Building A Sustainable Hydrogen Economy For Tunisia
Building A Sustainable Hydrogen Economy For Tunisia
Building A Sustainable Hydrogen Economy For Tunisia
Building a Sustainable
Hydrogen Economy
for Tunisia
From Quick Wins to Long-Term Benefits
ANALYSIS
Imprint
Publisher
Friedrich-Naumann-Foundation for Freedom
Residence Aziz (Block B - 2nd & 3rd floors)
City of Pines, Avenue Beji Caid Essebsi
Lac 2, 1053 Tunis
TUNISIA
/freiheit.org/tunisia-and-libya
/fnf.Tunis
Author
Chokri Aslouj
Editor
Alexander Knipperts
Contact
Phone: +216 71 966 097
Email: [email protected]
Date
12.2022
Table of contents
Summary _____________________________________________________________________________ 4
1. Background: the Tunisian energy deficit and its related problems __________________ 5
2. Analysis: Current Situation and Developments in the Hydrogen Market in Tunisia ___ 5
Germany leads the field in Tunisia’s international cooperation initiatives on green
hydrogen ______________________________________________________________________________6
Existing legislation on renewable energies to be complemented by specific rules applying
for green hydrogen ____________________________________________________________________7
Abbreviations ________________________________________________________________________ 13
POLICY PAPER 4
Summary
Tunisia stands to benefit enormously, and resolve a number of related challenges, from the
development of a sustainable green hydrogen economy. The country has recently formulated a
number of strategic documents to boost the renewable gas and agreed to a number of international
partnerships to complement national efforts. It could benefit from an early mover advantage by
positioning itself as a primary exporter of green hydrogen early, thereby establishing a source of
revenue and a basis for the development of a national green hydrogen economy. A number of key
policy recommendations follow from this analysis, among them a need for a cooperative approach in
the region and across the Mediterranean, a more prominent role of the private sector and a new
system of national energy governance that includes safeguard for marine life and scarce water
resources to provide incentives for sustainable renewable energy production.
POLICY PAPER 5
In addition, Tunisia's electricity mix is strongly dependent on natural gas, which currently represents
around 97% of the electricity sector's consumption. This situation poses also a serious problem for
securing the electricity production given that the Tunisian natural gas resources cover no more than
1/3 of the national needs and the rest is imported from Algeria. In Tunisia, energy subsidies represent
58% of development expenditure, 13% of the state budget or 3.7% of GDP. The surge in prices
following the Ukrainian crisis has aggravated the situation of the already precarious public finances,
by increasing the budgetary burden of the subsidy from 2885 to 5920 MTND. Despite this alarming
situation and regardless of its considerable potential, the actual contribution of renewable energies -
RE in the energy mix is still marginal and does not exceed 3% currently.
The yearly Greenhouse gas GHG emissions in Tunisia amount to 30 million tons of CO2. According to
its drawn up Nationally Determined Contribution in the year 2015, Tunisia proposed to cut its cross-
sectoral GHG emissions, by reducing its carbon intensity by up to 41% until 2030 compared to the
base year 2010. In 2021, Tunisia even raised its target reduction to 45%. The mitigation effort will
come mostly from the energy sector, which alone will account for 75% of the reductions in emissions.
The implementation of the Tunisian contribution in terms of mitigation requires the mobilization of
significant financial resources, estimated at around US$ 14 to 18 billion. The amount of 2.2 billion
could be self-funded by Tunisia; the rest has to come from international partners.
The Tunisian Solar Plan (TSP), which was devised in 2012 according to the country's strategic
orientations and updated in 2015 and 2022, stipulates the increase of renewable energy integration
rate to reach 35 % of the national electricity mix by the year 2030. To achieve this goal, the
development of solar and wind energy capacities (additional 4300MW) and the decrease of the
national primary energy consumption by 30% through the acceleration of energy efficiency actions,
have to be driven forward.
POLICY PAPER 6
Most experts agree today that green hydrogen is the best-suited energy carrier, which will facilitate
the storage and transport of renewable energy and thus allow to overcome their fluctuating supply. It
will also make the decarbonization of the so-called hard to abate sectors (heavy-duty terrestrial and
maritime transport, aviation, heavy industry, etc.) possible, which is an indispensable condition to
achieve the carbon neutrality by the year 2050.
