Source: BUSINESS TECH
The European Union (EU) has committed around R628 million (€32 million) in grants to support the development of South Africa’s emerging green hydrogen industry and promote net-zero-related investments across Transnet’s rail, port, and pipeline operations.
This was announced by European Commissioner for Energy Kadri Simson, Minister for Electricity and Energy Kgosientsho Ramokgopa, and Minister of the Department of Trade, Industry and Competition Parks Tau on 9 September 9 September 2024.
“This partnership between the European Union and South Africa focuses on efforts to build more renewable energy infrastructure, improve energy efficiency, and promote sustainable practices,” said Simson, Ramokgopa, and Tau in a joint statement.
“By investing in clean energy projects and providing technical expertise, the European Union and its Member States support South Africa in making the most of its green potential, promoting sustainable economic development and directly benefiting South Africans,” said Simson.
The funding will be separated into two parts.
The first, a R490 million grant, is said to leverage infrastructure investments across the hydrogen value chain, covering production, transportation, storage and downstream industries.
The main objective is to increase investments in green hydrogen infrastructure and contribute to:
- reducing global greenhouse emissions, notably in sectors where this is particularly challenging, and
- promoting local development and economic growth by creating jobs, providing water treatment, and increasing access to (green) energy.
The R490 million will be channelled through an EU Member State financial institution.
“Through the development of sustainable green hydrogen value chains, the European Union contribution will seek to increase local value addition and, thereby, to support South Africa to move up higher in these value chains [and] support efforts toward the creation of a regional green hydrogen hub in the Southern Africa region,” said the European Commissioner.
The second grant of R138 million is said to assist Transnet in its turn-around strategy and is expected to leverage additional funding for the green transformation of its core operational areas, including ports, rail, pipeline, engineering, and related facilities.
“To this end, the project’s beneficiary, Transnet, will receive assistance to achieve its net zero emissions by 2040 goal,” said Simson.
The project will support activities around Transnet’s core operational areas (ports, rail and pipeline, engineering, and facilities) related in particular to:
- executing studies (market, legal, and feasibility studies as well as impact assessments) and pilot projects focused on the production and storage of low-carbon hydrogen, and
- mobilizing technical assistance to structure Transnet’s green hydrogen strategy and allow for the scaling up of green hydrogen projects in South Africa.
An additional R138 million grant will be directed to Transnet, facilitated by the Agence Française de Développement (AFD), to conduct feasibility studies and pilot projects focused on low-carbon hydrogen production and storage.
Simson noted that the grants were supplementary to the EU’s contributions to the Just Energy Transition Partnership, as part of the international partners group.
At the UN climate conference COP26 in Glasgow in 2021, France, Germany, the US, the UK, and the EU committed financial support for South Africa’s just energy transition.
This coalition has since expanded to include Denmark and the Netherlands, and the total financial pledges have risen from approximately R150 billion to around R220 billion.
Tau said that “this initiative creates major opportunities for foreign and local investment across the value chain.”
“As South Africa scales up renewable energy, prioritising local value creation, industrialisation, and job creation is crucial for meeting energy demands and supporting economic and Just Transition goals.”
South Africa’s R1.5-trillion Just Energy Transition Investment Plan, which highlights green hydrogen as one of its top three priorities, estimates that R320 billion will be needed by 2027 for research and development of the infrastructure required to support green hydrogen production, utilisation, and export.
Government projections suggest that a green hydrogen economy could boost South Africa’s GDP by 3.6% by 2050 and generate around 370,000 jobs.
Ramokgopa said that “there is a greater emphasis on shifting to greener and more sustainable energy solutions as South Africa seeks to address environmental issues and lower its carbon footprint.”
“The Green Hydrogen Economy provides the best opportunity to re-industrialise the South African economy, drive localisation, preserve and create new jobs, and introduce new skills for development,” he added.
THE AUTHOR: Seth Thorne
