Author: Hajatiana Eric Randrianomenjanahary - Climate Finance, Sustainable Investing, Sustainable Industry Expert

The following report serves as a non-exhaustive technical analysis derived from the fundamental paradigms we need to put in place for the green transformation within the Republic of Madagascar. It evaluates the structural transformation required to transition from a counter, extractive, linear economic model toward a regenerative, high-value-added system. This analysis is segmented into three specialized technical domains: the macroeconomic shift toward a green economy, the strategic decarbonization of the industrial sector through critical mineral valorization and heavy industry reform, and the architectural overhaul of the national energy matrix.

Key Takeaways

  • Targeting 75% Hydroelectricity: Madagascar aims to transition its energy grid to be 75% powered by hydro by 2030, leveraging a massive untapped 7,800 MW potential (only 3% utilized in 2023).
  • Fossil Fuel Phase-Out: A radical reduction of fossil fuel reliance is targeted, shifting from ~55% of the energy mix in 2023 to less than 15% by 2030.
  • Green Industrial Synergy: The roadmap should focus on the circular integration of Green Industry (sustainable manufacturing and processing) directly powered by Green Energy sources. To change things up, we need to add more variety of energy to the mix. Wind and solar power are going to grow at the same rate, and by 2030, they should each make up about 5% of the total energy we use. This will help make our energy grid more varied and less reliant on just a few sources. And even may be in the near future considering the use of green hydrogen, a trend already started by our European allies.
  • Massive Untapped Potential: Highlighting a significant opportunity for expansion, with Solar (>2,000 MW) and Wind (2,000 MW) potentials both sitting at less than 3% current utilization. And using Battery Energy Storage Systems (BESS) to make the energy provision sustainable.
  • NDC3 Compliance: This comprehensive roadmap serves as the primary technical pathway to achieve Madagascar's Nationally Determined Contributions (NDC3) under the Paris Agreement.

The Macroeconomic Transition Toward a Green Economy in Madagascar

Madagascar’s economy is puzzling economists from around the world. The country has a lot of natural resources, like important minerals, unique plants and animals, but the country is stuck in a cycle of a generational and absolute poverty. According to the World Bank, in 2024 the country’s total economy, or GDP, was around 17.42 billion USD (World Bank, 2024), and we can all agree that it is not a lot. When we break it down to how much money each person has, it’s only about 545 USD per capita per year and this makes Madagascar one of the poorest countries in the world. To make things worse, still according to the World Bank, about 80% of the people in Madagascar live in extreme poverty, that means that they don’t have enough money to meet their basic needs. The principal reason for this is that the country’s economy is still based on just trying to survive, rather than growing, developing and transforming.

The need to move towards a green economy is then really urgent, and this is shown by the African Transformation Index (ATI), which shows how well a country can change and grow through new industries, competitiveness, and mastery of new technology. Madagascar's score on this index went down from 19.7 in 2000 to 16.3 in 2024. This decrease shows that the country is not doing well in terms of productivity and the use of new technology, proving once again the needs to act towards the greening the country's the economy and the industry.

Structural Performance and Productivity Analysis

As we talked about earlier, the country's economy is in a chaotic situation and one of the main reasons is that people are not producing as much as they used to in all the different sectors. If we look at the agriculture, which has the most important share of the Malagasy economy, we can observe that the value of what each worker produces has gone down from $445 to $362 over the last 20 years. We can speculate that this decrease is due to the non-availability of new technologies and also that Climate Change is affecting the quantity of food being grown. Also, the most important one, is that the manufacturing sector, which is supposed to give a big boost to the economy, still has a very negligible share and only makes up about 10% of the country’s total production. The whole industry, including manufacturing, only accounts for about 22.4% of the country’s total production, which is not enough at all (ACET, 2024).

Changing the way we think about the economy and the environment in general is then not only important but mandatory. Right now, we’re using up natural resources without thinking about the future, but shifting towards a green economy would make a big difference. It’s like a like a loop, when we manufacturing goods, we should renew and reuse them, instead of just throwing them away, and that's what we call a "circular economy".

Finally, the loss of our forests, caused major problems with water and soil quality, making it harder for farmers to grow food. So, shifting towards this green economy would focus on fixing these problems, not just to help the environment, but also to help people grow food and make a living. It’s like building a strong foundation for our farms and industries. If we take care of the natural world, it will take care of us. We need to start thinking about the long-term effects of our actions and make sure we can create a better future for everyone.

