For Namibia, green hydrogen could be transformative.
With vast sunbaked, windswept deserts and 2.5 million people, the southern African nation has plenty of renewable resources to go around.
Meanwhile rich, densely populated Europe, South Korea and Japan are crying out for clean fuel to decarbonise hard-to-electrify sectors like fertilisers, steel and shipping. Their net zero plans depend on it.
Keen to secure pole position in the global race for green hydrogen, last year the EU began reaching agreements with prospective producers. One of the most trumpeted deals was signed with Namibia on the sidelines of Cop27 in Sharm el-Sheikh, Egypt.
“We want to fight climate change. We want to have clean energy. And as I said, you have all the resources in abundance. So let us team up,” European Commission President Ursula von der Leyen said in the direction of her Namibian counterpart, hailing the partnership as a “big win-win situation for all of us”.
Tapping into solar and wind energy for export is central to President Hage Geingob’s economic strategy. Namibia is seeking $20 billion of investment in green hydrogen – more than its entire GDP of $12 billion in 2022. Government authorities are negotiating funding options with the EU.
As with any heavy industry, though, the hoped-for boom will come at a cost to local communities and ecosystems. The benefits to ordinary Namibians are less certain.
Namibia is planning a series of projects to catapult the country into becoming a major green hydrogen exporter. (Credit: Fanis Kollias/Spoovio)
In a months-long investigation, Climate Home News and Oxpeckers visited the site of the flagship project, a $10 billion complex near the southern coastal town of Lüderitz.
The reporter on the ground found a community largely in the dark about the development and nervous about the impact on fishing and tourism. Experts shared frustration at the secretive tender process, scepticism about job prospects for Namibians and concerns for the area’s unique wildlife.
The green hydrogen complex
Perched between the Namib desert and the Atlantic Ocean, Lüderitz is named after a German colonist. It was the centre of a diamond rush in 20th century and of a colonial history that repressed indigenous Africans. Germany officially apologised in 2021 for colonial-era atrocities, recognising them as “genocide”.
Today, its Art Nouveau architecture, fresh seafood and wildlife draws a modest number of tourists, who can visit ghost towns abandoned after the diamond rush. The town is surrounded by the Tsau//Khaeb National Park, home to seals, penguins, flamingoes and ostriches. The park and surrounding lands are off-limits to residents to prevent illegal diamond mining.
Green hydrogen is set to to transform the character of this small enclave once again.
Hyphen’s plans show an initial 5GW of wind turbines and solar panels to supply power, according to the project’s factsheet published by the Namibian government. In this arid region, a desalination plant is needed to supply fresh water. An electrolysis plant will split the water into hydrogen and oxygen, before the hydrogen gas is converted into liquid ammonia. A new deepwater port will accommodate tankers to ship the end product around the world. The company aims to produce 300,000 tons of ammonia a year, commissioning the first phase by 2026, Hyphen’s website says.
To build all this, Hyphen expects to bring in 15,000 workers, roughly doubling Lüderitz’s population. Lüderitz Town Council is planning a new town in the desert to house the influx, immediately south of the historic Kolmanskuppe ghost town.
An opaque tender process
“We were a little surprised at the government’s choice of a partner,” said Phil Balhao, an opposition party member of the Lüderitz Town Council.
Other bidders like South Africa’s Sasol and Australian Fortescue Future Industries had an “established track record” that “seemingly just got ignored”, he said.
The tender process was overseen by the Namibia Investments Development & Promotions Board (NIDPB), which sits in the president’s office. In September 2020, the board appointed James Mnyupe as green hydrogen commissioner. It launched the first call for proposals in early 2021.
In a televised speech, Mnyupe said the tender was exempt from public procurement rules. Instead, he cited tourism and conservation laws as the basis to hold a closed selection process.
Graham Hopwood, director of the Institute of Public Policy Research, a public-interest think-tank based in Windhoek, was not impressed.
“With such a major and strategic project, there needs to be transparency and accountability from the outset. The fact that this project is mired in secrecy is raising red flags,” he said.
The Namibian government published a list of six bidders, who submitted nine bids between them. However, the content of the bids was not made public, nor the reasoning for Hyphen’s selection.
Hyphen said this was standard practice, given the commercially sensitive data contained in the bids. They added the process was “competitive”.
“It would be irresponsible and to the detriment to the development of the Hyphen project and Namibia’s broader green hydrogen industry for it to publish commercially sensitive agreements in the public domain that competitor projects/countries could use to compete against Namibia,” Hyphen said in a statement.
The Namibian government said the tender was “conducted with the utmost transparency and fairness”.
They said that the three-person bid evaluation committee did a “detailed and comprehensive evaluation” of the proposals, supported by independent experts from the US government’s national renewable energy laboratory and the EU’s technical assistance facility on sustainable energy.
Who is Hyphen?
Hyphen is a joint venture between two companies – Enertrag and Nicholas Holdings Limited.
Enertrag, owned by a 59-year-old East German nuclear physicist called Jörg Müller has a long track record of building renewables. It is pursuing green hydrogen projects across the world in Uruguay, Vietnam and South Africa.
Nicholas Holdings Limited is a company registered in the British Virgin Islands, which owns its stake in Hyphen through a special purpose vehicle based in Mauritius. The ultimate owner of the company is a South African investor called Brian Myerson.
