European Union backs South Africa’s hydrogen agenda with €32 million

The European Union has committed R628 million (approximately €32 million) in grants to promote the sustainable development of green hydrogen value chains in South Africa.

The European Commissioner for Energy Kadri Simson, South Africa’s Minister for Electricity and Energy Kgosientsho Ramokgopa and Minister of the Department of Trade, Industry and Competition Parks Tau announced two grants amounting to approximately €32 million.

The first, a R490 million (approximately €25 million) EU grant, to be channelled through an EU member state financial institution, is expected to leverage R10 billion (approximately €505 million) in private and public sector finance across the hydrogen value chain, covering production, transportation, storage and downstream industries.

As disclosed, the main objective is to increase investments in green hydrogen infrastructure and contribute to reducing global greenhouse emissions and promoting local development and economic growth by creating jobs, providing water treatment and increasing access to (green) energy.

Through the development of sustainable green hydrogen value chains, the European Union’s contribution is aimed at increasing local value addition and, thereby, supporting South Africa to move up higher in these value chains. Furthermore, the contribution is expected to support efforts toward the creation of a regional green hydrogen hub in the Southern Africa region.

The second EU grant of R138 million (approximately €6.9 million) to assist Transnet in its green hydrogen project, is expected to leverage additional funding for the green transformation of Transnet’s core operational areas, including ports, rail, pipeline, engineering and related facilities.

The AFD-Transnet Green Hydrogen project will support activities related in particular to executing studies (market, legal and feasibility studies as well as impact assessments) and pilot projects focused on the production and storage of low-carbon hydrogen. Moreover, it will back activities related to mobilizing technical assistance to structure Transnet’s green hydrogen strategy and allow for the scaling up of green hydrogen projects in South Africa.

This grant, to be channelled through AFD, is expected to help contribute towards ensuring that Transnet meets its own internal commitments as well as the government’s initiatives relating to the Hydrogen Society Roadmap.

Simson commented: “The announcement today marks a significant milestone in the European Union’s partnership with South Africa, and shows the EU Global Gateway strategy in action, boosting smart, clean and secure connections in the energy and transport sections. Our cooperation in support of South Africa’s green hydrogen agenda aims to accelerate the green transition, drive sustainable development, create new economic opportunities, and build a more sustainable future for the region.”

To note, Global Gateway is the European strategy to boost smart, clean and secure connections in digital, energy and transport sectors, as well as to strengthen health, education and research systems across the world. It aims to mobilize up to €300 billion in investments.

The partnership between the European Union and South Africa is said to be focused on efforts to build more renewable energy infrastructure, improve energy efficiency and promote sustainable practices.

It is worth mentioning that the Global South, including South Africa, has been recognized as a promising market for green fuels. By implementing the concept of green shipping corridors, countries in the Global South could be supplying green fuels to the countries of the Global North.

During the webinar “Leveraging Maritime Green Corridors in Your Climate Strategy,” organized by Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping on March 20, 2024, it was stressed that places on the map of the Global South have the opportunity to become new bunkering hubs.