequent months.
As such, while Kenyan president William Ruto had announced at the end of May that the country would soon sign a trade pact with Russia. But the EU — Kenya’s biggest market for exports, primarily of agricultural products — is making its own moves to fund the nation’s shift to domestic fertiliser production.
Germany is considering a €60m loan towards a green fertiliser project in the geothermically active Olkaria region as part of a promised €450m in climate finance, according to reporting by Bloomberg, as well as another €60m in cancelled debt as long as the money is redirected to renewable energy and sustainable agriculture.
However, a spokesperson for the German ministry for economic cooperation and development confirms to Hydrogen Insight that while the funds will likely come from the state bank KfW, no decision has been made on which specific regions it expects the project will be sited in, although “Olkaria will be one of the options”.
State electricity firm KenGen opened a request for proposals last year for a pilot green hydrogen, ammonia and fertiliser facility in Olkaria, while Australian mining and energy company Fortescue agreed in March to develop a 300MW plant producing the same molecules and drawing on the same geothermal resources.
Hydrogen Insight has reached out to the German ministry of economic cooperation and development for clarification.
While Fortescue has included Kenya in the five regions it is prioritising for final investment decisions (FIDs) this year, it is more likely that the German loan will go towards the KenGen plant.
A green hydrogen strategy and roadmap for Kenya, co-developed by its government, the EU and German development agency GIZ, includes as one of its targets this year to “support/fast track catalytic projects that demonstrate commercial viability, including implementation of KenGen’s Olkaria green hydrogen demonstration project”.
“Kenya's ambitious target of 100% clean energy by 2030 is an inspiration for other countries,” said Ursula von der Leyen, president of the European Commission.
“The roadmap on green hydrogen will support Kenya towards that goal. It will help cut emissions, support a strategic industry for the country's future and boost its export capacity towards partners like the EU.”
Updated to include comment from German ministry of economic cooperation and development.