The CEO of Hyphen is South African businessman Marco Raffinetti.
Myerson is a South African who spent decades as an investor in the UK, where he made headlines for battling the business establishment.
In 2010, Myerson was found by a panel of top UK lawyers to have behaved dishonestly in averting a takeover of Principle Capital, the investment firm he co-founded.
The Takeover Appeal Board found that Myerson and co-conspirators made a “deliberate attempt to circumvent” rules around taking over companies and then attempted to cover up their rule-breaking when the authorities began to investigate. He was banned from getting involved in mergers for three years.
Dishing out the punishment, the panel said it was only the second time it had done so, which it said, “is some indication of the extreme nature of the sanction”.
A spokesperson for Hyphen, Enertrag and Nichols Holdings Limited described this incident as a “historic matter” over “an alleged technical infringement” which “remains contested”. It should not be used to draw conclusions about Myerson’s character, they argued.
They added that the Takeover Appeal Board had no formal regulatory powers and UK financial regulators took no action in respect of the alleged breach of the rules.
A spokesperson for the Namibian government said it these were “historical legal matters, that to best of our knowledge have since been resolved”.
Myerson’s previous ventures on the African continent include a failed bid to scale up bioethanol production in Mozambique. Like today’s green hydrogen push, this was driven by EU demand: in 2007, the bloc set a to blend a percentage of biofuels into petrol. Investors piled into Mozambique, touting it as a “biofuels superpower”.
Myerson set up Principle Energy, based on the Isle of Man. It made bold promises to plant sugarcane over 20,000 hectares of land, build one of the top production facilities in the world and employ 1,600 people. Then the global bioethanol market collapsed and by 2013 the company closed, having planted just 136 hectares, according to a report by GRAIN.
His involvement in Hyphen is likely to be of concern, said IPPR’s Hopwood, adding Hyphen’s leadership was “questionable”.
Use of tax havens
Myerson’s investment in Hyphen is structured through the British Virgin Islands and Mauritius. Both rank poorly in the Tax Justice Network’s financial secrecy and corporate tax haven indexes.
Raffinetti said that Mauritius and the British Virgin Islands were “tax neutral jurisdictions with efficient financial markets”. A lot of infrastructure investment in Africa goes through Mauritius, he said, and investors are subject to tax in the countries where they are registered.
Tax Justice Network analyst Bob Michel said that investment into Africa goes through Mauritius because of its tax rules. “Mauritius is a corporate tax haven,” he said.
“(Mauritius’) domestic tax regime combined with its vast tax treaty network allow third country investors to use it to siphon profits from operations in Africa with the least of taxes paid in the countries where the operations take place,” Michel said by email.
Namibia is one of many African nations to have signed a tax treaty with Mauritius, which seeks to stop investors based in Mauritius being taxed both there and in Namibia.
Michel said that, with this treaty in place, routing investment through Mauritius “restricts Namibia’s rights to levy tax on the profits derived from the new project.”
A spokesperson for the Namibian government said it was “aware of the jurisdictions through which certain Hyphen shareholders hold their equity in Hyphen”.
The spokesperson added: “Should [the Namibian government] come across any conduct that is unbecoming of its laws and global best practice, rest assured [we] will take the necessary swift corrective action.”
Great expectations
Raffinetti, Hyphen’s CEO, previously developed gas power and rooftop solar bids in South Africa. The Richard Bay gas project he co-led is facing legal challenge by environmental activists due to its climate impact.
Wearing glasses and a black turtleneck, Raffinetti joined a video call with Climate Home in late October. He warned interviewers the internet might cut out due to the power cuts his native South Africa is plagued with.
The interview was granted, through a PR agency, on condition Hyphen could vet the quotes used. Some of the more colloquial soundbites reporters transcribed came back replaced with cautious jargon, and an admonition to put everything in its full context. Hyphen separately responded in writing to detailed concerns raised by sources.
“There’s an enormous amount of expectation in Namibia around this project. So there’s a huge amount of media attention,” Raffinetti said in one approved quote. “As the first large-scale project in Namibia’s green industrialisation strategy, we have an enormous obligation to get it right.”
Biodiversity concerns
Dr Jean-Paul Roux, a retired marine biologist working in the area for decades, pointed to where the Luderitz peninsula ends at Angra Point. It is the northernmost tip of the Karoo ecosystem, he explained, unique to southern Africa.
In the dry summer season, the desert landscape looks drab and lifeless. Winter rains bring a green explosion of rare plants such as the endemic Lithops optica, a tiny succulent that gets as old as 90 years.
“Here you can find up to 1,000 different plant species in just one square kilometre, some so small no bulldozer operator will even notice them,” he said. He spots signs of hyenas and porcupines.
This is the area earmarked for the deepwater port, desalination and ammonia plants.
Roux said the development would have a massive impact on Shearwater Bay and the adjacent Sturmvogelbucht, a lagoon teeming with flamingos and a heavy-sided dolphin population that he has been studying for years and visits every day.
“This is the only place along the southern African coast where you can watch them from your car,” he said as this smallest of all dolphin species approached to within a few meters of the beach. He fears that once developers start blasting rock for the port construction, dolphins will leave and never return.
