German power utility RWE (RWEG.DE) announced on Monday that it has withdrawn from Namibia’s $10 billion Hyphen green ammonia project, dealing a setback to the country’s ambition to position itself as a major hydrogen hub.
The move underscores a broader trend of companies re-evaluating investments in a technology that remains costly to develop, Reuters reported.
RWE had signed a preliminary, non-binding memorandum of understanding with Hyphen in 2022 to purchase around 300,000 tonnes of ammonia annually starting in 2027.
Ammonia, primarily used in fertilizer production, is usually made with natural gas. To decarbonize the process, natural gas must be replaced with hydrogen extracted from water using renewable energy sources.
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“We can confirm that RWE is currently not pursuing any further projects in Namibia,” the company said in a statement, noting that demand for hydrogen and derivatives such as ammonia is developing more slowly than expected in Europe.
Hyphen spokesperson Ricardo Goagoseb emphasized that RWE had only signed “a memorandum of understanding to explore potential off-take,” and had not entered into a final purchasing agreement.
Meanwhile, indigenous rights groups raised objections earlier this year. In April, they wrote to RWE, arguing that the concession fell within a national park and overlapped with ancestral Nama land.
Andrea Pietrafesa, legal advisor at the European Centre for Constitutional and Human Rights, speaking jointly with the Nama Traditional Leaders Association, welcomed the company’s withdrawal, saying it was right not “to purchase goods produced on land where indigenous rights are violated.”
RWE, however, stressed that its decision was unrelated to the complaints. “Against this backdrop, we have reviewed the relevant projects at RWE. This included the project with Hyphen in Namibia,” the company said.
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Image Credit: Gasworld
