The European Union sees green hydrogen as a vital part of the global energy future and values its partnership with South Africa in this regard.
The European Union sees green hydrogen as a vital part of the global energy future and values its partnership with South Africa in this regard.
According to the EU Delegation to South Africa, the EU considers green hydrogen to be important for the decarbonisation of heavy industry and parts of the transport sector.
“EU Hydrogen Strategy [2020] “This agreement sets out a clear vision for the development of an inclusive hydrogen economy, with the goal of producing 10 million tonnes of hydrogen and importing 10 million tonnes by 2030,” the delegation said in response to questions following the R628 million deal that will support South Africa's green hydrogen plans.
“The EU remains committed to investing in the development of hydrogen markets at home and abroad, including through our Hydrogen Strategy, our package for the decarbonisation of hydrogen and gas markets, our work on an EU Hydrogen Bank and our partnerships with countries around the world to develop hydrogen supply chains.”
Under the agreement, part of the funds – R138 million – will be used to turn around embattled state-owned rail, ports and pipeline company Transnet, which is forecasting a R7.3 billion loss for the 2024 financial year, up from a R5.7 billion loss in 2023.
The EU believes that adequate safeguards are in place regarding the use of the funds.
“The European Union [R138 million] The grant will be sent through the French Development Agency. [AFD]”As the entrusted organization, we will conduct thorough due diligence, risk assessment and monitoring of the project,” the delegation said. “The monitoring system is part of our contractual obligations with the implementing partners.”
Bruce Douglas-Young, senior lecturer at the University of the Witwatersrand's African Energy Leadership Centre, and Craig McGregor, director of Stellenbosch University's Solar Thermal Energy Research Group, said: The Conversation, They claim this investment is only a fraction of what is needed for the country to become a serious green hydrogen player globally.
Moreover, environmental groups are wary of the industry reinforcing what they see as colonialist practices, and argue that discussions that include affected people are necessary to ensure a just transition. An article headlined “Green hydrogen trade from Africa to Europe is 'the same colonialist vision again'” stated:Mail & GuardianOn January 25, 2024, they reported an increase in hydrogen production, noting that much of the hydrogen will be exported to Europe, and also expressed concerns about people being displaced and the amount of water needed for green hydrogen.
Part of the fund, a R490 million grant, is expected to be used to leverage R10 billion in private and public sector funding across the entire hydrogen value chain, production, transportation, storage and downstream industry, according to an EU statement announcing the deal, in the hope that more investors will follow the EU's lead and raise more capital.
A successful green hydrogen drive could contribute significantly to the country's economy through revenue and job creation, President Cyril Ramaphosa said at a green hydrogen summit about a year ago.
“It is estimated that the hydrogen economy could increase GDP by 3.6 percent and create around 370,000 jobs by 2050,” he said.
But as Young and McGregor point out, EU subsidies “pale in comparison to the estimated R410 billion.” [about €20 billion] We need to produce 1 million tonnes of green hydrogen by 2030.”
“We calculate that the new grants represent less than 0.2% of the investment needed to make this happen,” they said, adding that South Africa will need significant funding from partners and northern hemisphere countries to make its green hydrogen industry a success.
Green hydrogen is a key part of South Africa's Just Energy Transition Implementation Plan, a roadmap for achieving decarbonization of the economy in an equitable way. This comes according to two documents the country released at COP28 in Dubai last year, in which the country positioned green hydrogen as one of six portfolios that will help deliver a just energy transition.
The delegation said the EU fully supports South Africa's green hydrogen plans. “International cooperation is one of the five pillars of the European Union's Green Hydrogen (2020) Strategy.”