The Tsau//Khaeb National Park is classified by Namibia’s Ministry of Environment and Tourism as a biodiversity hotspot. (Credit: Fanis Kollias/Spoovio)
Dr Antje Burke, a veteran botanist, is working as a consultant to Hyphen. She said at a conference of the Namibian Scientific Society in July that Hyphen was trying to avoid the most sensitive areas, but “one big problem” is that a species of parsley “overlaps almost completely with the concession area”.
She added that “even more concerning” was the future development plans. “The Hyphen project is developing the service infrastructure really keeping the future developments in mind… That means the entire area will be developed.”
Burke indicated some adjustments that could mitigate the environmental impact.
“No green energy project can be implemented without some environmental impact and Hyphen’s objective is to minimise environmental impacts to the largest extent possible,” Hyphen CEO Marco Raffinetti said in an interview with Climate Home.
The company has hired consultancy SLR to prepare an environmental and social impact report and lead a “comprehensive stakeholder engagement process”, Hyphen added in a written statement.
Consultants are currently gathering meteorological data and reporting a baseline of wildlife and plants in the area, SLR reports say. The formal environmental impact study is expected to start next year, the official documents add.
A group of Flamingoes at a lagoon within the Tsau//Khaeb National Park in Namibia, where green hydrogen developments are meant to ship the gas to the EU. (Photo: John Grobler)
Loss of access
Aside from the northern end of the bay, the peninsula is the only publicly accessible area of the Lüderitz region. The rest is Sperrgebiet or “forbidden area” – a legacy of the diamond rush.
Some of Hyphen’s infrastructure will reduce public access to the peninsula. Hyphen’s Raffinetti said this was “unavoidable” as it was “the only location feasible for a deepwater port”.
The other access to the sea is the four-kilometre Agate Beach to the north of the enclave, downwind from the last few local fishing factories and an overflowing municipal sewage plant.
Residents fear this would impact lobster fishing and rock angling. Crayfish fisheries, one of the area’s tourism attractions and an informal source of income would also be affected, locals said.
“The people in the township’s poorest areas [have] got nowhere else to go. They are going to strip this bay [Agate beach] clean of everything,” said Gerd Kessler, a fourth-generation Buchter as locals call themselves, referring to a potential concentration of fisheries in the area.
As owner of Five Roses Aquaculture and three smaller oyster-breeding operations, Kessler employs 100 people.
Felsenkirche, a Lutheran church built in 1912 in Lüderitz. (Photo: SkyPixels/Wikimedia Commons)
A massive new seawall and harbour at Angra Point could have unpredictable impacts on currents in the bay, he cautioned. When the existing shallow port was expanded in the late 1960s by filling in the channel between the town and Shark Island, the sea quickly stripped away the town’s little beach inside Robert Harbour.
Kessler’s biggest concern was how Hyphen planned to dispose of the brine from their desalination plant. “You can’t just dump that anywhere, you have to make sure you use the currents to disperse it,” Kessler said.
Questionable job prospects
Hyphen expects to create 15,000 jobs in the construction phase and 3,000 to operate the finished complex. It is aiming for 90% of these jobs to go to Namibians, and 30% to youth.
There is a huge skills gap, Namibian business groups warned.
“We do not even have a category for petrochemical or petroleum engineers at the moment,” said Sophia Tekie, chairperson of the Engineering Council of Namibia (ECN). “If we have any, they are registered as [one of 40] chemical engineers.”
“Although the ECN has 2,015 registered engineers in eight disciplines at present, about 30 to 40% of them were already retired and only did part-time consultancy work,” said her predecessor, Markus von Jeney.
Local construction capacity did not look much better: according to Bärbel Kircher, director of the Construction Industry Federation (CIF), their membership had declined from 480 companies in 2015 to 240 member companies, operating at only 50% capacity, she said.
“Currently, our local contractors are largely displaced by foreign contractors, excluding them from opportunities. This is often due to conditions set by external financiers,” said Kircher.
In the past, the country has struggled to complete large projects due to corruption charges.
Since 2013, the Namibian Ports Authority, the National Petroleum Corporation of Namibia and the Ministry of Agriculture have borrowed over N$21 billion (about US$400 million each, mostly from the African Development Bank) for infrastructure projects, including the 3MW Neckartal dam.
The Namibian High Court declared the dam was commissioned in 2008 under corrupted circumstances. The project was eventually completed at three times the original price in 2017.
Namibian construction companies were not likely to benefit from the green hydrogen projects, the CiF said. “The current procurement methods and trends do not provide a promising outlook for the future,” said Kirchner.
Hyphen said the company would implement “targeted training interventions at various levels” including “specialized Masters’ programs, internships and apprenticeships”.
The Karoo ecosystem is unique to Southern Africa. The Tsau//Khaeb National Park is a biodiversity hotspot hosting a part of this ecosystem. (Photo: John Grobler)
European support
Under the memorandum of understanding signed in Sharm el-Sheikh, the EU will provide technical expertise, trade incentives and, crucially, help to secure infrastructure finance.
Moments after von der Leyen and Geingob inked their deal, the European Investment Bank promised loans of up to €500 million ($528m) for renewable hydrogen investments in Namibia. “Let’s bring flesh to the bone,” the bank’s chief Werner Hoyer told the audience.
