Cape Town - “We must act with purpose to harness the potential of the green hydrogen economy.”
This was President Cyril Ramaphosa’s driving point when he delivered the keynote address on Monday at the South Africa Green Hydrogen Summit (SAGHS).
The event, which concludes today at Century City, aims to highlight South Africa’s potential as an early stage, large scale, low cost, world-class green hydrogen production hub and total value chain investment destination.
Green hydrogen and its associated large scale renewable energy production has the potential to support the expansion of the electricity transmission infrastructure to add additional renewable energy generation capacity and to support the local development of renewable energy.
During his speech Ramaphosa highlighted how the South Africa Investment Strategy, which was approved by Cabinet earlier this year, lists green hydrogen as one of the big frontier strategic sectors expected to attract foreign and domestic direct investment.
He stressed that the country aims to position itself as a globally competitive player, and the hydrogen economy has a prominent role in South Africa’s just energy transition, by providing employment and support to vulnerable workers, communities and small businesses.
Ramaphosa said the hydrogen economy has the potential to add 3.6% to the country’s GDP by 2050 and approximately 370 000 jobs.
“South Africa has committed to ambitious emission reduction targets. Our own estimates indicate that green hydrogen has the potential to remove 10% to 15% of our domestic emissions and contribute to our nation’s long-term energy security.
“Close co-operation between public, private and financial partners will be key to unlocking Africa’s green hydrogen potential. This will enable mass-scale domestic and international demand for green hydrogen and increase cooperation on green hydrogen production, storage and distribution infrastructure.
“If investment is significantly scaled-up, green hydrogen can deliver the equivalent of more than one third of Africa’s current energy consumption, increase our collective GDP, improve our clean water supply and empower our communities,” Ramaphosa said.
“Proper planning, regulation and incentive schemes are critical to mobilise private sector investment. South Africa has deep capital markets with world-class conditions for generating renewable energy through solar and wind power, which are key drivers of the production of green hydrogen.
“Funding green hydrogen projects will require innovative financing structures sourced from multiple stakeholders.”
Ramaphosa highlighted that in June, South Africa concluded a Heads of Agreement with the intention to launch the SA-H2 Fund, which is an innovative blended finance fund that will facilitate the development of a green hydrogen sector and circular economy in South Africa.
The SA-H2 fund is a partnership of private and public enterprises, locally and globally. It also aims to secure $1 billion in funding raised directly in South Africa or via indirect channels.
“Since the last Summit, we have made advances towards building the green hydrogen industry in the country.
“These include a Joint Declaration of Intent with the German government focusing on market access, off-take opportunities and value-additive benefits in the production of green steel and green fertiliser.
“South Africa has also signed an MOU with the Netherlands as an off-taker for green hydrogen derivative products,” Ramaphosa said.
He added it was encouraging that a Memorandum of Cooperation will be signed at the summit by Sasol, Anglo American and BMW, and said these initiatives are important within the context of carbon border adjustment mechanisms.