Carbon pricing gaps threaten Africa’s hydrogen ambitions

From the newsletter

Mauritania’s flagship green hydrogen project, AMAN, has stalled due to weak demand for green ammonia, a fate shared by a sister project in Angola. Developer CWP Global blames poor global carbon pricing, which leaves buyers unwilling to pay a premium for cleaner fuels, despite ideal conditions and strong regulatory support.

• Weak or absent carbon pricing, especially in major markets like the EU, disadvantages green hydrogen by failing to penalize carbon-intensive alternatives, making fossil-based ammonia comparatively cheap.

• Without robust carbon pricing, buyers face no financial incentive to shift to green fuels, leaving producers in Africa unable to recover higher costs despite clean energy advantages.

More details

• Sitting on 850,000 hectares of public land in Dakhlet Nouadhibou and Inchiri in northwest Mauritania, the AMAN project is among Africa’s most ambitious energy plans. It aims to harness 18 GW of wind and 12 GW of solar power to produce 1.7 million tonnes of green hydrogen and 10 million tonnes of green ammonia annually. A further phase plans 2.5 million tonnes of Direct Reduced Iron (DRI) production, with operations stretching through 2037.

• In Angola, weak demand is said to delay the final investment decision for the country's first green hydrogen plant, which aims to begin operations in 2027 with an annual output of 400,000 tonnes of green ammonia.

• “For now, there is nobody out there who wants to buy green ammonia [or even blue] at a price that works for the producers,” said Mark Crandall, CEO of CWP Global. “The waiting for offtake is painful for everybody involved,” he added.

• Mr. Crandall emphasized that the problem is neither resource-related nor regulatory. Instead, he pointed to a global pricing failure, where buyers remain unwilling to absorb the premium cost of green ammonia in the absence of strong carbon pricing or policy incentives.

• Africa’s green hydrogen ambitions face a growing structural challenge: the global failure to establish meaningful carbon pricing. As countries across the continent invest in large-scale renewable energy projects, they are finding that demand shortfall shaped by distorted international market conditions is an emerging challenge.

• The root of the problem lies in the absence or weakness of carbon pricing frameworks in key importing regions such as the EU, US and parts of Asia. Without instruments such as carbon taxes, emissions trading schemes or border carbon adjustments, fossil-based hydrogen and ammonia remain artificially cheap — with spot prices for conventional ammonia ranging from US $360 per tonne in China to US $660 per tonne in Germany in early 2025. 

• In contrast, green ammonia delivered internationally was assessed at US $887–1 052 per tonne. This price disparity severely undermines the financial case for green hydrogen, even as its environmental advantages are increasingly recognised.

• Africa’s green hydrogen model is primarily export-led. Countries including Morocco, Egypt, Mauritania,Namibia and Angola are positioning themselves as suppliers to global markets, drawing on abundant land, world-class solar and wind resources and governments eager to lead on energy transition. But these supply-side advantages are being undermined by a lack of pricing signals from major demand centres.

• This concern is further amplified by a recent study from the Technical University of Munich, which found that African green hydrogen exports to Europe are not economically viable without significant policy support. While it stops short of recommending specific interventions, the report highlights the importance of de-risking strategies, particularly long-term offtake agreements that provide price certainty and secure future demand. This confirms what many developers have long argued: without public-backed guarantees, private capital will not flow at scale.

• Carbon pricing is meant to create such incentives by making polluters pay and rewarding cleaner options. Yet in practice, most systems remain limited, delayed or poorly enforced. The EU’s Carbon Border Adjustment Mechanism (CBAM), for example, is still in a transitional phase and does not yet cover key hydrogen derivatives such as ammonia. 

• Meanwhile, African governments are moving ahead with plans to allocate land, sign framework agreements and draft hydrogen roadmaps. However, the international demand framework needed to absorb these volumes is evolving too slowly. This mismatch risks locking up capital in projects that cannot progress beyond planning. Until mechanisms like CBAM expand, African producers will continue to face a price disadvantage.

• Beyond carbon pricing, industrial policies in Europe and Asia, such as mandates for green steel, fertiliser blending requirements or clean shipping fuels, could help create anchor demand for green hydrogen derivatives. Without these complementary levers, even well-funded pricing regimes may fall short of unlocking large-scale offtake.

• The impact is already clear. Projects struggle to reach financial close without confirmed buyers. As announced, the final investment decision of CWP’s planned plant in Angola is delayed due to demand uncertainty. Investors remain cautious and developers are forced to slow down or pause even in markets where governments have done their part to enable progress. 

Our take

• AMAN’s delay is not just a setback for Mauritania. It’s a warning for all early movers in the green hydrogen space: Until global carbon pricing catches up with climate ambition, the clean fuel revolution will remain stuck at the gate.

• Africa stands ready to supply clean hydrogen, if the world is ready to value it. However, without proper carbon pricing, global ambition and African capability will remain misaligned.

• AMAN’s delay exposes a market failure: Early-stage green hydrogen projects can’t scale without demand signals. Carbon tariffs or targeted subsidies are no longer optional, they’re essential to unlock offtake and de-risk investment.