JOHANNESBURG (miningweekly.com) – South Africa has all the pieces necessary for the development of a successful green hydrogen economy.
South Africa also has a depth of rand funding to be able to support green hydrogen projects, and enable green hydrogen to play a critical role in decarbonisation priorities of this country’s heavy industries.
The nine green hydrogen projects that were gazetted with strategic integrated project (SIP) status last year on the back of South Africa’s inaugural hydrogen conference are under debottlenecking scrutiny to ensure that the necessary licences are in place.
South Africa’s Industrial Development Corporation (IDC) is financing two of the SIPs and assessing investments in others. Among these are Saldanha, Coega and a green hydrogen production and export hub in Boegoebaai, in the Northern Cape, a partnership between Sasol and the Northern Cape government.
With the competitive advantages that South Africa has, the country can feed into a number of European and Asian countries that are not going to be able to produce sufficient green hydrogen to decarbonise their own economies.
South Africa itself needs to develop a local market for green hydrogen to decarbonise this country’s heavy industries, provide green ammonia to our fertiliser industry, give our textile industry a green future and serve the marine bunkering fuel market.
These and many more far-reaching points were made by IDC chief operations officer Joanne Bate in a Zoom interview with Mining Weekly, in which she emphasised that green hydrogen should be seen as an industrial enabler with the potential to grow green products, jobs and exports. (Also watch attached Creamer Media video.)
South Africa’s newly announced R18-billion SA-H2 fund dedicated to finance green hydrogen projects in the country is supported by climate-focused blended finance investment firm Climate Fund Managers, the Dutch government's Invest International, life insurer and investment group Sanlam, the Development Bank of Southern Africa (DBSA) and the IDC, among others.
The fund is building off the model of Climate Fund Managers, which has similar infrastructure funds that are operating around the globe.
“We really liked their model of blended finance so that we can get that early-stage risk capital into accelerating the hydrogen economy.
“We’re looking at finding other partners to co-fund with us. To date, we've had a lot of interest from multilateral development banks and other development financiers around the globe, particularly from Europe and the East.
“We do believe that there's going to be significant appetite for this fund. It now is for us to get the fund closed so that we can start investing in some of the early-stage projects,” said Bate.
What factors are supporting South Africa’s participation in the green hydrogen economy?
We've got a long history in hydrogen production and through the Department of Science and Innovation, we’ve been looking at the hydrogen economy since 2008, with some very interesting innovations that have been driven by South Africa. Sasol produces roughly 2.4-million tonnes per annum of grey hydrogen, so with our experience in hydrogen production, and management and transportation, we've got a leg up on driving the hydrogen economy within South Africa. From a green hydrogen perspective, we have incredible renewables conditions, we have some of the best irradiation conditions in the world, I think second only to Chile. We also have amazing wind capacity. This combined with our access to platinum group metals, which are critical in both electrolysers and fuel cells, as well as our access to other key critical minerals for the green economy. Specifically, Sasol’s Fischer-Tropsch technology puts us at the forefront of driving this hydrogen opportunity. We’ve got all of the pieces necessary to build a successful green hydrogen economy. We also have a robust financial system, we have a depth of rand funding to be able to support these projects, and we believe that green hydrogen plays a critical role in the decarbonisation priorities of our heavy industry.
On the nine green hydrogen SIP projects, Bate added: “What we’re wanting to do is to look at the development of these projects on a nodal basis. What we see is that the projects are largely clustered in economic areas and we believe that the more we can develop a cluster of projects, not just around hydrogen, but around green economy opportunity, the more we can lower the individual infrastructure costs, build new economic hubs and grow the potential of these projects, so lots going to be announced over the coming months in that respect.
“From an IDC perspective, there’s the KfW grant that we’re managing on behalf of the German government and we'll be making an announcement around the projects benefiting from that grant over the coming months.
“As Infrastructure South Africa moves forward in progressing some of these projects, there will be announcements coming through that, and collectively we’re working towards the second annual hydrogen conference taking place in Cape Town in October, led by the Presidency, where we’re looking to showcase what we have achieved over the last year, as opposed to really just talking about more plans.”
Why does the IDC see green hydrogen as offering an outstanding opportunity to South Africa to compete?
The strategy is twofold. The one is looking at the global export markets. We do have an export-led strategy where we can benefit from the contracts in particularly Europe and Asia. A number of European countries and Asian countries are not going to be able to produce sufficient green hydrogen to decarbonise their own economies, and we do believe that with the competitive advantages that we have, we can very capably feed into these export markets. But, critically, we need to develop a local market for green hydrogen and from an IDC perspective, I always say in the 1940s, we created ArcelorMittal, our steel industry, in the 1950s, we created Sasol, both of which have been enormous contributors to both jobs and economic activity in the country, and sadly, carbon emissions on the back of that. Green hydrogen presents the perfect platform to be able to decarbonise both of these businesses and allow them to become, or to remain, globally competitive. The decarbonisation opportunity in our heavy industry is enormous, which will allow us to continue to compete in the export markets, in chemicals, steel, and in export of food. Our fertiliser industry has a significant opportunity to build off the back of green ammonia and some of our low cadmium content phosphate. Our location on the southern tip of Africa, along the trade routes for a number of vessels, makes us very well located to be able to serve the marine bunkering fuel market as well, so there are so many contributing factors that position us to be one of the leading hydrogen producers and global players in the future.
What should be the biggest takeaway from this interview?
The biggest takeaway should be for us to really believe in the opportunity that we have as a country to differentiate. The most positive part of being involved in the green hydrogen opportunity to date is seeing previous competitors collaborating in the best interests of the country. It really is for us to embrace the opportunity to create new skills, with that new jobs and new job opportunities. The localisation opportunity off the back of the green hydrogen economy is significant and it's important to not see green hydrogen as a competition for electricity and electrons, but really to see it for the industrial enabler that it really is and the potential to significantly grow both green products, jobs and global exports on the back of this industry.