South Africa poised to capitalise on the rapidly developing global hydrogen economy 

South Africa is powering ahead into a green hydrogen future, betting that this will be the new oil of the twenty-first century. 

Green hydrogen has been a hot topic at this year’s climate talks in Glasgow. South Africa has made it one of its three key priorities in its climate action plans, as it searches to lessen its dependency on coal. It was this climate plan that enabled it to attract a multibillion-dollar climate-funding deal, and South Africa will use part of the funds to invest in green hydrogen. 

Its future climate plans include fast-tracking plans for a green-hydrogen economy. It hopes to lure investors with innovative hydrogen infrastructure plans.

The other two legs of the plan entail a roadmap to decarbonise and recapitalise South Africa’s struggling power utility Eskom as well as boost electric vehicle infrastructure.

President Cyril Ramaphosa is especially excited about South Africa’s proposed green hydrogen projects, believing that this could give South Africa a competitive edge in an energy market looking for clean green opportunities. South Africa could become a major exporter of this fuel of the future.

“One of the new frontiers of infrastructure development is green energy, which has the potential not only to drive industrialisation, but to establish a whole new industrial reality,” he told delegates at an energy conference earlier this month. 

“I am pleased that our infrastructure developments are now going ahead of this curve, embracing the climate change narrative and debate, and making sure that it is a part of what we are doing.”


Fuel of the future

Hydrogen has often been labelled the fuel of the future, thanks to its abundance in nature and its clean-burning nature that emits only water vapour. But its extraction in the past was too intensive, and production was not cheap. While hydrogen is abundant, it has to be extracted from other substances, mostly water.

In the past few years so-called green hydrogen – hydrogen that is produced without any carbon emissions using renewable resources – has become economically viable. Green hydrogen is produced by splitting water by electrolysis, which produces only hydrogen and oxygen. The oxygen is released into the atmosphere with no negative effect on the environment.

Green hydrogen could be piped to homes in existing gas pipelines to power household appliances. Apart from its uses in industry, green hydrogen can also transport renewable energy when converted into a carrier such as ammonia, or used as zero-carbon fuel for shipping. 

In the future as technology grows it could replace gasoline as a transport fuel, or natural gas as fuel for power generation.

Investment bank Investec believes that there is huge potential for investment in the green hydrogen sector. In an investment note it argued that South Africa was well-endowed with renewable sources of energy, and was poised to become a leader in this field. 

Accounting firm PwC also advised investors that South Africa had a competitive advantage to produce and export green energy.

“Hydrogen is receiving an unprecedented level of international traction as the cost of renewables decline and carbon emissions are increasingly penalised,” said James Mackay, PwC Africa south market lead for energy.

Global momentum is growing across the hydrogen industry, with few sectors likely to remain untouched by this upcoming energy revolution. At the beginning of 2020, the global hydrogen project pipeline, across grey, blue and green projects, stood at $95 billion, PwC said. 


South Africa’s hydrogen potential

Trade minister Ebrahim Patel said South Africa had a rich endowment of renewable solar and wind resources, as well as the skill sets around Fischer-Tropsch technology that South African multinational Sasol perfected over many years. Fischer-Tropsch technology is a big boon in the extraction of hydrogen, and will help South Africa in the green hydrogen revolution. 

An added benefit, Patel said at his keynote address at the second Renewable Hydrogen and Green Powerfuels Webinar in April, was South Africa’s platinum group metals (PGMs) used in the electrolysers needed to produce green hydrogen as a fuel. 

“This places the country at an advantage for developing the green hydrogen value chain and being a key supplier into the global hydrogen market.”

Sasol, South Africa’s second biggest emitter, is also closing down its carbon intensive business model and opting to invest in green technologies including green hydrogen.

Fleetwood Grobler, CEO of Sasol, commented at the same webinar that Sasol wanted to use its grey hydrogen skills in the establishment of a green hydrogen economy for South Africa. Grey hydrogen is produced from natural gas, or from the gasification of coal.


The Northern Cape, Namibia and green hydrogen

South Africa’s flagship hydrogen project is the green hydrogen export special economic zone to be developed at Boegoebaai in the Northern Cape, with Sasol as an anchor investor. It is a major step towards realising SA’s potential to be a global leader in green hydrogen.

Namibia is set to be a key part of this project as it is also embracing green hydrogen through its green hydrogen programme. Last month Ramaphosa and Namibian president Hage Geingob met to discuss cooperation in the green hydrogen space, with both believing there are enormous benefits for South Africa and Namibia.

The cooperation between the two countries suggests a future where tens of gigawatts of renewable energy feed electrolysers on a huge scale, producing the hydrogen power fuels of the future.

“We stand ready to be a major exporter in this market, to use hydrogen to rapidly decarbonise our existing industries, and attract industrial investment from across the globe seeking to meet new standards of green power in the production process,” Ramaphosa said. 

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