Shortly after the event, Hyphen announced that it had “signed a €35 million agreement with the European Investment Bank to finance the early development of our project”. This was somewhat premature. The bank had supplied a letter of intent, not a firm commitment of funding.
Since the initial announcement, European institutions, Namibian government officials and private actors have been working out the details of the partnership.
Hyphen is looking for €100 million to start work on the project.
“We have been very grateful to the EIB and the European Commission for making available the initial funding to share the early development risk,” said Raffinetti in late September, suggesting a firm commitment from the European backers.
The Hyphen CEO went on to outline what the deal with the EIB should look like: a €10 million ($10.5 million) grant – “still to be finalised,” he added – and a €25 million ($26.4 million) “soft loan”, meaning it would come with favourable terms for the company.
An EIB spokesperson said no agreement has been signed yet. “We are in the process of completing our due diligence, after which the project will be presented to the EIB’s governing bodies for approval,” they said.
“Potential financial support at this early stage would be for site studies and feasibility studies. Any support for implementation will be conditional to the project complying with the Bank’s environmental and social (E&S), procurement, compliance and other standards,” they added.
Namibia’s president Hage Geingob, EIB president Werner Hoyer, Belgian prime minister Alexander de Croco and EU president Ursula von der Leyen announcing the EU green hydrogen partnership with Namibia at Cop27. (Photo: EIB)
On top of the cash injection, the EU’s international partnership division could provide a first-loss guarantee. If the project does not go to plan and the borrower cannot pay back its debt, the EU will pick up the tab – or at least part of it.
Without the “bedrock” of public money it would be impossible to lure in commercial lenders and leave a huge funding gap, Raffinetti said.
A European Commission spokesperson told Climate Home that “at present, there is not yet any financial assistance under the EU budget mobilised in favour of the Hyphen project”.
The Netherlands is also supporting the project. Dutch companies like the Port of Rotterdam and gas pipeline operator Gasunie see a business opportunity to offload the green ammonia from ships and pipe it to industry inland.
In June, green hydrogen commissioner Mnyupe told a national newspaper that the Dutch government had given Namibia a €40m grant to develop green hydrogen. He said the government would use €23m of this to buy a stake in Hyphen.
The Dutch said the money was not Namibia’s to spend. The €40m grant comes from Invest International, a public fund set up in 2019 to advance Dutch interests abroad and promote economic growth in the developing world.
Invest International’s lead on hydrogen Bart De Smet told Climate Home that the €40m grant will be distributed by a fund manager independent of the Namibian government and won’t necessarily go to Hyphen.
Who benefits?
The big question for Namibians is whether the inevitable disturbance of a unique ecosystem and small-town culture will be worth it.
The Namibian government is taking a 24% stake in Hyphen through its sovereign wealth fund. It is expected to raise further revenues through taxes, royalties, land rental and environmental levies on the project, Hyphen said.
“The benefit for the country in terms of economic upliftment is enormous. Because Namibia is only 2.5 million people. So if you’re successful, your impact on each human being’s life can be enormous,” Raffinetti said.
Patrick Neib, an unemployed resident of the Nautilus township behind Luderitz, could certainly use some upliftment. He moved to the area in 2015 in search of a better job that has yet to materialise.
Like many residents, he found out about Hyphen from social media. Most of Hyphen’s public meetings took place in Keetmanshoop, the regional capital 350 km away.
The secrecy and technical jargon used by Hyphen and its consultants made it impossible for the ordinary layman to understand or access any opportunities, Neib said.
“There is just no public discussion about the benefits for ordinary people like me, or what price we are to pay for green hydrogen development,” he said. “My question is, who or what is really behind all of this?”
This story was reported in collaboration with Oxpeckers Investigative Journalism Centre and was supported by a grant from JournalismFund.
The post Shades of green hydrogen: EU demand set to transform Namibia appeared first on Climate Home News.
Shades of green hydrogen: EU demand set to transform Namibia
In 2026, the dangers of fossil fuel dependence have been laid bare like never before. The illegal invasion of Iran has brought pain and destruction to millions across the Middle East and triggered a global energy crisis impacting us all. Communities in the Pacific have been hit especially hard by rising fuel prices, and Australians have seen their cost-of-living woes deepen.
Such moments of crisis and upheaval can lead to positive transformation. But only when leaders act with courage and foresight.
There is no clearer statement of a government’s plans and priorities for the nation than its budget — how it plans to raise money, and what services, communities, and industries it will invest in.
As we count down the days to the 2026-27 Federal Budget, will the Albanese Government deliver a budget for our times? One that starts breaking the shackles of fossil fuels, accelerates the shift to clean energy, protects nature, and sees us work together with other countries towards a safer future for all? Or one that doubles down on coal and gas, locks in more climate chaos, and keeps us beholden to the whims of tyrants and billionaires.
Here’s what we think the moment demands, and what we’ll be looking out for when Treasurer Jim Chalmers steps up to the dispatch box on 12 May.
