EU provides grant funding for green hydrogen in SA

The European Union will provide two grants totalling €32 million (US$35 million) to help South Africa kick-start its green hydrogen industry, Kadri Simson, Europe’s energy commissioner, said.

The grants will help South Africa to take advantage of its abundant wind and solar resources to produce green hydrogen, which is seen as a potential clean alternative to the fossil fuels used to power ships and heavy industry.

Green hydrogen is produced by using renewable energy to split water and release hydrogen, which can be burned without producing climate warming gases.

While countries such as South Africa, neighbouring Namibia, Egypt and Chile are positioning themselves to produce the fuel it’s still too expensive to compete with oil derivatives.

Still, there’s an expectation that the fuel will become more attractive as prices fall with improving technology and penalties on the use of fossil fuels increase.

“These two European Union grants will be implemented in a way so that they contribute to South Africa and the local economy,” Simson said at an event in Pretoria, the country’s capital, on Monday.

“They will leverage further public and private investments across climate change. And for this, we will work with global development finance institutions and European public funds.”

The money is from the European Union budget and is separate to the US$9,3 billion Just Energy Transition Partnership, a climate finance pact between South Africa and some of the world’s richest countries.

The EU has provided similar support to Namibia.

The first of the two grants, worth €25 million, is expected to act as a catalyst to attract R10 billion (US$558 million) in public and private money to invest in hydrogen production, storage and transportation, the EU and South Africa said in a statement.

It will be “channelled through an EU member state financial institution”.

The second, worth €7 million, will be used by Transnet, the state ports and rail company, to fund studies and pilot projects into hydrogen production and storage.

That money will come from Agence Francaise de Developpement, a state development finance institution.

Transnet “is expected to play a critical role across the hydrogen value chain for its operations as well as domestic and export markets”, the EU and South Africa said. — Bloomberg