Guidelines for Sustainable Hydrogen Projects in Developing Countries by UNIDO
The global hydrogen sector is experiencing unprecedented growth, with over 1,500 large-scale projects announced as of May 2024—a 50% increase from the previous year. This surge presents a monumental opportunity for developing countries, particularly in Africa, which could produce over 50 million tons of renewable hydrogen annually by 2035, positioning itself as a key player in the future hydrogen economy. However, this rapid expansion also carries significant social and environmental risks, potentially replicating the extractive industry models of the past, where local benefits were limited and environmental degradation was common.
Recognizing this critical need for a sustainable framework, a broad coalition led by the United Nations Industrial Development Organization (UNIDO), with contributions from the UN Environment Programme (UNEP), the UN Economic Commission for Europe (UNECE), the African Development Bank (AfDB), and other key stakeholders, has developed the "Guidelines for Sustainable Hydrogen Projects in Developing Countries." This document serves as a comprehensive tool for policymakers and financial institutions to evaluate and approve large-scale hydrogen projects (minimum 200 MW capacity), ensuring they deliver long-term local benefits while safeguarding the environment and promoting social equity.
The Guidelines' framework is built upon four core thematic pillars, known as the "4 Ps":
1. People
This pillar emphasizes the social dimensions of hydrogen projects. It requires developers to adhere to International Labour Organization (ILO) standards, ensuring decent work, fair wages, safe working conditions, and skills development programs. Projects must present explicit employment plans that promote local hiring and provide equal opportunities for marginalized groups, including women, persons with disabilities, and youth.
Beyond labour rights, robust social responsibility is crucial. Developers must seek approval from local communities through the principle of Free, Prior, and Informed Consent (FPIC), particularly for Indigenous populations. Transparency and public disclosure of project plans, impacts, and benefits are mandatory. Projects are encouraged to provide social infrastructure (e.g., schools, clinics) and adopt co-equity or cooperative models that allow communities to share in the project's ownership and financial success.
2. Planet
This pillar focuses on environmental stewardship, particularly water management and ecosystem protection.
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Water Use: Hydrogen production is water-intensive. Projects must conduct thorough water risk and impact assessments to ensure they do not compete with local water needs. In water-scarce regions, investment in desalination plants is expected, with a requirement to supply excess desalinated water to local communities at affordable rates. A comprehensive brine management plan must be developed and monitored to prevent ecological damage from desalination byproducts.
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Environmental Protection: While hydrogen is not a direct greenhouse gas, leakage across its value chain can contribute to global warming. Projects must implement stringent safety standards, leak detection systems, and regular maintenance. Environmental Impact Assessments (EIAs) using a life-cycle approach are essential. Projects must avoid areas with endangered species and ensure no degradation of natural carbon sinks, such as forests and wetlands.
3. Prosperity
The goal of this pillar is to maximize economic benefits for the host country.
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Local Value Creation: Governments should consider implementing well-designed Local Content Requirements (LCRs) that are mindful of World Trade Organization (WTO) rules. LCRs encourage the use of local goods, services, and workforce across the hydrogen value chain, fostering technology transfer, skills development, and job creation.
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Sustainable Financing: To bridge the significant financing gap for hydrogen, mobilizing private capital through blended finance and public-private partnerships is vital. Rather than mandating potentially costly minimum local financing shares, governments should focus on capacity building for local sponsors and banks, encouraging domestic hydrogen use to generate local currency revenue, and facilitating the entry of pension funds into long-term project financing.
4. Provision of Renewable Energy
Given the massive electricity demand of renewable hydrogen, this pillar ensures that projects do not strain local grids or compete with community energy access. Projects must utilize state-of-the-art electrolyzer technology to maximize efficiency. For grid-connected projects, a portion of the surplus renewable energy must be allocated to local communities at preferential rates. For isolated projects, renewable energy should be the primary power source for both the project and the local population. Hydrogen projects should act as catalysts for regional decarbonization by investing in local grid infrastructure and training local energy professionals.
Conclusion
These Guidelines are not a rigid certification standard but a flexible set of criteria that can be adapted to specific national contexts. By integrating the four pillars of People, Planet, Prosperity, and Provision of Renewable Energy, they provide a comprehensive roadmap for transforming renewable hydrogen into a genuine tool for sustainable, equitable, and inclusive development in developing countries, directly contributing to the achievement of the UN Sustainable Development Goals.