1. Stop fuelling the fire
2. Make big polluters pay
3. Support everyone to be part of the solution
4. Build the industries of the future
5. Build community resilience
6. Be a better neighbour
7. Protect nature
1. Stop fuelling the fire
In mid-April, Pacific governments and civil society met to redouble their efforts towards a Fossil Fuel Free Pacific. Moving beyond coal, oil and gas is fundamental to limiting warming to 1.5°C — a survival line for vulnerable communities and ecosystems. And as our Head of Pacific, Shiva Gounden, explained, it is “also a path of liberation that frees us from expensive, extractive and polluting fossil fuel imports and uplifts our communities”.
Pacific countries are at the forefront of growing global momentum towards a just transition away from fossil fuels, and it is way past time for Australia to get with the program. It is no longer a question of whether fossil fuel extraction will end, but whether that end will be appropriately managed and see communities supported through the transition, or whether it will be chaotic and disruptive.
So will this budget support the transition away from fossil fuels, or will it continue to prop up coal and gas?
When it comes to sensible moves the government can make right now, one stands out as a genuine low hanging fruit. Mining companies get a full rebate of the excise (or tax) that the rest of us pay on diesel fuel. This lowers their operating costs and acts as a large, ongoing subsidy on fossil fuel production — to the tune of $11 billion a year!
Greenpeace has long called for coal and gas companies to be removed from this outdated scheme, and for the billions in savings to be used to support the clean energy transition and to assist communities with adapting to the impacts of climate change. Will we see the government finally make this long overdue change, or will it once again cave to the fossil fuel lobby?
2. Make big polluters pay
While our communities continue to suffer the escalating costs of climate-fuelled disasters, our Government continues to support a massive expansion of Australia’s export gas industry. Gas is a dangerous fossil fuel, with every tonne of Australian gas adding to the global heating that endangers us all.
Moreover, companies like Santos and Woodside pay very little tax for the privilege of digging up and selling Australians’ natural endowment of fossil gas. Remarkably, the Government currently raises more tax from beer than from the Petroleum Resource Rent Tax (PRRT) — the main tax on gas profits.
Momentum has been building to replace or supplement the PRRT with a 25% tax on gas exports. This could raise up to $17 billion a year — funds that, like savings from removing the diesel tax rebate for coal and gas companies, could be spent on supporting the clean energy transition and assisting communities with adapting to worsening fires, floods, heatwaves and other impacts of climate change.
As politicians arrive in Canberra for budget week, they will be confronted by billboards calling for a fair tax on gas exports. The push now has the support of dozens of organisations and a growing number of politicians. Let’s hope the Treasurer seizes this rare window for reform.
3. Support everyone to be part of the solution
As the price of petrol and diesel rises, electric vehicles (EVs) are helping people cut fuel use and save money. However, while EV sales have jumped since the invasion of Iran sent fuel prices rising, they still only make up a fraction of total new car sales. This budget should help more Australians switch to electric vehicles and, even more importantly, enable more Australians to get around by bike, on foot, and on public transport. This means maintaining the EV discount, investing in public and active transport, and removing tax breaks for fuel-hungry utes and vans.
Millions of Australians already enjoy the cost-saving benefits of rooftop solar, batteries, and getting off gas. This budget should enable more households, and in particular those on lower incomes, to access these benefits. This means maintaining the Cheaper Home Batteries Program, and building on the Household Energy Upgrades Fund.
4. Build the industries of the future
If we’re to transition away from fossil fuels, we need to be building the clean industries of the future.
No state is more pivotal to Australia’s energy and industrial transformation than Western Australia. The state has unrivaled potential for renewable energy development and for replacing fossil fuel exports with clean exports like green iron. Such industries offer Western Australia the promise of a vibrant economic future, and for Australia to play an outsized positive role in the world’s efforts to reduce emissions.
However, realising this potential will require focussed support from the Federal Government. Among other measures, Greenpeace has recommended establishing the Australasian Green Iron Corporation as a joint venture between the Australian and Western Australian governments, a key trading partner, a major iron ore miner and steel makers. This would unite these central players around the complex task of building a large-scale green iron industry, and unleash Western Australia’s potential as a green industrial powerhouse.
5. Build community resilience
Believe it or not, our Government continues to spend far more on subsidising fossil fuel production — and on clearing up after climate-fuelled disasters — than it does on helping communities and industries reduce disaster costs through practical, proven methods for building their resilience.
Last year, the Government estimated that the cost of recovery from disasters like the devastating 2022 east coast floods on 2019-20 fires will rise to $13.5 billion. For contrast, the Government’s Disaster Ready Fund – the main national source of funding for disaster resilience – invests just $200 million a year in grants to support disaster preparedness and resilience building. This is despite the Government’s own National Emergency Management Agency (NEMA) estimating that for every dollar spent on disaster risk reduction, there is a $9.60 return on investment.
By redirecting funds currently spent on subsidising fossil fuel production, the Government can both stop incentivising climate destruction in the first place, and ensure that Australian communities and industries are better protected from worsening climate extremes.
No communities have more to lose from climate damage, or carry more knowledge of practical solutions, than Aboriginal and Torres Strait Islander peoples. The budget should include a dedicated First Nations climate adaptation fund, ensuring First Nations communities can develop solutions on their own terms, and access the support they need with adapting to extreme heat, coastal erosion and other escalating challenges.
6. Be a better neighbour
The global response to climate change depends on the adequate flow of support from developed economies like Australia to lower income nations with shifting to clean energy, adapting to the impacts of climate change, and addressing loss and damage.
