A thirsty bet: How green hydrogen projects risk drowning Algeria’s water supply
Algeria’s push to become a global hub for green hydrogen—with plans to export the fuel to Europe—is colliding with a brutal reality: the country is already on the brink of a water catastrophe. Recent warnings from labor unions and energy experts reveal that the projects, if scaled as proposed, could consume a quarter of Algeria’s drinking water by 2050, while demanding 20 times more renewable energy capacity than the country currently produces.
The stakes are enormous. Algeria’s government, led by President Abdelmadjid Tebboune, has positioned green hydrogen as a €100 billion economic lifeline, targeting Europe’s energy transition. But the Union Générale Tunisienne du Travail (UGTT)-affiliated Fédération Générale de l’Électricité et du Gaz has sounded the alarm: the water needs alone—equivalent to 25% of Algeria’s annual potable water supply—threaten to worsen the “hydric bankruptcy” already gripping regions like Gabès and Tataouine, where protests over pollution and resource shortages have erupted repeatedly.
For entrepreneurs and investors, the dilemma is stark: Is this a high-risk, high-reward opportunity—or a reckless gamble on Algeria’s most precious resource?
The €100bn export dream: Why Europe is betting on Algeria’s sun and gas
Algeria’s strategy hinges on two pillars: abundant solar energy in the Sahara and cheap natural gas to produce hydrogen. The government has already signed preliminary deals with Germany, Italy, and the UK, with €10 billion in foreign investment pledged by 2030. The logic is simple—Europe needs clean energy to replace Russian gas, and Algeria has the sun, space, and gas reserves to deliver.
But the numbers don’t add up. SONATRACH, the state energy giant, estimates that 100 gigawatts of renewable capacity—nearly 20 times Algeria’s current output—will be needed to power even the first phase of green hydrogen production. Building this infrastructure would require massive water withdrawals for cooling systems and electrolysis plants, while depleting groundwater reserves in already parched southern regions.
Elyes Ben Ammar, a labor union leader at the Fédération Générale de l’Électricité et du Gaz, warns that the projects are “designed for export, not for Algeria.” His analysis shows that Gabès and Tataouine—the proposed hubs—are already battling industrial pollution, unemployment, and social unrest. Adding hydrogen megaprojects risks fueling new conflicts, as seen in 2023 when protests over Groupe Chimique Tunisien’s (GCT) emissions turned violent.
The diaspora’s dilemma: Invest or walk away?
For Algerian entrepreneurs—especially those in the diaspora—the green hydrogen rush presents both risks and opportunities. On one hand, the sector could unlock funding for Algerian tech startups in renewable energy, AI-driven grid management, and water-efficient industrial processes. Berlin, Paris, and Dubai are already home to Algerian engineers and financiers eyeing green hydrogen as a high-margin niche.
On the other hand, missteps could trigger capital flight. The African Development Bank (AfDB) has flagged Algeria’s green hydrogen plans as “highly speculative” without water-use guarantees and local community buy-in. If projects fail to secure social licenses, investors may pull out, leaving Algerian firms holding the bag.
Noureddine Melikechi, founder of Algeria’s first hydrogen-focused cleantech accelerator, argues that the real opportunity lies in domestic applications—using hydrogen to decouple industry from gas imports and revive dying regions like Ouargla and Béchar. “Algeria doesn’t need to export hydrogen to prove itself,” he says. “It needs to use it to fix its own crises—water, energy, and unemployment.”
The bottom line: Can Algeria avoid repeating Tunisia’s mistakes?
Algeria is watching Tunisia’s hydrogène vert experiment with caution. Tunisia’s labor unions have publicly rejected green hydrogen plans, citing water shortages, energy grid limitations, and social instability. If Algeria follows the same path, it risks wasting billions on export-oriented projects while ignoring its own crises.
For now, the government is pushing ahead, with SONATRACH and Sonelgaz leading pilot projects. But without strict water-use regulations, transparent cost-benefit analyses, and diaspora-led innovation, the green hydrogen dream could drown in red ink—and protests.
Key takeaway for entrepreneurs
Algeria’s green hydrogen push is a high-stakes bet—but success hinges on local solutions first. Entrepreneurs should focus on water-efficient tech, diaspora-led funding, and domestic industrial applications before chasing European export deals. The real money will be in fixing Algeria’s crises, not just selling its sun to Europe.
Sources
💡 Starting a business in Algeria? GlobalStart guides you step by step: procedures, real costs, company forms (SARL, EURL, SPA) and CNRC registration.