Address by Minister in the Presidency, Mr Mondli Gungubele (MP) during the Green Hydrogen Stakeholder Engagement, Port Nolloth

Programme Director,
Premier of the Northern Cape, Dr Zamani Saul
MEC for Finance, Economic Development and Tourism, Mr Abraham Vosloo
MEC for Roads and Public Works, Ms Fufe Makatong
MEC for Agriculture, Rural Development, Environment and Nature Conservations, Ms Mase Manopole
Mayor of the Namaqua District Municipality, Mr Mervin Cloete
Mayor of the Richtersveld Local Municipality, Mr Cornell Knoph
The Executive VP for Sasol Energy Business, Ms Pricscilla Mabalane
Our Head of Investment and Instructure in the Presidency, Dr Kgosientsho Ramokgoba;
All distinguished guests
Ladies and gentlemen
We are very excited to be forming part of this ground-breaking venture between National Government, the Northern Cape Provincial Government and Sasol which will bring much needed economic growth and investment to our shores through the production of green hydrogen (H2).

South Africa has a long history investigating green hydrogen. Since 2007, the Department of Science and Innovation (DSI) has been researching green hydrogen with a focus on green mobility and the use of the platinum group metals.

Over the past two years there has been a proliferation of net zero commitments by nations and corporations. This has brought into renewed focus a need to decarbonise traditionally ‘hard-to-abate’ sectors such as:

• heavy duty transport;
• aviation;
• maritime; and
• heavy industries like steel, cement and ammonia manufacturing.

These hard-to-abate sectors cannot be decarbonised through renewable energy (RE) and electrification or through RE and battery storage. Green H2 provides the best, long-term, opportunity to decarbonise hard-to-abate sectors as its use is free of emissions.

The Department of Trade, Industry and Competition is developing a hydrogen commercialisation strategy; and the Northern Cape and Gauteng Provinces are developing provincial green hydrogen strategies focused on exports and domestic decarbonisation respectively.

South Africa has a number of strategic advantages which could make it a globally competitive green H2 production area. These advantages include the following:
1. A superior RE endowment of both onshore wind and solar. RE is the largest cost component in the production of green H2;
2. Holding largest concentration of known Platinum Group Metal reserves. Platinum is a major component in the manufacture of fuel cells and PEM electrolysers and 90% of known reserves are in South Africa and Zimbabwe;
3. A deep expertise of the Fischer-Tropsch Process used to produce powerfuels such as diesel, petrol and kerosene (jet fuel);
4. The availability of large tracts of relatively cheap land for RE production;
5. A large electric grid for the wheeling of RE; and
6. A large domestic industrial base as a source of local demand.

Green H2 is still an emerging sector but is one with significant potential. Global green H2 demand could reach 530 million tons by 2050, displacing roughly 10.4 billion barrels of oil equivalent (around 37% of pre-pandemic global oil production.) The green H2 export market could be worth USD 300 billion per annum by 2050. Green H2’s export potential and its potential to decarbonise local industry have so far not yet been fully explored by South Africa.

While South Africa has a number of inherent advantages that would enable it to be a major player in the anticipated green hydrogen economy, we are behind the curve in announcing our intentions and appetite to the rest of the world relative to our competitors such as Chile, Australia, North Africa and the middle east.

Over the past 12 months, Infrastructure South Africa (ISA) has been working with the Northern Cape (NC) and Gauteng provincial governments to develop catalytic green H2 projects that will underpin provincial green H2 strategies with the NC being the production hub and Gauteng being the domestic demand hub. These projects and strategies together with the DSI’s H2 Society Roadmap for South Africa will be the foundation of a national green H2 strategy.

The NC and Gauteng have signed the following agreements which were launched at SIDSSA21:

• A MoA between the NC and Sasol for Sasol to be the anchor developer of the planned Boegoebaai Green H2 SEZ;
• A MoA between the NC and the Port of Rotterdam (PoR) for the PoR to act as a demand aggregator for green H2 into Europe; and
• A MoA between Gauteng and Sasol for Sasol to develop green H2 production facilities in Gauteng aimed at decarbonising domestic industry.

Sasol is a major grey H2 manufacturer producing approximately 2.4 million tons per annum for the domestic market. The production of green H2 provides Sasol with an opportunity to leverage its expertise to enter a new market through green field facilities like the planned Boegoebaai Green H2 SEZ adjacent to the planned Boegoebaai port which we are inspecting today.

