South Africa, the Netherlands and Denmark on Tuesday launched a $1bn green hydrogen fund to help kick-start an industry seen as critical to this country's decarbonisation efforts.
South Africa's energy transition plan envisages setting up an ecosystem and export hub for green hydrogen, which uses renewable energy without producing greenhouse gas emissions.
The country wants to produce the fuel for use in aviation, green steel, transport and more, as well as for export to the EU. However, President Cyril Ramaphosa says this will require R319bn.
The new fund, dubbed SA-H2 and run by Climate Fund Managers, a joint venture between Dutch development bank FMO and South African insurer Sanlam, will look to support South Africa's green hydrogen sector.
"The SA-H2 initiative will aim to secure $1bn (about R18.4bn), to be raised directly in South Africa or indirectly via other channels," Climate Fund Managers said.
European nations are eager to help South Africa, the world's 14th-biggest emitter of carbon dioxide, transition towards a greener economy to help mitigate climate change.
Rich countries including France, Germany, Britain, the US and the EU pledged $8.5bn (now about R156bn) to South Africa in 2021 for its green transition, including a green hydrogen industry.
A similar fund targeting green hydrogen was set up for Namibia last year.
Critics say a key challenge to setting up a green hydrogen industry in South Africa is its slow renewable energy rollout, an imperative for green hydrogen production.
According to Boston Consultancy Group, South Africa would need to set up six to seven gigawatts of renewable capacity per year for the next two decades to support a green hydrogen industry, compared with the six GW it has managed since 2011.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.