Climate Vulnerability and Economic Impact

We're in the process of updating the National Determined Contributions (NDC3.0) of Madagascar right now, and I am leading the team doing this update. The reality of climate change in Madagascar is critical both in matters of Mitigation and Adaptation. The agricultural sector is the most emitting one (70% of emissions) because as we said it has the biggest share of the national economy, and in the other hand the emissions of the industrial sector is pretty negligible (<0.1% of the total emissions). From these data, we may think that it's good that our industry isn't a big a big source of Greenhouse Gases (GHG) but deeper it also means that the industrial sector is just non-existent and that also means that the country's transformational power is suffering and can't provide more added values such as food efficiency, jobs, etc.

In matters of adaptation, just recently, in February 2026, two big cyclones, Fytia and Gezani, showed how weak the country’s infrastructure is. They affected a lot of people – over 681,000 – and flooded a huge area of crops, about 174,100 hectares. Cyclone Fytia was a category 3 storm, and Gezani was even stronger, a category 4. Together, they caused a lot of damage, with 73 people losing their lives and 811 getting hurt. If the country doesn’t start planning for these kinds of climate disasters, the cost will be extremely high – it’s estimated to reach 24 billion USD by 2050, according to the World Bank. This is a big problem that needs to be addressed, and it’s not just about the money, it’s about people’s lives and livelihoods. The country needs to find ways to adapt to these climate shocks, or the consequences will be catastrophic (ReliefWeb, 2026).

Financing the Transformation and the New Social Contract

Moving to a green economy means we need a new deal for people that’s fair and provides good jobs. Right now, in Madagascar, about 95% of people work informally, which means they don’t have stable or secure jobs. The goal is to train these workers to become skilled technicians and engineers who can work in renewable energy and circular manufacturing. To make this happen, the country should plan to mobilise resources from climate finance, especially from the carbon that its forests and mangroves can absorb, known as blue carbon. This will help create a more sustainable future and provide better opportunities for the people of Madagascar. By doing so, the country can reduce its reliance on informal employment and create a more stable and secure workforce, which is essential for a successful transition to a green economy.

Fortunately, Madagascar has developed its Climate Finance Strategy this year, and I'm also proud to be part of the team drafting this important strategy. We all know that investing in a greener future is a critical decision, and we need to make sure to make the shift in a SMART way. That’s why financial innovation is so important – it helps reduce the risks involved. One other smart climate finance idea is the “Lemur Bonds” and biodiversity credits. These bonds are like special tickets that say “hey, we’re protecting the environment!” And they can be traded, which makes them a great way to raise money for conservation efforts. Madagascar has some really unique ecosystems, and we want to make sure we’re doing everything we can to protect them. Now, you might be wondering how we’ll keep track of all this. That’s where the national carbon registry comes in. It’s like a big ledger that uses blockchain technology to keep everything transparent and honest. This means we can trust that the carbon credits are real, and that the money is being used for what it’s supposed to be used for. It’s all about making sure we’re doing the right thing, and that we’re using our resources to make a positive impact on the planet.

The country is looking to make a big change in its economy, and part of that plan is to use the 20 billion cubic meters of natural gas found at Mahaboboka-Sakaraha (Midi Madagascar, April 2026). But instead of relying on fossil fuels forever, the government wants to use the money from selling gas to pay for a switch to renewable energy. This way, they can avoid the problems that come with relying too heavily on natural resources, and also reduce the amount of carbon emissions from the national electricity grid right away. By doing this, the country is trying to create a more sustainable industry and sustainable energy system, and the gas revenues will act as a kind of bridge to help them get there. Now let's see in details how this greening of the industry should happen.

Green Industry, Decarbonization, and Mineral Sovereignty

Madagascar’s plan for its industries should be to make better use of important minerals and reduce carbon emissions from emitting sectors. The goal must be to go beyond just exploiting our raw materials and instead manufacturing high quality tech components, all while cutting down on the amount of carbon used in this manufacturing process. This means we should build devices like electronics and other advanced products, rather than just exporting raw materials like metals and minerals. By doing this, we hope to reduce our carbon footprint and make their industries more sustainable.

