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Light in the gloom

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Light in the gloom

11th June 2021

By: Terence Creamer
Creamer Media Editor

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The already fragile national mood has turned decidedly more sour over the past few weeks as the country descended, yet again, into confidence-sapping load-shedding, tightened lockdown rules in response to the third Covid-19 wave and confirmed its worst-ever official unemployment figure of 32.6%. Adding to the despair are ongoing stories of nauseating corruption, which, like water torture, is now so mentally painful that it is driving even the most well-meaning of South Africans to thoughts of a tax revolt, or worse.

As is always the case in South Africa, however, it’s ‘never as bad as it could be’, with one or two pin-pricks of light piercing through the gloom.

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One of these is news that the German development bank KfW has initiated a programme of up to €200-million in size to support the establishment of green hydrogen projects in South Africa. The funding, which is in the form of concessional loan finance, must be disbursed by December 2023 and KfW intends releasing a formal request for information for projects by the end of June.

For those who have not been following developments closely, green hydrogen (produced using renewable electricity to split water into hydrogen and oxygen using an electrolyser) is being viewed as increasingly important for decarbonising those sectors that are difficult to abate using renewable electricity directly. A number of countries have, thus, announced hydrogen strategies, with Germany’s National Hydrogen Strategy adopted in 2020.

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Crucially for renewables-rich South Africa, this strategy recognises the limits of producing green hydrogen in Germany and envisages the creation of international partnerships to support the importation of green hydrogen and green-hydrogen derivatives, such as green ammonia, carbon-neutral jet fuel and green iron and steel. In fact, Germany expects to be producing only 420 000 t of the three-million tons it will be consuming yearly by 2030 and the KfW initiative implies that Germany views South Africa as a potential supplier.

The initial projects are likely to target the production, transportation, export and/or storage of green hydrogen and green- hydrogen products, but KfW is also open to proposals for the creation of financial instruments that could boost demand for premium-priced green hydrogen in the short term.

A second sliver of light came in the form of French President Emmanuel Macron’s recent visit to South Africa, during which he expressed support for a temporary waiver on the Trade Related Aspects of Intellectual Property agreement to enable developing countries to manufacture vaccines, diagnostics and therapeutics amid persistent global supply constraints.

South Africa believes the waiver, which it has been championing together with India, will pave the way for the development and growth of local pharmaceutical industries in South Africa and across the continent.

While mere shards of light for sure, both initiatives signal that the goodwill towards South Africa remains intact, notwithstanding our best efforts to undermine it in recent years.

It would be a shame if we failed to let them shine more brightly through implementation.

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