Germany leads the field in Tunisia’s international cooperation initiatives on green hydrogen
In a far-sighted move and in order to strengthen their long-standing cooperation, Germany and Tunisia
concluded in December 2020, the Tunisian-German Alliance for green hydrogen. Pursuant to this
agreement, Germany has granted 31 million € to help Tunisia kick-start a green hydrogen market by
implementing a pilot production unit KfW, conducting studies, performing capacity building activities
and establishing an institutional and regulatory framework GIZ. After conducting three rounds of the
high-level Tunisian-German dialog on green hydrogen and organizing three introductory workshops,
the project “Green hydrogen for sustainable growth and a low-carbon economy in Tunisia
(H2Vert.TUN) was formally launched, in June 2022.
On behalf of (BMZ), the Wuppertal Institute has issued in April 2021 a study, which highlighted the high
potential and the very competitive production costs of PtX in Tunisia. Furthermore the Bavarian
Ministry for European and International Affairs launched a Tunisian-Bavarian technology and
innovation program for green hydrogen was announced on September 7th, 2022 with a financial
support of the federal Land of Bavaria amounting to 820,000 €.
Other countries did not take long to express their interest to develop a close energy partnership with
Tunisia. The Italians, with a long tradition in the hydrocarbons sector in Tunisia, were also quick to
come forward and dispatched two high-level delegations in May and June 2021, representing the
giants of the energy sector SNAM and ENI, to convey to the head of government, their willingness to
invest heavily in the green hydrogen sector in Tunisia.
Four (MoU)’s between Tunisia and Japan were also announced at the business forum, organized as
part of the Tokyo International Conference on African Development TICAD 8, which was held in
August, 2022 in Tunis, two of which at least are directly linked to the production of green hydrogen,
namely the water desalination and the production of renewable energy. Business France, the French
agency in charge of the internationalization of the French economy, and the French Agency for the
Environment and Energy Management (ADEME), organized in September 2022, in Tunis, the first
Africa-France Forum for ecological and energy transition. Representatives from eight countries
(Tunisia, Algeria, Ivory Coast, Cameroon, Senegal, Egypt, Libya and France) presented the issues and
solutions for the environment, energy transition and sustainable cities including those related to the
development of green hydrohen.
Within the framework of the working visit of Lord Tarek Mahmoud Ahmed, the British Minister of State
for South and Central Asia and North Africa, Tunisia and the UK have signed in June 2022 an MoU to
reaffirm the commitment of the British government to further support Tunisia in various sectors,
especially those related to its energy transition, by creating a financing line worth 2.5 million pounds
for purchases and services originating from UK that will be included in the establishment of clean
energies and green hydrogen projects in Tunisia.
This seems to pander particularly to the interests of Tunur, a subsidy of the British company Nur
energy, which has a successful tender track record in RE projects in Tunisia and which has developed
POLICY PAPER 7
a long-term green hydrogen strategy in Tunisia, based on developing a series of projects for the
production of green hydrogen and its derivatives beginning with an ammonia producing pilot project
in Gabes.
All relevant financial institutions for Tunisia, such as the German bank of reconstruction – KfW, The
European Investment Bank EBI, the European Bank for Reconstruction and Development – EBRD, the
African Development Bank – ADB, the International Finance Corporation – IFC (World Bank Group),
etc., have assured the Tunisian government of their support for the Tunisian energy transition in
general and the development of the GH sector in particular.
We may consider that the existing legislative framework relating to hydrocarbons and renewable
energies covers the production and use of green hydrogen quite well and requires therefore little or
even no further adjustments at all. In general terms, new laws would be needed for:
- Electrolysis (Hydrogen production and storage) and Hydrogen injection in gas networks (Gas sector)
- Manufacturing and use of synthetic fuel from hydrogen (Oil sector)
- Use of hydrogen for transportation (Road and rail transport sector)
In the elaboration of the Tunisian national green hydrogen strategy, which was recently launched by
GIZ, the future development of the green hydrogen market in Tunisia should necessarily take into
consideration the development of two sectors, one oriented towards the local use of this resource and
the other towards its export, especially to Germany/Europe. However and given that the storage and
distribution infrastructure as well as the industrial hydrogen consuming applications are more
developed in Europe than in Tunisia, this sector should be the first to be considered since it’s easier,
cheaper and faster to implement because it only requires the build-up of production capacities. To
offset the large deficit in the foreign trade balance and create a source of hard currency to finance its
development and overcome its precarious financial situation, Tunisia is well advised to work diligently
in order to position itself well in advance, among the major green hydrogen exporting countries.
