Part Two: The Adoption of Green Hydrogen in South Africa

Introduction

In its latest report, the World Economic Forum named green hydrogen as one of the most exciting technologies that emerged in 2020, with the potential to positively transform society and industry.[1] South Africa, as is the case with several other Sub-Saharan African countries that possess abundant amounts of clean energy sources such as solar and wind energy, is well-placed to leverage such resources to establish itself as a key supplier of the small, but rapidly-growing international hydrogen market.[2] To address the energy challenges faced by South Africa, the government, in recent years, has rolled out several energy access and energy efficiency programmes and initiatives with a strong emphasis on the following: off-grid renewable energy solutions, the uptake of hydrogen energy, and oil and gas (including shale - a substitute for conventional oil) exploration opportunities. Some of the most significant and wide-ranging programmes and initiatives will be analysed below.

South Africa’s comparative advantage in the production and export of green hydrogen

In February 2021, the Council for Scientific and Industrial Research (CSIR) published a report on power fuels and green hydrogen. This Report affirmed that as a result of South Africa’s vast wind and solar resources, the country has a comparative advantage in producing and exporting green hydrogen.[3]

In addition to the above, South Africa is also well-positioned to produce green hydrogen technology due to its large reserves of Platinum Group Metals (PGMs) such as platinum, Palladium, among others. South Africa holds approximately 75% of the world's platinum reserves and is the world's largest producer of PGMs, which are the main raw materials in the synthesis of catalysts, vital for the electrolysis process when producing green hydrogen. Additionally, the country’s expertise and technical capabilities around the Fischer-Tropsch (FT) Process,[4] stand South Africa in good stead and is another major contributor to its comparative advantage in producing green hydrogen on a large scale basis. 

Whereas the potential exists for South Africa to develop green hydrogen as a key export product in the future, regulation, as well as coordination between the most important stakeholders (e.g. the relevant government departments, industry, labour unions and civil society), are essential for the country to successfully capitalise on the green hydrogen opportunity.[5] In the latest version of South Africa’s long-term electricity plan, the Integrated Resource Plan (IRP) of 2019,[6] a significant allocation has been made for renewable energy, but there is no explicit allocation for green hydrogen technology. Therefore there is an urgent need to develop a framework to specifically regulate the development of the green hydrogen economy.

South African government’s efforts to promote the adoption of green hydrogen as a source of sustainable and cost-effective clean energy

Hydrogen is of strategic importance to South Africa. President Cyril Ramaphosa, when responding to a debate that emanated from his recent State of the Nation Address (SONA), highlighted the Hydrogen South Africa Strategy (HySA), stating that after a decade of research, South Africa is prepared to manufacture hydrogen fuel cells.[7] A clear policy and regulatory environment that encourages investment as well as addressing infrastructure shortfalls, will enable South Africa to actively be part of the energy transition and benefit considerably from exporting green hydrogen.

The South African National Hydrogen Fuel Cell Technology (HFCT) Research, Development and Innovation Strategy, more commonly known as the HySA Strategy, was initiated by the Department of Science and Innovation (DSI) and subsequently approved by Cabinet in 2007. HySA is a 15-year programme within the DSI’s Research, Development, and Innovation (RDI) strategy, which was officially launched in 2008.[8] HySA was established to promote capacity building and to stimulate the innovation of the hydrogen value chain in South Africa with the aim of achieving a 25% share of the global hydrogen market and the fuel cell catalysts market by 2020.[9]

In addition to the above, the HySA Strategy focuses primarily on maximising participation in PGM beneficiation, while at the same time fulfilling other important environmental and developmental objectives. The Strategy and its established structures are executed through the DSI’s HySA Programme. According to the DSI, the Strategy sets a framework to define a sustainable pathway towards establishing a local hydrogen ecosystem in the context of the National Hydrogen Roadmap, explained below, with the potential of creating direct opportunities for economic and community development, while contributing to decarbonisation efforts.

