South Africa launches green hydrogen in partnership with Netherlands and Denmark

The government of South Africa Netherlands and Denmark, have come together to launch a US$1-billion green hydrogen fund to help kick-start an industry seen as critical to the country’s decarbonisation efforts.

The energy transition plan for South Africa involves setting up an ecosystem and export hub for green hydrogen, which comes by using renewable energy and without producing greenhouse gas emissions.

The country is looking to produce the fuel for use in aviation, green steel, transport, as well as for export to the European Union. President Cyril Ramaphosa revealed that this would require R319-billion rand. The countries in European are looking forward to assisting South Africa, the world’s 14th biggest emitter of carbon dioxide. This new fund, dubbed SA-H2 and run by Climate Fund Managers, a joint venture between the Dutch development bank, FMO, and South African insurer Sanlam, is set to support South Africa’s green hydrogen sector.

In a statement, the Climate Fund Managers said: “The SA-H2 Fund initiative will aim to secure $1-billion in funding, to be raised directly in South Africa or indirectly via other channels.”

South Africa currently relies on a fleet of 15 ageing coal-fired power plants for electricity. A number of countries which include France, Germany, Britain, the US and the European Union, have pledged $8.5-billion to South Africa in 2021 for its green transition. This also includes a green hydrogen industry. A fund similar to this one, targeting green hydrogen, was also set up for Namibia last year.

Critics believe that the key challenge to setting up a green hydrogen industry in South Africa is its slow renewable energy roll-out, an imperative for green hydrogen production.

Boston Consultancy Group revealed that South Africa would need to set up 6-7GW of renewable capacity per year for the next two decades to support a green hydrogen industry, compared with the 6GW it has managed in total since 2011.