‘The hydrogen train has left the station’

Lack of investment has stalled South Africa’s advancement of a green hydrogen strategy that could potentially contribute $9bn to GDP by 2050 and create thousands of jobs, writes

A specialised corridor on the platinum belt in Limpopo that was to kick-start the country’s green hydrogen economy and create thousands of jobs is battling to get off the ground as investment flows remain slow.

While the government is betting on its green hydrogen strategy to create a new R162bn industrial sector, there is worry that South Africa is lagging behind the rest of the world in harnessing this cheap, clean and abundant alternative.

An 835km Platinum Valley Corridor Project, stretching from Mokopane in Limpopo to OR Tambo and King Shaka international airports in Johannesburg and Durban respectively, was announced in 2020 as part of a hydrogen strategy that would see the development of a new industry projected to create between 14,000 and 32,000 green jobs a year by 2050.

Nine pilot projects needing $1.2bn (about R22bn) were identified.

These included manufacturing buses, forklifts and heavy-duty and mining truck powered by hydrogen fuel-cells. Sasol also committed to developing ethylene and ammonia from green hydrogen.

Memorandums only

Mandy Mlilo, director for hydrogen and energy at the department of science & innovation, said the government had to date not obtained firm investment commitments on these projects but had signed memorandums of understanding (MOU) with Anglo American Platinum, Sasol, Limpopo Economic Development Agency, Gauteng’s department of economic development and the Central Energy Fund.

“The establishment of the MOUs is a good start to propel the envisaged investment commitment,” she told Business Times.

However, Henk de Hoop, CEO at SFA (Oxford), a UK-based research firm focused on strategic metal markets, said South Africa was not keeping up with developed nations that have invested a lot of money into hydrogen production.

“If you look at the sheer mountains of capital that have been thrown at it, the train has left the station. All the commitments made by large industrial countries; China is trying to run ahead, Europe is taking it seriously, with Germany in the lead, and the US also wants to subsidise, essentially, the production of hydrogen”.

South African products and raw materials will stop being globally competitive if the country does not speed up decarbonisation efforts, De Hoop added.

“What a lot of countries are seeing is a great opportunity to establish full-on supply chains and take the lead in the development of the hydrogen economy.

“It could be equipment manufacturing, production of goods that are net-zero and are acceptable around the world. In time that will be a big hurdle for South Africa. We are not seen to be part of decarbonising our economy and we rely on lots of coal-fired power. Eventually, our endproducts are going to be tainted by this; it could even be exports of raw material and cars,” he said.

Hydrogen, which is not an energy source but an energy carrier, is regarded as a key ingredient in the global transition to cleaner energy. It is created from natural gas and renewable energy resources, including wind and solar.

A feasibility study by the department of science and innovation, the South African National Energy Development Institute (Sanedi), Anglo Platinum and Bambili Energy in 2021 suggested the establishment of a hydrogen valley could potentially contribute $9bn directly and indirectly to GDP by

2050.

It could also position South Africa as an important exporter since green hydrogen is sought after by industrialised countries such as Germany, which needs new sources of clean energy as it weans itself off Russian gas.

Still, partnerships will be important if South Africa is to harness the economic benefits of green hydrogen in full.

Anglo American Platinum launched the world’s first hydrogen-powered mine haul truck at its Mogalakwena PGM mine in Limpopo last May.

Fahmida Smith, who leads Amplats’s market development, said a hydrogen economy would help South Africa meet climate change targets in line with commitments made under the Just Energy Transition Partnership.

“It is a great opportunity to be able to create a new industrial sector in the country, and through that ensure we allow and have a just energy transition,” she said.

But while the hydrogen valley programme is one of the country’s key infrastructure projects, hydrogen costs are high and there is a shortage of infrastructure used for development of this energy source,

Smith said.

“We don’t have sufficient hydrogen infrastructure. There is a single grey hydrogen pipeline that is for Sasol. We will need a lot of investment and development to get the hydrogen valley off the ground,” she said.

Still, Smith is confident about South Africa’s role in global development of the hydrogen economy.

“We are starting to see some movement, but there is still a lot of opportunity. We are trying to work with local partners to establish local manufacturing capabilities. It is not at the scale you can say that the US or Japan

is at, but we are making smaller strides. It is how we work together to ensure that we can expedite the work at a faster pace,” she said.

Mlilo said the government has had an interest in hydrogen since 2007 when it formulated a hydrogen and fuel-cell research development and innovation strategy. She is confident the country can develop this industry and sell green hydrogen at globally competitive prices.

“We believe hydrogen has the potential to decarbonise the energy and the transport sectors because these are critical in driving our economy,” she said.

In addition, hydrogen has the potential to decarbonise steel and cement production. These are sectors that have started to gain interest in terms of how they utilise hydrogen to green their systems.

“If we can get the investment to support the implementation of a project geared towards production of green hydrogen, along the hydrogen valley corridor, that would facilitate the export of green hydrogen to the UK, US, Chinese and Japanese markets.”

De Hoop said the establishment of the hydrogen economy was a step in the right direction, but South Africa should accelerate efforts to become more active in the sector.

“We are starting this race behind people who are halfway down the track. It is absolutely necessary.

“It is a great initiative, but we should not underestimate the speed at which we need to run to remain competitive and become successful,” he said.

It is a great initiative, but we should not underestimate the speed at which we need to run to remain competitive and become successful

Henk de Hoop

CEO, SFA (Oxford)