With the assistance of the private sector, the DSI is set to build a Hydrogen Valley in the metals-rich Bushveld geological area. It has thus far partnered with Anglo-American, energy and services company, ENGIE, and clean energy solutions provider, Bambili Energy, to carry out a feasibility study on the project.[10] This study constitutes the first stage of the project, which will drive the planning, design, construction and commissioning of projects related to the development of the Hydrogen Valley. The Hydrogen Valley will identify concrete project opportunities for initiating hydrogen activities in promising hubs. This endeavour aims to: boost economic growth and job creation, drive the development of new industries, increase value-add to the country’s platinum reserves, and reduce the country’s carbon footprint.

Subsequently, the Green Hydrogen Atlas-Africa Initiative was adopted in 2020.[11] As part of this initiative, South Africa’s Hydrogen Society Roadmap is presently being developed, with the goal of producing hydrogen for both domestic uses and export. The Roadmap is intended to provide a guide for the country’s transition to a hydrogen-based energy system. It explains how the country’s resources can be effectively harnessed to produce green hydrogen. This policy Roadmap outlining the development of the hydrogen value chain is crucial to providing the much-needed policy certainty to potential investors and other stakeholders in the green hydrogen economy.

In terms of the development of an appropriate framework for green hydrogen in South Africa, the right mix of incentives and penalties are required for an effective hydrogen market. Resources and incentives on the supply side can assist in the formation of pilot projects that feed into existing processes and set up independent production, which can be scaled as commercial viability is ascertained.[12] Hence policy support is fundamental to further drive the progress that has already been made through initiatives of the government.

Concerning domestic use, the government has planned to construct a “Hydrogen Corridor", which will involve heavy-duty fuel cells for the country's air, freight and rail network.[13] Several hydrogen projects have already been initiated. For example, a mining truck project by Anglo-American in South Africa,[14] a fuel cell application in a hospital,[15] and several pilot projects under the HySA.

Initiated as part of the aforementioned Roadmap, the development of a local hydrogen economy has the potential to have a significant impact in stimulating economic activity, creating jobs and decarbonising the so-called "hard-to-abate" industries such as aviation, shipping and steel, as well as spurring industrialisation. Moreover, the hydrogen economy presents an opportunity for South Africa to leverage its platinum resources to develop a domestic hydrogen economy valued at up to $10 billion per year, and to tap into export potentials of $100 billion a year.[16] According to the head of the African Development Bank (AfDB), Dr Akinwumi Adesina, Africa’s recovery from the adverse effects of the Covid-19 pandemic must be green. He also said that Africa’s pathway to recovery offers great opportunities to boost green investments- with abundant solar, wind, hydro and geothermal energy resources, Africa’s energy transition alone presents a $100 billion per year investment opportunity.[17]

In the context of funding, the government has committed funds through the International Development Corporation (IDC). It has also in recent years entered into partnership agreements with international institutions such as World Bank, European Union (EU), among others, to provide the requisite funding for the proposed projects. Also, multiple companies have expressed interest in providing financial and other forms of support for hydrogen-based green energy projects in South Africa and throughout the African continent. Many such companies are already involved in innovative projects relating to the green hydrogen economy. For example, Sasol and Total recently launched a partnership to a green hydrogen project to explore how green hydrogen may be utilised in the mobility industry.[18]

Conclusion

South Africa as well as other African countries that are endowed with sources of renewable energy are well positioned to secure their own domestic supply of clean energy to accelerate economic growth and development. Moreover, they could also become major exporters of energy in the form of green hydrogen and hydrogen-enabled chemicals, fuels and products, to high demand markets in Europe, Asia and across the world. With continued support from the South African government in terms of putting in place appropriate policies and a conducive environment for investments, the country would be able to meet its future energy demand and achieve its goal of ensuring a just transition.

Written by Kennedy Chege.