In May 2022, the European Commission presented the REPowerEU Plan, which pledges to end the
European Union's dependency on Russian fossil fuels and to tackle more rapidly the climate crisis,
which manifested itself clearly during this last summer throughout Europe. The objective to be met by
the year 2030, according to this plan is to attain 10 million tons of green hydrogen from domestic
production and 10 million tons from imports, in order to replace natural gas, coal and oil in hard-to-
decarbonize industrial and transport sectors, the implementation of which requires at least € 84 billion
in investments over the next 7 years. This constitutes a unique opportunity for Tunisia to get its share
of the pie.
POLICY PAPER 8
Electricity from renewable sources and produced in Tunisia could be exported in the form of electricity
or already transformed into gaseous green hydrogen. Currently two projects are planned to
interconnect Tunisia with Europe. The Elmed project consists of a new interconnection between
Tunisia and Sicily to be carried out through a 500MW High Voltage Direct Current – HVDC
transmission submarine cable aiming at increasing the interconnection capacity of the Euro-
Mediterranean. As for the TuNur project, a 2,000 MW HVDC transmission system will provide 13
TWh/year of low-cost controllable solar energy to European consumers under long-term (CPPAs).
Compressed gaseous hydrogen could also be exported mixed with natural gas at a proportion of 15
to 20% and transported via the existing Transmed gas pipeline to Italy or in pure form via a dedicated
pipeline to be built in the future. Liquefied green hydrogen or other liquid derivatives (methanol,
ammonia, eFuels, …) could furthermore be transported by sea with special tanker ships.
Building the green hydrogen economy - the case for local use in industry, power generation
and transport
Industry
Hydrogen is used currently in several industrial sectors mainly as a feedstock rather than an energy
carrier. The possible use of green hydrogen or derivatives in the future is specific for each industrial
segment and could range from the simple substitution of the already used fossil based hydrogen to
changing entirely the production processes:
Refining: In the national reform plan of the energy sector in Tunisia "TUNEREP" and more specifically
in the activity No. 8 relating to the feasibility study for the development of the STIR oil refinery, it is
stipulated the establishment of a natural gas based hydrogen production unit with a capacity of 2.4T/h
for supplying hydrogen consuming chemical processes (hydro-cracking, desulphurization, etc.). A pilot
project for the production of green hydrogen could constitute an appropriate substitution alternative
allowing the reduction of the refinery's carbon footprint and pave the way for a future partial or total
reconversion towards the production of green Fuels.
Cement: Tunisia has nine cement factories, which are responsible of 3000 kt CO2/a. green hydrogen
could replace the extreme polluting petroleum coke, used currently for high temperature heat
generation in the Tunisian cement industry. Furthermore, cement factories could serve as abundant
CO2 sources, needed for the production of green methanol (H2 + CO2).
Fertilizer: Apart from the production difficulties linked to the political and social instability in recent
years, Tunisia occupied the third (2010) and the 5th place (2015) in the worldwide ranking of the
phosphate producing countries. The CPG, a state owned company, is carrying out all mining activities
in the south of Tunisia. The GCT uses most of the extracted phosphate to produce fertilizers, a state
owned company and TIFERT, a Tunisian-Indian joint-venture. Ammonia, the second most produced
synthetic chemical in the world, is a chemical compound formed by nitrogen (N) and hydrogen (H)
atoms, which is necessary for the production of fertilizers.
Tunisia could avoid its ammonia imports, currently ranging from 250 – 400 Kt/a, and even become
an exporting country by developing a green ammonia industry.
POLICY PAPER 9
Other industries: Methanol (CH3OH) is the second largest produced synthetic chemical after
ammonia; it is an important feedstock for the chemical, pharmaceutical and building materials
industries. Methanol can also be used as an energy carrier for RE or as a fuel either directly mixed with
other hydrocarbons or further converted to MTBE or DME.
