Part One: The Potential of Green Hydrogen as a Source of Clean Energy for South Africa in the Energy Transition Era

03 Nov 2021
03 Nov 2021

Introduction

British High Commissioner to South Africa, Hon. Nigel Casey, in his presentation at the recent “2nd Renewable Hydrogen and Green Powerfuels” webinar,[1] asserted that in terms of mitigating the global effects of climate change, there is already a framework in place i.e. the Paris Climate Agreement of 2015.[2]  The Agreement has charted a new course in the effort to combat global climate change, requiring countries to make commitments and progressively strengthen them. The key imperative for countries is to deliver on the pledges therein, and the private sector is where most of the opportunities to realise these ambitions lie- to chart a way forward for a low carbon future, he further stated. South Africa’s Industrial Development Corporation (IDC) for example, has been given the mandate to drive the commercialisation of the green hydrogen economy in South Africa by actively forging partnerships with the private sector to fund opportunities across the green hydrogen value chain.

Also at the webinar, South Africa’s Minister of Trade, Industry and Competition, Hon. Ebrahim Patel intimated that the world is yet to meet its climate change goals as per the aforementioned Agreement. He added that green hydrogen (also referred to as “clean hydrogen”) can play a significant role in addressing the effects of climate change by helping to achieve global net-zero ambitions.[3] Hon. Patel went ahead to explain that a hydrogen economy could ensure a just transition by decarbonising a greater range of sectors than renewable electricity alone, thereby acting as the missing link to achieving net-zero by 2050, as will be discussed below.

The above sentiments have been echoed in subsequent iterations of the webinar, and similar forums, by stakeholders in the renewable energy sector, both domestically and internationally. Specifically, at the 3rdRenewable Hydrogen and Green Powerfuels” webinar, the outgoing German Ambassador to South Africa, Hon. Martin Schaefer exuded confidence that a just and sustainable energy transition will open up opportunities for South Africa to enhance economic growth, promote social wellbeing and social justice, and lead to a low carbon and sustainable future. He also stated that the development of green hydrogen is bound to establish South Africa as a powerhouse in the energy transition.

In addition to the Paris Agreement, the United Nation’s Sustainable Development Goals (SDGs) are significant, as they consist of a call for action for countries to play their part in combating the climate concerns of today and protecting the planet for future generations. These broad and interdependent goals chart a way forward towards a sustainable future, with energy acting as a catalyst to achieving the SDGs. Apart from SDG 7, which advocates for access to affordable, reliable, sustainable and modern energy, SDG 13 is also particularly significant, as it encourages all nations to take urgent action to combat climate change and its impacts.

In light of the climate change and environmental concerns around the world, it is expected that in the foreseeable future, all energy supply will have to be derived from carbon-free sources. There is growing consensus among academics, industries and governments that a decarbonisation path based on (quasi)-exclusivity on electricity networks (i.e. an “electricity-only” model), is unrealistic and would be too costly.[4] Therefore, it is necessary to incorporate hydrogen gas, as it is clean and affordable, to satisfy, not only current global demand, considering the rapidly growing population particularly in Africa, but also the energy needs of future generations.

South Africa goes into COP26, scheduled for November 2021, with the intention of being recognised as a country that can play its part in the global fight against climate change. The development of a green hydrogen economy is expected to be a significant enabler towards global net-zero greenhouse gas emissions by 2050, not only in South Africa, but across the African continent.

Types of hydrogen

Hydrogen, which is the most abundant chemical substance in the universe is categorised into the following three broad categories:[5]

  • Grey hydrogen - entails the traditional process for producing hydrogen, whereby fossil fuels are exposed to steam in a process called steam methane-reforming, or from the regasification of coal. Although grey hydrogen still accounts for most of the global hydrogen supply at approximately 96%, its relatively high carbon intensity makes it undesirable, particularly with the global focus on energy transition to a low carbon future.
  • Blue hydrogen - in the event that the carbon dioxide generated from the production of grey hydrogen above is captured and sequestered or stored, it is referred to as blue hydrogen.[6] Blue hydrogen is a lower carbon alternative to grey hydrogen.  
  • Green hydrogen - this type of hydrogen is the focus of the attention of investors and industries today. Its production utilises electricity generated through renewable energy sources such as wind, solar or hydro, and splits pure water through an electrolysis process, into hydrogen and oxygen gas molecules.[7] It is sometimes colloquially described as hydrogen created using clean and sustainable sources, being renewable energy or non-fossil fuels.