Such support is vital to building trust and cooperation, reducing global emissions, and supporting regional and global security by enabling countries to transition away from fossil fuels and build greater resilience.
Despite its central leadership role in this year’s global climate negotiations, our Government is yet to announce its contribution to international climate finance for 2025-2030. Greenpeace recommends a commitment of $11 billion for this five year period, which is aligned with the global goal under the Paris Agreement to triple international climate finance from current levels.
This new commitment should include additional funding to address loss and damage from climate change and a substantial contribution to the Pacific Resilience Facility, ensuring support is accessible to countries and communities that need it most. It should also see Australia get firmly behind the vision of a Fossil Fuel Free Pacific.
7. Protect nature
There is no safe planet without protection of the ecosystems and biodiversity that sustain us and regulate our climate.
Last year the Parliament passed important and long overdue reforms to our national environment laws to ensure better protection for our forests and other critical ecosystems. However, the Government will need to provide sufficient funding to ensure the effective implementation of these reforms.
Greenpeace has recommended $500 million over four years to establish the National Environment Agency — the body responsible for enforcing and monitoring the new laws — and a further $50 million to Environment Information Australia for providing critical information and tools.
Further resourcing will also be required to fulfil the crucial goal of fully protecting 30% of Australian land and seas by 2030. This should include $1 billion towards ending deforestation by enabling farmers and loggers to retool away from destructive practices, $2 billion a year for restoring degraded lands, $5 billion for purchasing and creating new protected areas, and $200 million for expanding domestic and international marine protected areas.
Conclusion
This is not the first time that conflict overseas has triggered an energy crisis, or that a budget has been preceded by a summer of extreme weather disasters, highlighting the urgent need to phase out fossil fuels. What’s different in 2026 is the availability of solutions. Renewable energy is now cheaper and more accessible than ever before. Global momentum is firmly behind the transition away from fossil fuels. The Albanese Government, with its overwhelming majority, has the chance to set our nation up for the future, or keep us stranded in the past. Let’s hope it makes some smart choices.
The 2026 budget test: Will Australia break free from fossil fuels?
Anne Jellema is Executive Director of 350.org.
The war on Iran and Lebanon is a deeply unjust and devastating conflict, killing civilians at home, destroying lives, and at the same time sending shockwaves through the global economy. We, at 350.org, have calculated, drawing on price forecasts from the International Monetary Fund (IMF) and Goldman Sachs, just how much that volatility is costing us.
Even under the IMF’s baseline scenario – a de facto “best case” scenario with a near-term end to the war and related supply chain disruptions – oil and gas price spikes are projected to cost households and businesses globally more than $600 billion by the end of the year. Under the IMF’s “adverse scenario”, with prolonged conflict and sustained price pressures, we estimate those additional costs could exceed $1 trillion, even after accounting for reduced demand.
Which is why we urgently need a power shift. Governments are under growing pressure to respond to rising fuel and food costs and deepening energy poverty. And it’s becoming clearer to both voters and elected officials that fossil dependence is not only expensive and risky, but unnecessary.
People who can are voting with their wallets: sales of solar panels and electric vehicles are increasing sharply in many countries. But the working people who have nothing to spare, ironically, are the ones stuck with using oil and gas that is either exorbitantly expensive or simply impossible to get.
Drain on households and economies
In India, street food vendors can’t get cooking gas and in the Philippines, fishermen can’t afford to take their boats to sea. A quarter of British people say that rising energy tariffs will leave them completely unable to pay their bills. This is the moment for a global push to bring abundant and affordable clean energy to all.
In April, we released Out of Pocket, our new research report on how fossil fuels are draining households and economies. We were surprised by the scale of what we found. For decades, governments have reassured people that energy price spikes are unfortunate but unavoidable – the result of distant conflicts, market forces or geopolitical shocks beyond anyone’s control. But the numbers tell a different story.
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Santa Marta: Ministers grapple with practicalities of fossil fuel phase-out
Around 60 governments that want to make progress on transitioning away from coal, oil and gas are meeting in Colombia to work out how they can do it an equitable way -
Why the transition beyond fossil fuels depends on cities and collective action
Cities will help identify concrete pathways for an equitable shift to clean energy at the Santa Marta conference, with C40 members aiming to halve their fossil fuel use by 2030
What we are living through today is not an energy crisis. It is a fossil fuel crisis. In just the first 50 days of the Middle East conflict, soaring oil and gas prices have siphoned an estimated $158 billion–$166 billion from households and businesses worldwide. That is money extracted directly from people’s pockets and transferred, almost instantly, into fossil fuel company balance sheets. And this figure only captures the immediate impact of price spikes, not the permanent economic drain of fossil dependence. Fossil fuels don’t just cost us once, they cost us over and over again.
First, through our bills. Every time there is a war, an embargo or a supply disruption, fossil fuel prices surge. For ordinary people, this means higher costs for energy, transport and food. Many Global South countries have little or no fiscal space to buffer the shock; instead, workers and families pay the price.
Second, through our taxes. Governments around the world continue to pour vast sums of public money into fossil fuel subsidies. These are often justified as a way to protect the most vulnerable at the petrol pump or in their homes. But in reality, the benefits are overwhelmingly captured by wealthier households and corporations. The poorest 20% receive just a fraction of this support, while public finances are drained.
