According to the Oslo-based independent research firm Rystad Energy, Africa has quickly emerged as the global center for the production of green hydrogen, an energy technology that’s in its infancy, but one that’s shaping up to become a key piece in the planet’s transition from polluting fossil fuels to low-carbon power. 

“The zero-carbon hydrogen commitments of African states put the region among the top of the league charts globally,” Minh Khoi Le, head of hydrogen research at Rystad Energy, told Fortune. “The region has all the hallmarks for a successful hydrogen economy: excellent renewable energy potential, space for mega projects, cheap labor costs, and it’s well positioned to serve multiple markets.

“Further,” he continued, “the continent may benefit from the hydrogen downstream value chain by also producing green iron, steel, fertilizer, and green fuel. African countries are putting their money where their mouth is by committing billions of their own funds, which has attracted international investment.”

Rystad calculates that across the continent, African energy companies are on pace to produce 6.3 million metric tons of green hydrogen—that is, hydrogen produced exclusively from low-carbon renewable power sources—every year, which could be used not only as a green energy source but also as an ingredient for fertilizer. The projected output for African green hydrogen is more than double what American companies are on track to produce.

Mauritania, a country of less than 5 million people, alone is far outproducing the United States in green hydrogen production, as well as many Western economic powers.

Africa’s secret weapon? Its location. The continent is blessed with the sun (solar), water (hydro), and wind to produce abundant electricity needed to power the electrolizers—a kind of reactor that splits the hydrogen atoms in water (more on how, below)—that can make hydrogen at a scale big enough to power local economies and export abroad.

A potential buyer is energy-dependent Europe, which is desperate to break from Russia and find new energy trading partners since the Kremlin’s bloody war in Ukraine broke out earlier this year. In March, Marco Alverà, the CEO of Italian pipeline network Snam, told Fortune he saw Africa as a key part of Europe’s push for energy independence from Russia. Talks of a wider EU-Africa partnership to bring Africa’s hydrogen to the global markets began before the war, at the EU-Africa Business Forum in February.

Why climate hawks are buzzing about hydrogen

When converted into a fuel and burned, hydrogen’s chief by-product is water. (You may recall the experiment from your high school chemistry class that produced hydrogen gas by rigging a nine-volt battery with paper clips after plunging the power source into a container of water.) Hydrogen gas is also highly versatile. It can be blended with fuels such as natural gas, converted into methane, or burned as a highly potent fuel on its own, making it a promising energy source for heavily polluting industries such as steel and cement production and, eventually, shipping, long-haul trucking, and aviation. 

Another plus: Hydrogen fuel can be produced anywhere the sun is shining, the water is flowing, or the wind is blowing.

This could very well explain the explosion in investor interest in Africa’s green hydrogen potential since COP26, the United Nations’ annual summit on climate change, last autumn. As Goldman Sachs reported recently, more than 30 countries have publicly shared their hydrogen strategies for the next decade, with a flurry coming in recent months. Many of those hydrogen-ready countries can be found in Africa, including Egypt, Morocco, and Mauritania in the north to Kenya in the east and Zimbabwe, Namibia, and South Africa in the south.

Egypt, the host of the upcoming COP27 summit in November, has attracted roughly $20 billion in investments for its budding hydrogen sector with energy heavyweights such as the United Arab Emirates’ Masdar, Italy’s Eni, and France’s EDF committing funding to produce roughly 1.6 million metric tons annually. Rystad computes that amount of hydrogen could be converted into 1.62 gigawatts (GW) of energy, enough for the annual power needs of roughly 4 million Egyptians, or just under 5% of the population.

Given its proximity to the major Suez shipping corridor and to the network of undersea fuel lines leading to Europe, Egypt is also well positioned to be a major green hydrogen exporter, vaulting it into Rystad’s No. 3 spot, behind Australia, on its global ranking of hydrogen-producing countries.

The top spot globally goes to Mauritania, which is on pace to produce 3.5 million metric tons of hydrogen in the next year. The bulk of that comes from the $49 billion AMAN hydrogen project, codeveloped by the Serbian renewable energy firm CWP Global.

The billions flowing into green hydrogen projects worldwide has made the technology one of the hottest areas in green tech, but that funding outlay is still a drop in the bucket. Zoe Clarke, an energy analyst from Goldman Sachs, has calculated that at least $5 trillion in investment is needed globally to untap green hydrogen’s full potential in helping industry and governments around the world achieve their net zero goals.

Globally, hydrogen is still a minuscule part of the global energy mix, with the sum total of hydrogen electrolyzers in operation last year producing roughly 1GW of power. That energy output is expected to grow 60-fold by the end of the decade, Bank of America forecasts. A big portion of green hydrogen produced will also go to food production in the form of ammonia, a key ingredient in fertilizer.

A hydrogen alliance to avoid past pitfalls

With so much at stake, Africa recently took an important step to establish itself as a global leader in hydrogen production and as a center for innovation. At the COP26 summit in Scotland last year, six of Africa’s hydrogen heavyweights—Kenya, South Africa, Namibia, Egypt, Morocco, and Mauritania—announced the creation of the Africa Green Hydrogen Alliance with the intention to expand globally so as to collaborate with other nations on large international hydrogen projects.

In addition to promoting best-practice and cutting-edge technologies for hydrogen production, the alliance is seeking to avoid the worst examples from the past in which foreign powers came to the continent and dug up its resources—with little of that mineral wealth trickling down to locals.

As the group said in a statement forming the alliance, “Governance will…be key, with transparency and accountability central to ensuring the green hydrogen sector avoids the pitfalls that have plagued extractive industries on the continent for so long.”