South Africa teams up with Netherlands, Denmark to create green hydrogen fund

What is green hydrogen technology that South Africa is creating?

In South Africa, the development of green hydrogen technology is driven by the country's abundance of renewable energy resources, such as wind and solar. The government and various private companies are exploring the potential of harnessing these renewable sources to produce hydrogen for various applications.

One notable project in South Africa is the Hydrogen South Africa (HySA) program. HySA is a research, development, and innovation initiative focused on advancing hydrogen and fuel cell technologies in the country. The program aims to develop and commercialize hydrogen and fuel cell technologies for various sectors, including transportation, energy storage, and industrial applications.

Why is platinum vital for the production of green hydrogen technology?

South Africa's rich platinum reserves are also of interest in the context of green hydrogen technology. Platinum is a critical component of some electrolyzers used in hydrogen production. The country's platinum industry could potentially benefit from increased demand for platinum catalysts in the production of green hydrogen.

Why South Africa is partnering with Netherlands and Denmark to create a green hydrogen fund?

State-backed firms from the Netherlands will help create a $1-billion green hydrogen fund for investment in South African projects as part of Dutch and Danish investments in renewable energy announced at an event in Pretoria attended by the three countries' leaders.

While the breakdown of investment in the fund wasn’t given, Boitumelo Mosako, the CEO of the Development Bank of Southern Africa (DBSA), said in an earlier interview that Denmark would be involved.

The SA-H2 fund, a first for South Africa, will include the participation of the DBSA and the Industrial Development Corporation of South Africa, which are both State finance institutions. The Netherlands’ Climate Fund Managers and Invest International will be involved, as will South African insurer, Sanlam Ltd. and other “strategic investors,” the DBSA said in a statement.

South Africa’s abundant wind and solar resources and industrial capacity have positioned it to potentially become a key producer of the green fuel, which is expected to ultimately replace natural gas.

“South Africa is uniquely positioned to become a key player in the global hydrogen market,” while the Netherlands could serve as an import hub, said Dutch Prime Minister Mark Rutte at an event in Pretoria.

The DBSA said the money will be raised in South Africa or through “other channels.” The SDG Namibia One fund, which also aims to raise $1-billion, is a similar instrument, the lender said.

The planned fund comes as South Africa prepares to implement an $8.5-billion climate finance pact with some of the world’s richest countries as it seeks to transition away from the use of coal.

Denmark and the Netherlands are in talks to join the so-called Just Energy Transition Partnership between South Africa, the UK, the US, France, Germany, and the European Union, three people familiar with the matter said earlier this month.

The hydrogen fund “is a first and others will follow,” Mosako said, adding that it would be a blended finance facility, intended to catalyze more private-sector investment in the industry.

In addition, a range of partnerships between the three countries was announced including the formation of a €300-million ($327-million) water infrastructure fund for South Africa by Invest International. A Dutch venture to form a “climate-smart” agriculture hub at the soon-to-be-idled Grootvlei power plant in South Africa was also announced.

Mette Frederiksen, the prime minister of Denmark, said her country will contribute about R3.2-billion ($ 174 million) to green energy projects in South Africa.

The event was attended by 130 business leaders from the three countries, including executives from Vestas Wind Systems A/S and Port of Rotterdam. The CEO of South African petrochemicals company spoke, as did the acting CEO of the state power utility, Eskom Holdings