Third, through climate impacts. New research across more than 24,000 global locations gives a granular account of the true costs of extreme heat, sea level rise and falling agricultural yields. Using this data to update IMF modelling of the social cost of carbon, we found that fossil fuel impacts on health and livelihoods amount to over $9 trillion a year. This is the biggest subsidy of all, because these massive and mounting costs are not charged to Big Oil – they are paid for by governments and households, with the poorest shouldering the lion’s share.
Massive transfer of wealth to fossil fuel industry
Adding up direct subsidies, tax breaks and the unpaid bill for climate damages, the total transfer of wealth from the public to the fossil fuel industry amounts to $12 trillion even in a “normal” year without a global oil shock. That’s more than 50% higher than the IMF has previously estimated, and equivalent to a staggering $23 million a minute.
The fossil fuel industry has become extraordinarily adept at profiting from instability. When conflict drives up prices, companies do not lose, they gain. In the current crisis, oil producers and commodity traders are on track to secure tens of billions of dollars in additional windfall profits, even as households face rising bills and governments struggle to manage the fallout.
Fossil fuel crisis offers chance to speed up energy transition, ministers say
This growing disconnect is impossible to ignore. Investors are advised to buy into fossil fuel firms precisely because of their ability to generate profits in times of crisis. Meanwhile, ordinary people are told to tighten their belts.
In 2026, unlike during the oil shocks of the 1970s, clean energy is no longer a distant alternative. Now, even more than when gas prices spiked due to Russia’s invasion of Ukraine in 2022, renewables are often the cheapest option available. Solar and wind can be deployed quickly, at scale, and without the volatility that defines fossil fuel markets.
How to transition from dirty to clean energy
The solutions are clear. Governments must implement permanent windfall taxes on fossil fuel companies to ensure that extraordinary profits generated during crises are redirected to support households. These revenues can be used to reduce energy bills, invest in public services, and accelerate the rollout of clean energy.
Second, we must shift subsidies away from fossil fuels and towards renewable solutions, particularly those that can be deployed quickly and equitably, such as rooftop and community solar. This is not just about cutting emissions. It is about building a more stable, fair and resilient energy system.
Finally, we need binding plans to phase out fossil fuels altogether, replacing them with homegrown renewable energy that can shield economies from future shocks. Because what the current crisis has made clear is this: as long as we remain dependent on fossil fuels, we remain vulnerable – to conflict, to price volatility and to the escalating impacts of climate change.
The true price of fossil fuels is no longer hidden. It is visible in rising bills, strained public finances and communities pushed to the brink. And it is being paid, every day, by ordinary people around the world.
It’s time for the great power shift.
Full details on the methodology used for this report are available here.
The Great Power Shift is a new campaign by 350.org global campaign to pressure governments to bring down energy bills for good by ending fossil fuel dependence and investing in clean, affordable energy for all
The post What fossil fuels really cost us in a world at war appeared first on Climate Home News.
Computer models that use artificial intelligence (AI) cannot forecast record-breaking weather as well as traditional climate models, according to a new study.
It is well established that AI climate models have surpassed traditional, physics-based climate models for some aspects of weather forecasting.
However, new research published in Science Advances finds that AI models still “underperform” in forecasting record-breaking extreme weather events.
The authors tested how well both AI and traditional weather models could simulate thousands of record-breaking hot, cold and windy events that were recorded in 2018 and 2020.
They find that AI models underestimate both the frequency and intensity of record-breaking events.
A study author tells Carbon Brief that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
AI weather forecasts
Extreme weather events, such as floods, heatwaves and storms, drive hundreds of billions of dollars in damages every year through the destruction of cropland, impacts on infrastructure and the loss of human life.
Many governments have developed early warning systems to prepare the general public and mobilise disaster response teams for imminent extreme weather events. These systems have been shown to minimise damages and save lives.
For decades, scientists have used numerical weather prediction models to simulate the weather days, or weeks, in advance.
These models rely on a series of complex equations that reproduce processes in the atmosphere and ocean. The equations are rooted in fundamental laws of physics, based on decades of research by climate scientists. As a result, these models are referred to as “physics-based” models.
However, AI-based climate models are gaining popularity as an alternative for weather forecasting.
Instead of using physics, these models use a statistical approach. Scientists present AI models with a large batch of historical weather data, known as training data, which teaches the model to recognise patterns and make predictions.
To produce a new forecast, the AI model draws on this bank of knowledge and follows the patterns that it knows.
There are many advantages to AI weather forecasts. For example, they use less computing power than physics-based models, because they do not have to run thousands of mathematical equations.
Furthermore, many AI models have been found to perform better than traditional physics-based models at weather forecasts.
However, these models also have drawbacks.
Study author Prof Sebastian Engelke, a professor at the research institute for statistics and information science at the University of Geneva, tells Carbon Brief that AI models “depend strongly on the training data” and are “relatively constrained to the range of this dataset”.
In other words, AI models struggle to simulate brand new weather patterns, instead tending forecast events of a similar strength to those seen before. As a result, it is unclear whether AI models can simulate unprecedented, record-breaking extreme events that, by definition, have never been seen before.
