The European Union views green hydrogen as vital to the global energy future and sees its collaboration with South Africa as essential for advancing this effort, particularly in decarbonizing heavy industries.
“The EU’s hydrogen strategy [2020] sets out a clear vision for the development of a comprehensive hydrogen economy, with an aim to produce 10 million tonnes and import 10 million tonnes by 2030,” the delegation said in response to questions after the R628 million deal to support South Africa’s green hydrogen agenda.
“The EU remains strongly committed to investing in the development of the hydrogen market, both domestically and globally, as shown for example by our hydrogen strategy, the hydrogen and gas markets decarbonisation package, our work on the EU Hydrogen Bank and our partnerships with countries around the world to develop hydrogen supply chains.”
Under the agreement, a portion of the money — R138 million — will be used to help turn around the struggling state-owned rail, port and pipeline company Transnet, which posted a R7.3 billion loss for the 2024 financial year, worse than the loss of R5.7 billion in 2023.
The EU believes appropriate safeguards are in place for the use of the money.
“The European Union’s [R138 million] grant will be channelled through Agence Française de Développement [AFD]. As an entrusted entity it will conduct a thorough due diligence, risk assessment and monitoring of the project,” the delegation said. “Monitoring systems are part of the contractual obligations with our implementing partners.”
Bruce Douglas Young, a senior lecturer at the University of the Witwatersrand’s Africa Energy Leadership Centre, and Craig McGregor, the director of the Solar Thermal Energy Research Group at Stellenbosch University, writing in The Conversation, have argued that this investment represents just a fraction of what the country needs to be a serious green hydrogen player globally.
In addition, environmental groups are wary of the industry enhancing what they regard as colonial practices, and have argued that discussions must include the people who will be affected to ensure a just transition. In an article headlined “Green hydrogen trade from Africa to Europe is ‘the same colonial vision again’ (Mail & Guardian, 25 January 2024), they noted that much of the product will be exported to Europe. They also expressed concern about people being displaced from their land and the amount of water green hydrogen requires.
According to the EU statement announcing the deal, part of the money, a R490 million grant, is expected to leverage R10 billion in private and public sector finance across the hydrogen value chain, covering production, transport, storage and downstream industries, the hope being that more investors will take their cue from the EU to bring in more funding.
A successful green hydrogen drive could make significant contributions to the country’s economy by way of revenue and job creation, President Cyril Ramaphosa said about a year ago at the green hydrogen summit.
“It has been estimated that the hydrogen economy has the potential to add 3.6% to our GDP by 2050 and approximately 370 000 jobs,” he said.
But, as Young and McGregor have noted, the EU grants “pale in comparison to the estimated R410 billion [about €20 billion] needed to produce one million tonnes of green hydrogen by 2030”.
“We calculate that the new grants represent less than 0.2% of the investment needed to get this done,” they said, adding that South Africa would require significant funds from partners and Global North countries for the green hydrogen industry to succeed.
South Africa has made green hydrogen a key component of its just energy transition implementation plan, a roadmap designed to decarbonise the economy in an equitable manner. The country highlighted green hydrogen as one of six critical portfolios for driving the transition in two documents released at COP28 in Dubai last year.
The European Union delegation expressed strong support for South Africa’s green hydrogen initiatives, emphasising that international cooperation is central to the EU’s Green Hydrogen strategy, introduced in 2020.
