Cabinet has approved the Green Hydrogen Commercialisation Strategy (GHCS) for implementation, with the goal of positioning South Africa as a major producer and exporter of green hydrogen.

Government has estimated that the hydrogen economy has the potential to add 3.6% to gross domestic product by 2050 and create 370 000 jobs.

Minister in the Presidency Khumbudzo Ntshavheni said the draft Green Paper had received extensive feedback from stakeholders and the GHCS would give effect to the Hydrogen South Africa Strategy approved by Cabinet in 2007 to prepare the country for a hydrogen economy.

“It is also framed within the Hydrogen Society Roadmap developed by the Department of Science and Innovation and approved by Cabinet in 2021.”

She also said that government had identified possible funding for green hydrogen projects, without offering any details.

However, the approval of the strategy follows on from the the second South Africa Green Hydrogen Summit in Cape Town, where South Africa concluded Heads of Agreements with the intention of launching an SA-H2 Fund that will facilitate the development of the country’s green hydrogen sector.

The aim is to attract $1-billion in funding.

The development of a green hydrogen economy is also included in the Just Energy Transition Investment Plan (JET IP), which was endorsed last year by the initial members of the International Partnership Group (IPG), which pledged $8.5-billion in concessional funding to support South Africa’s phased transition away from coal.

The Kingdom of the Netherlands and the Kingdom of Denmark have subsequently become members of the IPG, while JET IP pledges have also been made by Canada, Spain and Switzerland.

The Presidency’s Rudi Dicks told the Presidential Climate Commission (PCC) recently that that pledges of concessional funding in support of South Africa’s JET IP had increased to $11.9-billion.

Most of the funding would be in the form of loans rather than grants and Cabinet said it remained concerned about the non-commitment of developed countries to meaningful grant funding.

Details of the GHCS were not immediately released, but it is understood that the strategy will seek to lock-in price subsidies arising in various developed countries for green hydrogen derivatives exports, support the decarbonisation of domestic hard-to-abate sectors and develop industrial capacity to manufacture components for wind, solar and electrolyser facilities.

Green hydrogen is produced by using renewable electricity in an electrolyser to split water into hydrogen and oxygen. The clean energy carrier and the derivative products are seen as becoming increasingly important in assisting those sectors that are unable to decarbonise directly using renewable electricity, such as steel, petrochemicals, fertilisers, cement, as well as long-haul land, sea and air transportation.

Ahead of the endorsement of the strategy, the Eastern, Northern and Western Cape provinces signed a memorandum of understanding to cooperate on the development of South Africa as a global hub to produce green hydrogen and derivative products, as well as to produce the components required in the green hydrogen value chain.

The three coastal provinces are all playing host to potential multibillion-rand green-hydrogen projects and have been working separately on strategies and roadmaps to capture the jobs, growth and industrialisation opportunities that could flow should the projects materialise.

However, opportunities extend beyond these provinces and also include opportunities in territories such as the Free State and Mpumalanga where Sasol is investigating displacing grey hydrogen produced from coal with green hydrogen to produce sustainable aviation fuels and other products.