Potential Financing Mechanisms for Green Hydrogen Development in Sub-Saharan Africa

Hydrogen as an energy carrier is experiencing renewed interest due to its potential to deliver zero-carbon energy, especially considering the rising costs and depletion of fossil fuel resources. Financing green hydrogen projects, along with clear offtake strategies, can attract financial institutions to invest in green hydrogen initiatives, from advisory and piloting to up-scaling. Although substantial funding is required for a green economy transition, success hinges on mobilizing capital through smart public and innovative financing mechanisms. The growth of capital markets, green market penetration, and emerging initiatives such as microfinance, green stimulus funds, sovereign wealth funds, and carbon finance can enhance large-scale financing of green economies globally. However, these capital flows are currently insufficient for the green energy transition and need to be scaled up. This review article evaluates the most promising mechanisms for mobilizing finance to drive the green economy transition in sub-Saharan Africa over the coming decades. It also assesses the potential benefits and risks associated with transitioning to Net-Zero emission economies in sub-Saharan Africa, driven by hydrogen energy development. The review indicates that investment in hydrogen as an energy carrier for green hydrogen development in sub-Saharan Africa has the potential to become a significant alternative to fossil fuels, albeit with a risk factor of approximately 35%. This study aims to unlock sustainable green financing mechanisms for sub-Saharan Africa.