South Africa and Green Hydrogen: At an economic turning point?

There is much talk currently about South Africa standing at a political cross-roads, in relation to its ability to make the newly formed Government of National Unity work (and to unlock the legion economic and social benefits that would flow from making it work). South Africa also stands at another, perhaps less dramatic, economic turning point.

As the world continues to shift its focus towards sustainable energy, green hydrogen emerges as a compelling alternative for nations seeking to decarbonise their economies. Green hydrogen is likely to be in ever greater demand as more countries seek to reduce their carbon emissions, particularly in sectors such as aerospace, shipbuilding, mining, oil and gas, and chemical and steel production. In this regard, South Africa's vast renewable energy potential and strategic location, coupled with its commitment to combating climate change, position it as a key player in the green hydrogen revolution.

Green hydrogen refers to hydrogen produced through electrolysis, a process that utilises renewable energy sources such as wind or solar power to split water molecules into hydrogen and oxygen. Unlike conventional hydrogen production methods, which rely heavily on fossil fuels and emit significant amounts of greenhouse gases, green hydrogen offers a clean and sustainable alternative. Green hydrogen can be transformed into electricity or synthetic gas and then used for a variety of commercial and industrial purposes. Its eco-friendliness and versatility make it a frontrunner in the quest for carbon-neutral energy solutions.

South Africa has abundant renewable energy resources, including vast solar and wind potential making it ideally suited to produce green hydrogen. The country's favourable climatic conditions and expansive land availability provide a conducive environment for scaling up renewable energy projects. Additionally, South Africa's strategic location and well-developed ports infrastructure offer opportunities for it to export green hydrogen to international markets, thereby boosting its economy while also contributing to global decarbonisation efforts.

The global demand for green hydrogen reached 93 million metric tonnes in 2022. This is expected to grow exponentially and is anticipated to reach approximately 500 million metric tonnes by 2050. It is estimated that the hydrogen economy will be contributing approximately 3.6% to South Africa’s GDP and will have created approximately 360 000 jobs in South Africa by this date.

Recognising the transformative potential of green hydrogen, South Africa has commenced various initiatives to promote its development and adoption. The government, in collaboration with industry stakeholders, has launched pilot projects aimed at demonstrating the feasibility and scalability of green hydrogen technologies. Additionally, partnerships with international organisations and leading renewable energy companies have facilitated knowledge exchange and investment in South Africa's green hydrogen sector. Significant existing green hydrogen projects include the Prieska Power Reserve in the Northern Cape, the Ubuntu Green Energy Hydrogen Project in the Northern Cape, the Boegoebaai Green Hydrogen Development Programme in the Northern Cape, Atlanthia Green Hydrogen in the Western Cape and the Sasolburg Green Hydrogen Production Hub in the Free State.

While the potential is immense, moving towards the widespread adoption of green hydrogen in South Africa is not without its challenges. High initial investment costs, infrastructure limitations and technological barriers pose significant hurdles to overcome. Furthermore, the need for supportive policies and regulatory frameworks to incentivise private sector participation remains critical. But these challenges also present opportunities for innovation, job creation, and economic growth. By leveraging its renewable energy resources and fostering a conducive environment for green hydrogen development, South Africa can position itself as a regional leader in sustainable energy production.

Green hydrogen projects have the potential to create significant economic and social benefits for South Africa. The development of green hydrogen infrastructure can lead to job creation in various sectors, including construction, engineering, and manufacturing. Furthermore, the transition to green hydrogen can drive the growth of local industries and supply chains, boosting the economy and enhancing energy security. Community development programmes associated with these projects can also improve local living standards, providing education and training opportunities for the local workforce.

As South Africa moves towards a greener future, the role of green hydrogen cannot be overstated. By investing in renewable energy infrastructure and fostering collaboration between government, industry and academia, the country can unlock the full potential of green hydrogen. Aligning the country’s energy transition efforts with global decarbonisation objectives will attract foreign investment and strengthen our position in the emerging green economy. South Africa has the opportunity to lead by example, demonstrating that economic development and environmental stewardship can go hand in hand.

South Africa can draw valuable lessons from the green hydrogen initiatives of other African countries. For instance, Morocco’s ambitious Noor Ouarzazate Solar Complex, one of the world's largest solar power plants and the cornerstone of Morocco's strategy to become a major exporter of green hydrogen. Similarly, Egypt is making significant strides with its Egypt Green Hydrogen Project, aiming to produce green hydrogen cost effectively by leveraging its renewable energy capabilities.

In addition to Morocco and Egypt, Kenya has also made notable progress in the renewable energy sector. Kenya's Lake Turkana Wind Power project is the largest wind farm in Africa and has significantly contributed to the country's renewable energy mix. By harnessing wind power, Kenya is exploring green hydrogen production to further diversify its energy portfolio.

Namibia, with its abundant solar resources, is another example. The Namibian government has launched initiatives to develop green hydrogen projects, capitalising on the country's high solar irradiance. These projects aim to produce green hydrogen for both domestic use and export, positioning Namibia as a key player in the green hydrogen market.

The African Hydrogen Partnership (AHP) was established as the first non-profit association on the African continent dedicated to the development of green and natural hydrogen, hydrogen-based chemicals, fuel cell technology and related business opportunities. This pioneering organisation plays a crucial role in Africa's energy transition by fostering collaboration, innovation, and investment in sustainable hydrogen technologies.

As the world increasingly focuses on sustainable energy solutions, Africa's role in the green hydrogen revolution is becoming more prominent. The AHP provides African countries with a platform to lead in this sector, by showcasing their regional capabilities on a global stage. Norton Rose Fulbright South Africa Inc. has recently become a member of the AHP, thereby enabling the firm to contribute its legal expertise, particularly in the areas of corporate, project finance and real estate, to the collective effort of realising a sustainable hydrogen economy in Africa. 

This article was authored by Alastair Dixon and Dylan Hampton.