Decarbonizing the Cement Sector: The IPPU Priority

According to our last NDCs and still confirmed by the NDC3.0, the cement industry in Madagascar is the only industrial sub-sector that is a major source of greenhouse gas emissions, and this is mainly due to the way limestone is turned into clinker. This process, known as calcination, involves a chemical reaction that releases a lot of carbon dioxide into the air. According to the World Bank, in 2025, the cement industry will be the biggest contributor to greenhouse gas emissions in Madagascar, within the Industrial Processes and Product Use sector. The chemical reaction that takes place during calcination is a key part of this process, and it’s what leads to the release of these harmful emissions.

To make the construction sector more environmentally friendly, the NDC3.0 plans to focus on using a new type of cement. This cement, called Limestone Calcined Clay Cement, or LC3 for short, can help reduce the amount of clinker used by up to 50%. Clinker is a key ingredient in traditional cement, but it’s also a big contributor to greenhouse gas emissions. By using LC3, which is made with clay from Madagascar, the carbon footprint of construction projects can be significantly lowered. Another part of the plan should be to update the way kilns are used in the industry, using the best available techniques to make them more efficient. The goal should be to reduce the amount of thermal energy used to make clinker, aiming to get it down to around 3,000 megajoules per tonne. This can help make the construction sector more sustainable and reduce its impact on the environment.

Greening the Textile Sector and AGOA Compliance

The textile industry remains a cornerstone of formal employment in Madagascar, heavily reliant on the African Growth and Opportunity Act (AGOA) for market access (IFC, 2025). To maintain competitiveness in global markets that increasingly demand environmental transparency, the sector must undergo a “circular” overhaul. Following this trend, the "Textile City" that the EDBM wants to implement in Moramanga aims to:

Being in control of our water: this means recycling all the water we use and getting rid of harmful chemicals, which is what the Stockholm Convention is all about, as noted by the Global Environment Facility and the United Nations Industrial Development Organization in their 2022 report.

Renewable Integration: Implementation of solar thermal systems for dyeing and finishing processes, significantly reducing reliance on heavy fuel oil (UNIDO, 2025).

Waste Valorization: Conversion of fabric offcuts into economically viable products, such as handcrafted rugs or paper ribbons, a model already piloted by industry leaders like CIEL Textile (CIEL Textile, 2024).

Big companies with over 22,000 employees are already switching from coal to renewable energy, showing that it’s possible to be a large industry and still reduce carbon emissions at the same time, as seen in the example of CIEL Textile in 2024.

Vertical Integration of Critical Minerals: The Graphite Chain

Madagascar possesses world-class deposits of flake graphite, particularly in the Molo and Vatomina mines (Discovery Alert, 2026). The green industrial strategy mandates a shift toward the production of Coated Spherical Purified Graphite (CSPG), the essential material for Lithium-ion battery anodes.

The process of refining graphite is pretty complex. It involves a couple of key steps: micronization and spheronization. Essentially, this means taking flake graphite and using machines to break it down into tiny particles that are all roughly the same size – between 15 and 25 micrometers in diameter. This process is crucial because it changes the shape of the particles, making them more rounded. As a result, the particles can be packed more tightly together, which is important for making batteries work well. When the particles are nicely rounded, they can be packed in so tightly that the density of the material is over 0.95 grams per cubic centimeter. This is a big deal because it directly affects how well the battery will perform. Several companies, including Renascor and NETZSCH, have developed techniques for doing this, and researchers have also been studying the best ways to purify spherical graphite for use in lithium-ion batteries.

After the initial processing, the next step is to purify the material to get rid of impurities like silicates. In Madagascar, we use a special method that involves using alkaline and acid solutions, like sodium hydroxide, hydrochloric acid, and sulfuric acid, to achieve a very high level of purity – 99.95% - without using hydrofluoric acid, which can be harmful. This process is really important for making spherical graphite that can be used in lithium-ion batteries.

Green Energy: Sovereignty, Diversification, and the Technical Roadmap

The energy sector in Madagascar is currently characterized by a systemic imbalance between supply and demand, largely managed by the state utility JIRAMA. The utility’s financial state is a significant risk to national stability, with a supplier debt estimated at 1,880 billion MGA at the end of 2023 (IMF, 2025). High production costs, driven by a 53-55% dependence on imported heavy fuel oil, result in tariffs that remain below cost-recovery levels, requiring annual state subsidies of approximately 80 million USD (AfDB, 2024).