Hydrogen development, whether green or blue hydrogen, requires substantial financial, infrastructural and policy support to allow it to achieve wide deployment and to spark the initiation of commercial-scale projects. It is cheaper to produce grey and blue hydrogen on a largescale, as opposed to producing green hydrogen, since the electrolysis process is very capital intensive.[8] However, as the cost of renewable energy and electrolysis technology has plummeted in recent years due to advances in fuel cell technology, the cost of producing green hydrogen is gradually reducing, a major factor for its increasing adoption. Globally, hydrogen fuel cells are being recognised as clean energy technologies.[9]

Growing momentum in the adoption of green hydrogen as a viable source of clean energy[10]

The case for clean energy in Africa has never been more compelling than it is today, as a result of increased demand because of the rapidly growing population, increased urbanisation, industrialisation and trade, among other factors. Hydrogen, particularly green hydrogen, has been touted as one of the resources that could play a major role in our future economies. Countries, including South Africa, have either recently developed or are currently developing green hydrogen roadmaps to support the decarbonisation of their economies by 2030. Others include: Germany, France, Japan, USA, Portugal and China. 

Hydrogen as a source of clean energy has gained unprecedented impetus in the past few years, largely for the following reasons: First, the gradual decline in the cost of wind and solar energy has opened up the prospects for large-scale production of green hydrogen.[11] For example, countries such as South Africa are very well endowed in solar and wind energy, thereby ensuring that the production of green hydrogen is relatively cheaper as compared to those countries that are not as endowed in these resources. Secondly, the growing acknowledgement that the world cannot decarbonise energy systems solely by enforcing green electricity i.e. electricity derived from renewable sources. Instead, it is more efficient and cost-effective to achieve decarbonisation through hydrogen, which is also suitable for long-term and seasonal storage of renewable electricity in many ways. It thus provides room for accessibility and easy distribution.[12] Thirdly, existing gas infrastructure can be used to transport hydrogen, with limited adjustment and costs. Unlike in developed countries for example in Europe, many African countries are not trapped in existing technology industries, therefore large-scale devaluations and exit risks pose less of an impediment. Additionally, in countries that have existing natural gas networks, hydrogen can also be blended (up to 15%-20%) in the gas grid, in a transitional phase, thereby significantly enhancing its potential.[13]

The above are some of the major reasons for the quick adoption of green hydrogen, a trend that is likely to persist. For South Africa, the country will inevitably adopt cleaner sources of energy sooner rather than later, as one of its key export commodities, coal, faces imminent collapse, owing to the global energy transition.[14] 

Utility/ benefits of hydrogen for future economies

Hydrogen is renowned for being versatile and it plays a critical role in the world economy, with application in the industrial, energy and transportation sectors, especially as the world becomes more reliant on renewables as its primary source of energy.[15] With respect to the transportation sector, hydrogen is used across both the road and rail sectors as a result of the advancement of fuel cell technology - fuel cell technology is able to provide unparalleled performance for vehicles.[16] Green hydrogen is increasingly being integrated as a power source for ships, aircraft and cars. There are many other uses for its by-products, ammonia and methanol.

In the aviation and shipping industries, hydrogen's ability to produce carbon-neutral fuels that can run through existing carbon-intensive technologies such as diesel engines and jet turbines, make it unmatched in terms of its ability to decarbonise the transportation sector.[17] It also offers a simple decarbonisation alternative in the generation of heat and power within households, to provide alternatives to carbon-intensive diesel generators.

Arguably the most compelling future area for hydrogen usage is for both industrial heat and chemical feedstock.  The use of hydrogen for this purpose offers a plausible decarbonisation alternative for largescale industrial heat users. Hydrogen is also used in the energy sector, as it can help solve the intermittent supply issues associated with renewable energy by utilising the electrolysis process to convert excess electricity into hydrogen during times of oversupply,[18] which can then be used to generate power through either fuel cell or direct combustion in gas turbines when needed. 

