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SA’s hydrogen economy has potential to boom with funding kickstart

Home Infrastructure Environmental – Green Industries SA’s hydrogen economy has potential to boom with funding kickstart

SOUTH Africa’s plan to raise US$1 billion to kickstart the country’s hydrogen economy in partnership with Denmark and the Netherlands bodes well for a new energy future, says CEO of the South African National Energy Development Institute (SANEDI), Dr Titus Mathe.

The July announcement that Denmark and the Netherlands would join forces with South Africa to raise US$1 billion was made at the business forum on green energy transition and green hydrogen partnership impact that was held in Pretoria in the third week of June.

The fact that Mark Rutte and Mette Frederiksen, the prime ministers of the Netherlands and Denmark, respectively, attended the forum communicated the two countries’ support for South Africa’s energy-transition ambition.

This support is well placed when one considers the context South Africa has already created for a hydrogen economy. Apart from resource advantages – abundant renewable energy sources in the form of wind and solar, accessibility to sea water which could easily be desalinated to produce water for use in producing hydrogen using electrolysers, and the cobalt, nickel, platinum, and other minerals required to produce and use hydrogen fuel cells and batteries – South Africa also has technical and knowledge advantages. Chief among these is the country’s well-developed expertise in the Fischer-Tropsch technology and the production of synthetic fuels, which can be easily transferrable to green-hydrogen technology. As an energy carrier, hydrogen is already used in a wide range of applications in South Africa (albeit currently produced from fossil fuels). As such, its safe storage and transport are well understood.

The country also has an established manufacturing sector and a vast labour force that is “completely trainable”, in the words of our Green Hydrogen Commercialisation Strategy. All of this means the country has the potential to decarbonise traditionally hard-to-abate sectors, such as heavy-duty transport, aviation and shipping, and industries such as steel, cement, and ammonia/fertiliser manufacturing.

Acting on this potential, South Africa started investing in hydrogen research, development, and innovation more than 12 years ago through a programme called Hydrogen South Africa (HySA). More than R500 million has since been invested in research and development activities, leading to South Africa developing intellectual property such as membrane electrode assemblies and the integration of systems in the various sectors of the hydrogen economy. During the Covid-19 pandemic, for instance, South Africa powered a field hospital using hydrogen fuel cells that combined national and international intellectual property.

Over the past few months, Infrastructure SA, a programme within the Ministry of Public Works, identified a pipeline of 19 green-hydrogen projects valued at more than R300 billion. The Industrial Development Corporation (IDC) also secured €23 million in grant funding from the German government to support the development of South Africa’s green hydrogen economy and help accelerate the country’s transition to renewable energy.

Internationally speaking, the Carbon Border Adjustment Mechanism (CBAM) states that any product manufactured outside the European Union using the so-called “dirty energy” will be subject to a significant carbon tax. Given that South Africa is a substantial exporter of products like steel, cement and fertiliser, carbon neutrality and products produced using renewable energy and green-energy carriers will do much to secure and grow our export markets. The knock-on effect on these and other value chains will create considerable economic benefits, including job creation and mega-infrastructure development in underdeveloped areas.

From a domestic point of view, several policies are in place to support South Africa’s participation in the hydrogen economy.

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