The German Government through its H2Global initiative has created a sustainable aviation fuel market trading platform which is intended to provide funding to green hydrogen products globally. South Africa has the potential to become a global sustainable aviation fuel (SAF) hub due to our renewable endowment and Fisher-Tropsch technology capabilities. Sasol is working with a number of local and international partners on a pioneering sustainable aviation fuel project at the Sasol Secunda facility.

This project has been assessed by the Investment and Infrastructure Office in the Presidency. The project was found to have the potential to contribute to a just transition of South African workers and communities from coal through creating quality, green jobs. The re-positioning of Sasol’s infrastructure away from fossil fuels has the potential to promote and sustain employment, livelihoods and economic inclusion for historically marginalised communities and sectors of our society while positively contributing to domestic and international net zero commitments. Due to its catalytic nature and its potential to contribution to a just transition, the Investment and Infrastructure Office submitted a letter of support to H2Global for the Sasol Consortium’s SAF project.

Due to the multi-sectoral implications of green hydrogen, the Presidency will be playing a convening and coordinating role across government with respect to green hydrogen.

In this respect, the Presidency and GIZ, commissioned by the German Federal Ministry of Economic Cooperation and Development, (BMZ), have agreed to collaborate on the topic of green hydrogen and to thus jointly implement the project “Promoting the development of a green hydrogen economy for South Africa”, abbreviated as H2.SA with Eur 12.5 million funding support from BMZ.

The project aims to:

• Support the development of a favourable strategic and regulatory framework for a green hydrogen economy in South Africa;
• Coordinate the important contributions of different government departments and stakeholders for such a framework;
• Enable relevant actors to build a green hydrogen export economy;
• Enhance capacity and knowledge of South African stakeholders in the green hydrogen and Powerfuels sector; and
• Mitigate potential implications of a green hydrogen and Powerfuels economy on the environment, society, and the economy.

The Investment and Infrastructure Office is in the process of developing South Africa’s inaugural Country Investment Strategy (CIS) which should be released for public comment before the end of the first quarter of this calendar year.

The CIS aims to position South Africa as a key preferred African investment destination by attracting and facilitating quality Foreign and Domestic Direct Investment into the country, in a well-co-ordinated manner, anchored by quality institutions and robust economic infrastructure networks. This is in the country’s important endeavour of advancing its National Development Plan (NDP) target of 30 percent of Gross Fixed Capital Formation (GFCF) to Gross Domestic Product (GDP) by 2030.

The CIS aims to achieve this through:
i. Catalysing a new investment model to address current under-investment;
ii. Attracting quality greenfield investments into South Africa;
iii. Identifying high-impact and high-growth industries which will accelerate contributions to GDP;
iv. Supporting existing industries and developing new industries;
v. Consolidating and strengthening existing capacity in identified priority sectors through enhancing policy certainty; and
vi. Targeting areas of intervention, accompanied by the mobilisation of resources and improved institutional co-ordination.

The CIS is importantly underpinned by and aligned to the aspirations and objectives articulated in the NDP, the country’s Economic Recovery and Reconstruction Plan (ERRP), the Re-imagined Industrial Strategy (RIS), Sector Masterplans and the National Infrastructure Plan (NIP) 2050.

A data-driven sector prioritisation model was developed to determine the sectors that should be prioritised from an investment-growth perspective within the context of limited fiscal resources. It is important to note that the aforementioned data-driven sector prioritisation approach is combined with identified strategic investment opportunities by government, known as South Africa’s 5 Big Frontiers. Big Frontier 1 is green hydrogen and its ability to place South Africa at the global forefront of green energy.

Conclusion

South Africa can maximise the potential of green H2 by following a dual strategy entailing maximising the export potential of green H2 derivative products in the short-term and using green H2 as an enabler for domestic, industrial decarbonisation and attracting hard-to-abate industries to relocate to South Africa in the medium term. Both strategies would be underpinned by localisation.

Green hydrogen is not only potentially catalytic for the Northern Cape but for South Africa as a whole. It represents a real reindustrialisation vector and a potential enabler of mineral beneficiation by coupling our mineral resource endowment with green energy.

This project is testament to our Constitutional imperative of partnership and participation as a young democracy.

I thank you.

Source: Government of South Africa