Algeria taps EU funds to build green hydrogen framework

From the newsletter

The North African nation of Algeria has unveiled a $32 million EU- and Germany-backed plan to boost renewable energy and green hydrogen capacity. The initiative seeks to create a supportive environment for clean energy development, aiming to cut reliance on conventional electricity and reduce domestic fossil fuel use—freeing up more natural gas for export.

• North African nations are increasingly positioning green hydrogen as a hedge against fossil fuel dependency and as a lever for export-driven clean growth. 

• The EU’s support for Algeria shows that well-articulated plans can draw funding—even in countries outside Africa’s usual hydrogen frontrunners.

More details

• Among other things, the plan aims to provide tools for developing the green hydrogen economy,  building institutional and technical capacities in the field of renewable energy, and creating appropriate conditions for implementing renewable energy projects.

• The plan also aims to establish an information database on national potential for green hydrogen applications, in addition to providing planning and monitoring tools to achieve energy savings and reduce emissions.

• The framework represents a strategic move to prepare Algeria’s institutions for long-term green energy integration. The country is seeking to increase renewables' share to 27% of its electricity mix by 2026, generating roughly 15 gigawatts (GW). This is a significant pivot in a country where hydrocarbons have long dominated the energy system.

• Unlike leading players in Africa’s green hydrogen sector, which have quickly moved to announce multi-billion-dollar projects, Algeria is intentionally entering a pre-implementation phase. This phase is centered on laying the groundwork for success—rather than rushing into high-profile deals. The country is focusing on developing policy tools, building a hydrogen database, and establishing planning and monitoring systems to ensure a robust foundation for its hydrogen ambitions.

• Such a structured, preparatory approach reflects a recognition that long-term success in green hydrogen depends on foundational readiness. By focusing on capacity-building first, Algeria is signaling that it intends to move deliberately from strategy to execution, avoiding the premature hype seen in other markets.

• Algeria’s decision to target capacity-building over megaproject headlines underscores its bid for credibility in the eyes of European partners. With the EU actively seeking stable, diversified green hydrogen sources beyond Morocco and Namibia, Algeria is now trying to position itself as a serious contender by showcasing institutional readiness over ambition alone.

• The pre-implementation focus aligns with the geopolitical realities of Algeria’s energy landscape. As one of Africa’s largest gas exporters, particularly to Europe, Algeria sees green hydrogen as an opportunity to extend its influence in a decarbonising world. 

• By replacing some domestic gas use with renewable energy sources like solar and wind, Algeria could free up more natural gas for export in the short term. Over the longer term, the country is aiming to position itself as a key hydrogen supplier to Europe’s future clean energy markets.

• Still, there are challenges. Algeria’s energy sector remains heavily centralised, and private sector participation in clean energy remains limited. Regulatory bottlenecks and a historical overreliance on public investment may slow progress unless reforms accompany the current planning phase. 

• The Maghreb nation’s energy transformation also hinges on international partnerships beyond the EU. While the current plan is externally funded, long-term hydrogen development will require industrial collaborations, technology transfers, and domestic private sector growth. Algeria will need to clarify its investment rules and ease barriers to entry if it wants to attract companies capable of building large-scale hydrogen infrastructure.

• Institutionally, the focus on data, planning tools, and monitoring systems sets a strong foundation. However, without parallel efforts on pilot projects and demonstration sites, Algeria may struggle to prove its readiness for deployment.

• By contrast, Morocco has launched test sites and signed hydrogen export MoUs, while Namibia is conducting feasibility studies with global partners. Algeria, by contrast, has only two identified green hydrogen projects so far—underscoring how early its journey still is. Without visible pilot efforts or implementation pathways, it may struggle to convince international investors of its readiness.

Our take

• The country's dual strategy of protecting fossil fuel revenues while preparing for green energy markets is forward-thinking, but Algeria must swiftly move beyond frameworks to tangible projects to avoid being left behind by faster-moving competitors.

• By moving deliberately, Algeria is avoiding the risk of overpromising. But momentum matters. The hydrogen transition in Africa is picking up speed, and the few months will be crucial for Algeria to show that its framework is not just aspirational but operational.

• Algeria’s methodical approach emphasises institutional readiness and long-term planning, presenting an opportunity for the country to carve a niche in Africa’s evolving energy landscape.