The 2030 Energy Pact and Renewables Potential

The government of Madagascar wants to make sure everyone has access to electricity, so they’ve made a plan called the National Energy Pact. The goal is to have 80% of the country’s population with electricity by 2030. To make this happen, they’re focusing on using renewable energy, like water, sun, and wind power. The Government wants 85% of their energy to come from these sources, with most of it coming from hydroelectricity, which is energy made from water. Right now, about 40-45% of their energy comes from renewable sources, so they need to move quickly to meet their target. This is a big step towards making Madagascar energy independent and helping its industries grow.

Madagascar has a lot of potential for hydroelectric power, more than many other countries in Africa. But right now, it’s only using a small part of what it could be using – just 3% of the 7,800 MW that's available. There are some big projects in the works, like Ranomafana, Sahofika, and Volobe, that will help provide steady power to cities and mining areas. These projects are being planned to make sure everyone has the power they need (World Bank, 2025).

Solar Electrification and Smart Grids

Solar energy has a lot of potential too, with the sun shining for about 2,800 hours every year. This means we can get around 2,000 kWh of energy per square meter per year. One way to make the most of this is by combining traditional power plants with solar panels and batteries. This helps balance out the ups and downs of renewable energy. There’s already a program called the Universal Energy Facility that’s shown this approach can work. They’ve given out $3.7 million to help over 5,600 homes in rural areas get access to electricity. This is a great example of how results-based financing can make a real difference.

The way we set up our power grid is getting an update, thanks to a project called DECIM that’s happening from 2023 to 2028. This project is putting in smart meters and energy management systems to cut down on losses – both from technical issues and from people not playing by the rules. According to the IMF, this was happening since 2025.

And last, we should use Battery Energy Storage Systems (BESS) for the sustainability of the energetic output.

For the long run: Green Hydrogen and Ammonia Synthesis

Madagascar has a great chance to jump ahead in technology by using green hydrogen. The country can use its many hydroelectric sites that aren’t connected to the grid to power special machines called Proton Exchange Membrane electrolyzers. These machines need a lot of energy to work, around 50 to 60 kilowatt-hours for every kilogram of hydrogen they produce. Luckily, the latest technology internationally available is pretty efficient, with some machines able to convert around 70-75% of the energy into hydrogen. This is based on research by Randimbiarison and others in 2024, as well as a report by the International Solar Alliance’s Green Hydrogen Initiative in 2026.

Generally hydrogen is mainly used to make green ammonia, which is a cleaner way of producing ammonia. It does this through a process called the Haber-Bosch process, but without using carbon, making it better for the environment.

If we can build hydro-hydrogen plant in Madagascar, if the country has the will and if the funds are available, we can produce a lot of green ammonia, about 57,000 tonnes every year. This will be a good thing because it will help Madagascar make its own fertilizers, so that it won’t have to rely on other countries for natural gas. This also means that the farmers in Madagascar won’t have to worry about prices going up and down all the time, and they can just focus on growing food.

Technical Synthesis of the Green Transformation

Madagascar is going through a big change, making everything green. This means changing how the country’s economy works, how it makes things, and how it uses energy. All these changes work together to make the country stable in the long run. The economic plan that we propose should gives the country the money and support it needs to make these changes last. The plan to make industries green ensures that the country uses its natural resources, like cement and important minerals, in a way that’s good for the environment and helps the local community. This also will create a market for clean energy. Finally, the country’s plan for green energy will give it the power it needs to make all these changes happen, without relying on fossil fuels. This means Madagascar can make its own clean energy and be in control of its own power.

For Madagascar to succeed with its technical roadmap, it needs a solid foundation in laws and rules, especially when it comes to the 2023 Mining Code and turning JIRAMA into a neutral Transmission System Operator. This is crucial because it will help the country make the most of its natural resources. By using the money from natural gas royalties and coming up with new ways to borrow money, like Lemur Bonds, Madagascar is taking a big step forward. Instead of just being affected by climate change, the country will become a leader in the global green economy, showing that it’s proactive and committed to making a difference. This approach not only will help Madagascar but also will set an example for other countries to follow, which is really important for the future of our planet.

Right now, it looks like Madagascar is on the right path to make some big changes.