Power Generation
By increasing the share of intermittent renewable energy in the electricity mix, it becomes more and
more challenging to balance the temporal and spatial mismatch between the demand and the supply.
To meet the peak demand, renewable energy must be stored as electricity or PtX and the grid must
become smarter to allow operation flexibility. Besides pumped storage, batteries, grid expansion and
cross-border trading, and because many gas turbines in the Tunisian power plants are ‘hydrogen
ready’, green hydrogen as a fuel could become an option to offset the mismatches, by managing the
surplus electricity generated from non-dispatchable and fluctuating RE sources and thus partially
replace the 4000 Ktep consumed to generate electricity.
Furthermore, green hydrogen could replace fossil-based hydrogen used currently for gas turbines’
cooling. Green hydrogen could also be injected into existing natural gas pipeline networks either
directly or after being converted into syngas. It is assumed that the share of green hydrogen could go
as high as 20% without the need of any costly retrofitting measures for the existing transport and
distribution gas infrastructure.
Transport
The transport sector accounts for about 26% of Tunisia’s CO2 emissions and 31 % of its national
energy consumption. Powering the different transportation modes with green hydrogen could
contribute significantly to decarbonize this sector.
Railway: Only circa 4% of the railway network in Tunisia is electrified, the rest is operated with diesel
locomotives. For this reason, the SNCFT is looking for sustainable alternatives and has launched in
2021, with the financial and technical support of the EIB, a call for tenders for a feasibility study on the
deployment of alternative propulsion solutions in the Tunisian railways. Given the high investment
costs for overhead electrification infrastructures and the successful experience with H2 trains in the
German Lower Saxony and elsewhere, locally produced gaseous green hydrogen could become the
ideal solution for retrofitted existing diesel locomotives in replacement of the imported diesel.
Shipping: In the Mediterranean Sea circulates more than 20% of world trade, one of the busiest
Mediterranean maritime routes passes just alongside the Tunisian coastal city of Bizerte, which is
located in the northernmost point of the African continent. In the course of cutting at least 50% of
(GHG) emissions by the year 2050, as decided by the IMO in 2018 and following the deployment of
large-scale industrial hydrogen production, Bizerte could become a main “gas station” in the
Mediterranean, where ships passing by will make a stop to refuel with green hydrogen or derivates
(green ammonia).
Road: While Battery Electric Vehicle are better suited for light duty vehicles such as passenger cars
and vans, Fuel Cell Electric Vehicle running on hydrogen should be prioritized for heavy duty and long-
haul transport as well as for long distance buses.
The state owned bus service company SNTRI operating 121 buses from Tunis to nearly all significant
towns in the country could be an ideal candidate to introduce H2 powered buses for longer distances.
POLICY PAPER 10
Aviation: IATA has set the target of 50% reduction of aviation CO2 emissions by 2050. Since both of
the Tunisian airliners are members of IATA, this is going to be binding for Tunisia as well, which will
have to substitute wholly or partly its 300K tons kerosene imports, with locally produced green fuel.
Adopting regional concerted policies and collaborative approaches: It is crucial to develop the
respective national green hydrogen strategies in the Maghreb states in a prospect of clustering and a
spirit of constructive cooperation and not of disruptive competition or destructive animosity.
Strengthening the role of the private sector in green hydrogen development: Most of the activities
related to green hydrogen are carried out currently within the framework of Tunisian-German bilateral
cooperation in accordance with the MoU signed by the two governments and are therefore considered
to be the exclusive prerogative of the administration. However, the bureaucratic approach,
characterized by its cumbersome procedures, resistance to change, lack of innovation, deficiencies in
terms of governance, exclusive rather than inclusive mind-set, limited delivery capacity in the concrete
realization of industrial projects in accordance with the objectives set, etc., may end-up jeopardizing
the chances of a swift success of the green hydrogen industry development process, as already
experienced in other international cooperation projects. Thus, it is strongly recommended to explore
new ways to carry out international cooperation projects on green hydrogen by involving the private
sector and the civil society as equal stakeholders, alongside with public central authorities and
preferably in a decentralized rather than centralized manner.
