/ 16 October 2023

Green hydrogen can boost economy create jobs, says Ramaphosa

Green Hydrogen
Storage tanks are seen at the construction site of China's first 10,000-ton photovoltaic green hydrogen pilot project operated by China Petroleum & Chemical Corporation (Sinopec) on January 4, 2023 in Kuqa City, Aksu Prefecture, Xinjiang Uygur Autonomous Region of China. (Photo by Guo Jianjiang/VCG via Getty Images)

President Cyril Ramaphosa says green hydrogen has the potential to add to the country’s GDP by 2050 and create hundreds of thousands of jobs.

Ramaphosa was delivering his keynote address at the second Green Hydrogen Summit taking place in Cape Town on Monday, where he announced that the gathering would see leading multinational corporations, including Sasol, BMW and Anglo American, finalising a groundbreaking agreement.

“It has been estimated that the hydrogen economy has the potential to add 3.6% to our GDP by 2050 and approximately 370 000 jobs. We must act with purpose to harness the potential of the green hydrogen economy,” he said

“It is encouraging to note that a memorandum of co-operation will be signed at this conference by three multinationals in the green hydrogen mobility space, namely Sasol, Anglo-American and BMW.”

Green hydrogen is made by the electrolysis of water and is a clean energy source, if produced using renewable power sources, such as wind and solar. It is rapidly emerging as a low-carbon alternative to traditional fossil fuels, such as coal and oil. 

Ramaphosa added that green hydrogen is part of the country’s efforts towards building 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.”

In June, South Africa also signed a memorandum of understanding with the Netherlands as an off-taker for green hydrogen projects. 

In addition, it launched the SA-H2 fund, aimed at facilitating the development of a green hydrogen sector and circular economy in South Africa. The SA-H2 fund aims to secure $1 billion in funding raised directly in South Africa or through indirect channels. The fund is a partnership of private and public enterprises, locally and globally.

On Sunday, during a media briefing, Minister of Electricity Kgosientsho Ramokgopa said the collaborative effort among industry giants is “poised to herald a new era in sustainable transportation solutions”.

Ramokgopa, emphasised the importance of the co-operation agreement, stating that it will be instrumental in “elevating the potential of green hydrogen in the country”, transcending administrative and political boundaries.

According to an overview document provided by the summit, “Sasol will serve as the primary supplier of green hydrogen to both Anglo American and BMW, with a specific focus on the transformation of their commercial and passenger fleets.”

“Given the mounting pressure to reduce emissions in production processes, particularly due to the European Union’s impending Carbon Border Adjustment Mechanism, which taxes imports based on their carbon footprint, companies are increasingly seeking sustainable solutions,” the statement reads.

The Green Hydrogen Summit will also witness the signing of a memorandum of understanding between three coastal provinces — Northern Cape, Western Cape and Eastern Cape — with the goal of collectively formulating an inter-regional green hydrogen strategy. This includes the development of shared logistics, infrastructure and manufacturing facilities.

On Sunday during the media briefing, Dr Harry Malila, the director general of the Western Cape, explained that the new memorandum of understanding outlines how provinces can support one another in developing green hydrogen capabilities. 

Ramaphosa on Monday added that the hydrogen economy has a prominent role to play in our country’s just energy transition, providing employment and support to vulnerable workers, communities and small businesses.

Green hydrogen, produced using renewable energy, as opposed to fossil fuels, is an alternative, low-carbon fuel to power emissions-intensive industries such as steelmaking.

The hydrogen peak is a response to the Paris Agreement signed in 2015 at the UN climate conference to reduce carbon emissions in the world. 

The Paris Agreement is a global framework that is legally binding and aims to limit global warming to below 2°C and push to limit it to 1.5°C. The agreement also aims to strengthen countries’ ability to deal with climate change.

At the Glasgow, Scotland, COP26 UN climate change conference in 2021, the UK, US, Germany, France and the EU pledged $8.5 billion to help accelerate South Africa’s energy transition, which aims to achieve “net zero” carbon emissions by 2050.

“For the world to limit global warming to less than 1.5 degrees, green hydrogen will need to constitute 10% to 20% of the global energy mix,” Ramaphosa said.

But during his opening address on Monday, Ramokgopa said green hydrogen technology had not matured yet and it was unlikely to be included in the upcoming Integrated Resource Plan update, which is expected to be presented to the cabinet before the end of the year by the energy minister Gwede Mantashe.

“The cost elements associated with green hydrogen are a bit more prohibitive. As you construct the IRP you [must] also have in mind the cost to the end-user; it’s got tariff implications,” he said.

Ramokgopa added that many of the proposed green hydrogen projects were not yet at an advanced stage and required further investment.

“The major industrialised countries of the north are likely going to be prepared to pay an adjusted cost premium because they really want to get to the targets of the net-zero [carbon commitments],” he said.

Joanne Bate, chief operations officer of the Industrial Development Corporation, said the sooner commercial scale could be achieved in South Africa, “the quicker we can accelerate the use of green hydrogen within our heavy industry, positioning it as a key element of decarbonisation and reindustrialisation”.