SA launches $1bn green hydrogen fund with Netherlands, Denmark to tackle climate crisis

20 Jun 2023

The SA-H2 fund is seeded by an initial €50m from Invest International, and aims to capitalise on South Africa’s wind and solar resources to mitigate the impacts of the climate crisis.

A new fund to promote the financing of green hydrogen initiatives in South Africa was announced in Pretoria on Tuesday as part of a joint effort between the Netherlands, Denmark and South Africa.

The fund aims to capitalise on South Africa’s abundance of wind and solar resources, and its significant industrial capacity. With green hydrogen earmarked to replace natural gas, it plays a key role in plans to transition away from coal towards more sustainable sources of energy.

The $1-billion fund, dubbed SA-H2, was seeded by an initial €50-million from Invest International of the Netherlands, with the remainder of the money to be raised over the next two years.

Supported by multiple institutions, including the Development Bank of Southern Africa, Industrial Development Corporation and Sanlam, it will be managed by The Hague-based Climate Fund Managers.

Read more in Daily Maverick: Green hydrogen provides answer to many of South Africa’s decarbonisation prayers, studies show

The announcement was attended by President Cyril Ramaphosa, Danish Prime Minister Mette Frederiksen and Dutch Prime Minister Mark Rutte, all of whom made commitments to knowledge sharing and highlighted the importance of mitigating the impacts of climate change as part of a just transition, a commitment which has been softened in South Africa by the load shedding crisis.

“Our country faces severe electricity challenges,” said Ramaphosa. “The development of new renewable energy generation capacity alongside our own existing fleet of power stations that are coal-fuelled and generated is vital for our long-term energy security.”

Waterworks in St Petersburg

Other remarks by the President elicited a less than favourable response. Noting his recent trip to Ukraine and Russia as part of an African-led attempt at a peace deal, Ramaphosa spoke of seeing waterworks in the Russian city of St Petersburg.

“The minister told me the Dutch had been involved in the making of those wells and those fountains in that historic place,” said Ramaphosa, “…and so we want that capability and that capacity to be brought here.”

Rutte shifted in his seat and a visibly irritated Frederiksen looked on.

However, the remainder of the event was a public display of partnership between all parties who stand to benefit strongly from early investment in green hydrogen technologies, which are likely to play an increasingly significant role in the global pursuit of emission reduction and are predicted to become a growing and lucrative industry.

Nine green hydrogen projects in South Africa have been granted Strategic Integrated Project status, with many likely to receive approval for SA-H2 funding in an attempt to fast-track the growth of the country’s green hydrogen industry, which aims to attract as much as $250-billion by 2050, according to South Africa’s presentations at COP27.

Read more in Daily Maverick: Green hydrogen – how South Africa can capitalise on it, and why we need to do it fast

South Africa already has significant applications for green hydrogen projects directly, with many companies such as Sasol and other industrial players making use of it in processes.

The President was also at pains to point out that in attendance and collaborating in the implementation of the fund were not just state-based entities and the private sector, but roleplayers from organised labour and NGOs.

The Netherlands and Denmark are not currently part of the Just Energy Transition Partnership, but are supportive of its objectives, of which green hydrogen plays a part. The two countries are, however, in discussions to join the alliance, which includes South Africa, the UK, US and European Union.

While the main focus of the day was the SA-H2 fund, a memorandum of understanding on green hydrogen was also signed between South Africa and the Netherlands, while amendments were made to an existing partnership between Denmark and South Africa on low-carbon energy technologies. Invest International also announced a finance package to assist in water-related public infrastructure.

The commitments represent an increasing commitment to combatting climate change as well as a strong belief by the three countries in the significance of green hydrogen as a critical factor in the sustainable energy mix of the future. DM

This article was edited on 21 June at 4.32pm to correct a figure.

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Waterworks in St Petersburg