Reforming the governance infrastructure to remove roadblocks and boost production incentives: One
of the major obstacles that has hindered so far the development of renewable energies and caused a
considerable delay in the Tunisian energy transition is of a structural nature. Indeed, the development
of renewable energies has always been considered as a threat to the monopoly of the national
electricity and gas company STEG. After having yielded, the production monopoly with the law 2015-
12 relating to the production of electricity from renewable sources, the unions used (STEG’s)
monopoly on the national grid to prevent the new photovoltaic power plants from being connected to
consumers, which deterred investors from moving forward to carry out their projects.
Within the ministry MIEM, conventional electricity and renewable energies are under the aegis of the
same general directorate, which is likely to perpetuate the status quo, since this same structure is
playing the role of judge and jury. This blockage causes Tunisia to lose nearly 2,500 MD of unrealized
investments and 400 MD of annual forgone revenues for the State. It is therefore high time to take
inspiration from Algeria and organically separate the decision-making bodies of conventional and
renewable energies and to provide state guarantees for the connection of renewable energy power
plants to the national electricity grid. For the further development of renewable energy and
consequently of green hydrogen in Tunisia, a lasting solution for this problem is urgently needed.
POLICY PAPER 11
Green hydrogen as a driver for decent employment and a remedy for brain drain: Tunisia has about
50,000 higher education graduates per year, more than 30% of whom are forced into long-term
unemployment. One of the main causes is linked to the non-adequacy of the curricula and research
projects, to the actual needs of the national economy. Another major cause lies in the relatively modest
technological level of a large part of the Tunisian industry, which does not require a large number of
highly trained personnel because of an outdated development model. With the establishment of a
new, state of art green economy around renewable energy and green hydrogen and the
implementation of capacity building programs that must go hand in hand with it, there is a unique
opportunity for the Tunisian higher education and scientific research sector to become a catalyst for
a new economic development and a driver for the creation of lucrative jobs, which could significantly
reduce the worsening brain drain and illegal immigration phenomena.
Addressing the water scarcity problem in the course of developing green hydrogen: At an early stage of
the reflection and planning, the green hydrogen-water nexus has to be addressed. It is important to
acknowledge in this regard, that the level of water stress in Tunisia, which is defined as the ratio of the
fresh water withdrawal over the available renewable water resources, is estimated at 96%. This
situation could be well considered as severe water scarcity and will constitute one of the major
challenges for the Tunisian people in the years to come. The large-scale industrial development of
green hydrogen production, based on the electrolysis of desalinated seawater will make it possible to
increase the volume of desalinated seawater and thus to achieve an economy of scale, which will lead
to a significant cost reduction of water desalination. This will benefit the production of green hydrogen
and the production of potable water alike.
Preserving the Mediterranean Sea against the impacts of the large-scale development of green
hydrogen: The Mediterranean Sea will be practically the only water reservoir from which all the
Mediterranean bordering and green hydrogen producing countries will draw. The enormous quantities
of brine that will be discharged following the very large-scale desalination of seawater will constitute
a major ecological hazard for the marine fauna and flora. In this respect, the interests of all
Mediterranean basin countries must be protected; therefore, a multinational structure should be
created for this purpose to protect and preserve the Mediterranean Sea from overexploitation.
Using communal waste for green hydrogen transformation: Tunisia produces roughly 2.6 Mt/a of
household waste with an annual growth rate of 3% and a biodegradable proportion of 68%.
Approximately 80% of this waste is collected in urban areas and 10% in rural areas. No more than 4%
of the waste is recycled, mainly plastic; the rest is buried in public landfills at a cost of 200 Dinars/t.
This approach worked more or less so far, except for the fact that almost all communal landfills are
currently saturated and the government lacks the time and the funds to build new ones. The solution
lies in the recovery and the recycling of the municipal waste, in particular as a source of green CO2.
With green hydrogen produced with renewable-energy-based electrolysis and green carbon produced
by mechanisation or gasification of biomass, it is possible to synthesize the various eFuels as well as
green methanol.