Furthermore, hydrogen can lower energy costs, increase the flexibility of power systems and facilitate the decarbonisation of industries. Green hydrogen could also act as a substitute for fertilizer and explosives imports. About 60% of South Africa’s fertilizer is imported, therefore hydrogen could be combined with nitrogen from the air to make ammonia, using the well-established Haber process.[19] Apart from green hydrogen possessing the capacity to act as a storage system for excess clean hydrogen, it would also potentially cushion Africa from exposure, considering the fact that geopolitical and oil price volatility are serious issues for the continent. 

Conclusion

Countries across the world are gradually recognising the potential that green and to a lesser extent, blue hydrogen, have on their future economic prospects. It was recently reported that European governments have announced the most ambitious climate change plan to date, worth an estimated $572 billion, including an estimated $10 billion for the development of green hydrogen industries.[20] The development of green hydrogen production sectors could be key to African countries becoming net exporters in a global market, thereby contributing the much-needed foreign direct investment (FDI), employment creation, skill development, and to secure clean domestic energy supply that is de-risked from supply chain disruptions and currency devaluations.

Written by Kennedy Chege.

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[1] This webinar was hosted by EE Business Intelligence and the British High Commission to South Africa on Tuesday, the 13th of April 2021. https://www.atlantic.co.za/eebi.html.

[2] The Paris Agreement on Climate Change of  2015 provides the framework for mitigating the global effects of climate change. Moreover, it provides a pathway for developed nations to assist developing nations in their climate mitigation and adaptation efforts, and it also creates a framework for the transparent monitoring, reporting, and ratcheting up of countries’ individual and collective climate goals. 197 countries, nearly every country in the world, with the last signatory being Syria, have endorsed the Agreement. Of those, 190 have hitherto solidified their support with formal approval.

[3] The term "net-zero" broadly refers to the state of achieving a balance between the greenhouse gases emitted into the atmosphere and those taken out. The goal of achieving net-zero by 2050 is an internationally agreed-upon goal for mitigating global warming and other adverse effects of greenhouse gas emissions on the environment. https://www.atlantic.co.za/eebi.html

[4] Many “hard-to-abate” sectors cannot be entirely (or even partially) electrified in a practical or economically feasible manner. https://www.bizcommunity.com/Article/196/834/215148.html.

[6] Countries such as the UK intend to produce both blue and green hydrogen, as these are both low carbon sources of energy. However, the difference is that green hydrogen has much greater renewable power and/ or feedstock content, thus is a more viable source of green energy for the economy.

[7] Electrolysis is the process of breaking down water into its constituent elements - hydrogen and oxygen. The World Economic Forum explains that when hydrogen burns, the only byproduct is water, which is why hydrogen is perceived to be an alluring zero-carbon energy source. http://www3.weforum.org/docs/WEF_Top_10_Emerging_Technologies_2020.pdf.

[8] B. Kroposki, J. Levene, K. Harrison, P.K. Sen & F. Novachek ‘Electrolysis: Information and Opportunities for Electric Power Utilities’ Technical Report NREL/TP-581-40605 (September 2006) at 12.

[10] Evidence of the rising relevance of hydrogen is “The Hydrogen Initiative” of 2018 that was signed by most European Union (EU) countries at the Informal Energy Council in Linz (Austria), to support the deployment of sustainable hydrogen technology for the decarbonisation of multiple sectors, the energy system and for the long-term energy security of the EU. Also, CEOs of about 20 European companies and organisations that are members of the European Clean Hydrogen Alliance - Round Table for Buildings, have committed themselves to make the necessary investments to ramp up the use of clean hydrogen technologies to make buildings carbon neutral by 2050 by using green hydrogen alongside renewable power.

[12] T.R. Ayodele & J.L. Munda ‘Potential and economic viability of green hydrogen production by water electrolysis using wind energy resources in South Africa’ (2019) International Journal of Hydrogen Energy 44 at 17,670.

[14] Coal, together with other commodities that have been South Africa’s biggest export earners, are all vulnerable to changes in global demand, thereby threatnening the country’s ability to service national debt and import liquid fuels in the short and medium term. Managing the transition of these sectors could lead to significant opportunities for the country. See http://www.mlia.uct.ac.za/news/coal-vs-renewables-fight-against-coal-major-source-energy-finally-being-won.

[15] Green hydrogen offers a complementary pathway to decarbonisation, with application across a number of economic sectors. For example, in some sectors like transportation, specifically aviation and shipping, green hydrogen is the only feasible decarbonisation option.