Record-breaking extremes
Extreme weather events are becoming more intense and frequent as the climate warms. Record-shattering extremes – those that break existing records by large margins – are also becoming more regular.
For example, during a 2021 heatwave in north-western US and Canada, local temperature records were broken by up to 5C. According to one study, the heatwave would have been “impossible” without human-caused climate change.
The new study explores how accurately AI and physics-based models can forecast such record-breaking extremes.
First, the authors identified every heat, cold and wind event in 2018 and 2020 that broke a record previously set between 1979 and 2017. (They chose these years due to data availability.) The authors use ERA5 reanalysis data to identify these records.
This produced a large sample size of record-breaking events. For the year 2020, the authors identified around 160,000 heat, 33,000 cold and 53,000 wind records, spread across different seasons and world regions.
For their traditional, physics-based model, the authors selected the High RESolution forecast model from the Integrated Forecasting System of the European Centre for Medium-Range Weather Forecasts. This is “widely considered as the leading physics-based numerical weather prediction model”, according to the paper.
They also selected three “leading” AI weather models – the GraphCast model from Google Deepmind, Pangu-Weather developed by Huawei Cloud and the Fuxi model, developed by a team from Shanghai.
The authors then assessed how accurately each model could forecast the extremes observed in the year 2020.
Dr Zhongwei Zhang is the lead author on the study and a researcher at Karlsruhe Institute of Technology. He tells Carbon Brief that many AI weather forecast models were built for “general weather conditions”, as they use all historical weather data to train the models. Meanwhile, forecasting extremes is considered a “secondary task” by the models.
The authors explored a range of different “lead times” – in other words, how far into the future the model is forecasting. For example, a lead time of two days could mean the model uses the weather conditions at midnight on 1 January to simulate weather conditions at midnight on 3 January.
The plot below shows how accurately the models forecasted all extreme events (left) and heat extremes (right) under different lead times. This is measured using “root mean square error” – a metric of how accurate a model is, where a lower value indicates lower error and higher accuracy.
The chart on the left shows how two of the AI models (blue and green) performed better than the physics-based model (black) when forecasting all weather across the year 2020.
However, the chart on the right illustrates how the physics-based model (black) performed better than all three AI models (blue, red and green) when it came to forecasting heat extremes.
The authors note that the performance gap between AI and physics-based models is widest for lower lead times, indicating that AI models have greater difficulty making predictions in the near future.
They find similar results for cold and wind records.
In addition, the authors find that AI models generally “underpredict” temperature during heat records and “overpredict” during cold records.
The study finds that the larger the margin that the record is broken by, the less well the AI model predicts the intensity of the event.
‘Warning shot’
Study author Prof Erich Fischer is a climate scientist at ETH Zurich and a Carbon Brief contributing editor. He tells Carbon Brief that the result is “not unexpected”.
He adds that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
The analysis, he continues, is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
AI models are likely to continue to improve, but scientists should “not yet” fully replace traditional forecasting models with AI ones, according to Fischer.
He explains that accurate forecasts are “most needed” in the runup to potential record-breaking extremes, because they are the trigger for early warning systems that help minimise damages caused by extreme weather.
Leonardo Olivetti is a PhD student at Uppsala University, who has published work on AI weather forecasting and was not involved in the study.
He tells Carbon Brief that “many other studies” have identified issues with using AI models for “extremes”, but this paper is novel for its specific focus on extremes.
Olivetti notes that AI models are already used alongside physics-based models at “some of the major weather forecasting centres around the world”. However, the study results suggest “caution against relying too heavily on these [AI] models”, he says.
Prof Martin Schultz, a professor in computational earth system science at the University of Cologne who was not involved in the study, tells Carbon Brief that the results of the analysis are “very interesting, but not too surprising”.
He adds that the study “justifies the continued use of classical numerical weather models in operational forecasts, in spite of their tremendous computational costs”.
Advances in forecasting
The field of AI weather forecasting is evolving rapidly.
Olivetti notes that the three AI models tested in the study are an “older generation” of AI models. In the last two years, newer “probabilistic” forecast models have emerged that “claim to better capture extremes”, he explains.
The three AI models used in the analysis are “deterministic”, meaning that they only simulate one possible future outcome.
In contrast, study author Engelke tells Carbon Brief that probabilistic models “create several possible future states of the weather” and are therefore more likely to capture record-breaking extremes.
Engelke says it is “important” to evaluate the newer generation of models for their ability to forecast weather extremes.
He adds that this paper has set out a “protocol” for testing the ability of AI models to predict unprecedented extreme events, which he hopes other researchers will go on to use.
The study says that another “promising direction” for future research is to develop models that combine aspects of traditional, physics-based weather forecasts with AI models.
Engelke says this approach would be “best of both worlds”, as it would combine the ability of physics-based models to simulate record-breaking weather with the computational efficiency of AI models.
Dr Kyle Hilburn, a research scientist at Colorado State University, notes that the study does not address extreme rainfall, which he says “presents challenges for both modelling and observing”. This, he says, is an “important” area for future research.
The post Traditional models still ‘outperform AI’ for extreme weather forecasts appeared first on Carbon Brief.
Traditional models still ‘outperform AI’ for extreme weather forecasts
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