Reshaping European Energy Relationships – resolving geopolitical tensions to the benefit of all: The
waged wars for black gold in the twentieth century and the ongoing conflict between Russia and
Ukraine have shown that energy resources as a commodity can become a formidable economic and
political weapon, which brings misery rather than wealth to the world. The same goes for the closure
by Algeria of the Maghreb-Europe gas pipeline, which passes through Morocco and crosses the
Mediterranean to transport Algerian gas to Spain as a form of retaliation, because of the dispute
between the two countries over the Western Sahara issue.
POLICY PAPER 12
In the same conflicting logic, two gas pipeline megaprojects are being prepared: the first, 6000 km long,
will transport Nigerian gas through Morocco to Spain via 16 West African countries, the second
concerns the Galsi project with a 1450 km long gas pipeline which will link the Algerian installations
of Koudiet Draouche to Piombino in Italy via Sardinia passing on the Mediterranean Sea bed in addition
to its interconnection at Hasi R'mel with the 4000 km long trans-Saharan gas pipeline, thus linking
Nigeria to Europe through Algeria and Niger. This will obviously make obsolete, the Trans-
Mediterranean gas pipeline, transporting the Algerian gas to Italy and crossing Tunisia for a share of
about 6%.
In addition to these two projects, a third proposition has been announced recently concerning a 3000
km gas pipeline linking Italy to Nigeria via Niger and Libya. Considering its immense potential in
renewable energy resources, its vast unexploited desert territories, its existing and planned pipelines
to Europe, the Maghreb in general and Tunisia in particular could become the main supplier of green
hydrogen and derivatives to Europe in general and Germany in particular. To turn the Maghreb into a
viable and durable source of green energy for Europe, increased efforts should be made to defuse the
existing potential of conflicts in the region and to establish a fair win-win relationship between the two
shores of the Mediterranean.
Similar to the European Coal and Steel Community Treaty of 1952, which definitively turned the page
on the hostilities of the Second World War and laid the foundations of the European Union, the
Maghreb Community of green hydrogen could offer a historic opportunity to revive the Arab Maghreb
Union project on a solid basis of common economic interests for the benefit of the peoples in the
region. Comparably to the Organization of Petroleum Exporting Countries - OPEC, Tunisia could then
in the near future, become alongside its neighbours, a founding and influential member of the
Organization of Hydrogen Exporting Countries - OHEC.
POLICY PAPER 13
Abbreviations
ADEME: Agence de l’Environnement et de la Maîtrise de l’énergie, the French environment and energy management agency.
BMZ: Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung, the German ministry for economic
cooperation.and developement
BEV: Battery Electric Vehicle.
CPG: Compagnie des Phosphates de Gafsa, a Tunisian state owned company for phosphate mining.
DME: Dimethyl ether
EIB: European Investment Bank.
FCEV: Fuel-Cell Electric Vehicle.
GA: Green Ammonia.
GCT: Groupe Chimique Tunisien, a Tunisian state owned company for chemical industries.
GDP: Gross Domestic Product.
GHE: Greenhouse Gas Emissions
GHG: Greenhouse Gas Emissions
GIZ: Gesellschaft für Internationale Zusammenarbeit, German agency for international cooperation.
GM: Green Methanol
HVDC : High Voltage Direct Current
IATA : International Air Transport Association
IMO: the International Maritime Organization
MIEM: Ministère de l’industrie de l’Energie et des Mines, Tunisian Ministry for Industry Energy and Mines
MTBE: Méthyl tert-butyl éther
MTND: Million of Tunisian Dinars (Tunisian currency)
MoU: Memorandum of Understanding
NDC: Nationally Determined Contribution
PtX: Power to X
RE: renewable energy
SNCFT: Tunisian national railway company
SNG : Synthetic Gas
SNTRI: Société Nationale de Transport Rural et Interurbain, Tunisian state owned company for intercity transportation.
STEG: Société Tunisienne d’Electricité et de Gaz, a state owned company for electricity and gas
STIR: Société Tunisienne des Industries de Raffinage, a state owned company for oil refining
TICAD: Tokyo International Conference on African Development
TIFERT : Tunisian Indian Fertilizers, a Tunisian-Indian joint venture company for fertilizers
TSP: Tunisian Solar Plan
TUNEREP: Tuniisian Energy Reform Plan