South Africa’s Green Hydrogen Strategy Gets Boost from Sanlam Investments

The asset manager endorses the UAE Consensus and the SA-H2 Fund to promote green hydrogen as a clean energy alternative.

by Motoni Olodun

South Africa’s ambitious plan to become a major producer, user, and exporter of green hydrogen has received a vote of confidence from Sanlam Investments, one of the country’s largest asset managers.

Sanlam Investments announced that it supports the historic UAE Consensus made at COP28, which marked the first collective recognition for transitioning away from fossil fuels. The company also endorsed the call for a just and equitable transition and the petition to accelerate the adoption of renewable energy, including the swift expansion of viable and cost-effective zero-carbon alternatives like green hydrogen and its derivatives.

This follows the recent approval of the country’s Green Hydrogen Commercialisation Strategy (GHCS) by the South African cabinet in the last quarter of 2023. The GHCS outlines a strategic vision to position South Africa as a significant player in the global green hydrogen market and provides the framework for the government to support and promote the country’s green hydrogen sector and ambitions.

Green hydrogen is produced using environmentally friendly methods that split water into hydrogen and oxygen. Its clean energy carriers and derivative products are becoming increasingly important in assisting sectors that cannot decarbonize directly using renewable electricity, such as steel, petrochemicals, fertilizers, cement, and long-haul land-, sea-, and air transportation.

According to the government, the GHCS is aligned with the Hydrogen Society Roadmap developed by the Department of Science and Innovation, which was approved by the Cabinet in 2021. The strategy holds immense potential for the country’s economy and environment, as it estimates that by 2050, the hydrogen economy could contribute 3.6% to the gross domestic product and generate 370,000 jobs.

Minister in the presidency, Khumbudzo Ntshavheni, affirmed the government’s commitment, stating, “Government has identified potential funding for green hydrogen projects, with the draft Green Paper receiving extensive stakeholder feedback”.

Carl Rothman, chief executive officer at Sanlam Investments, said that the approval of GHCS by Cabinet gives further credence to the recently announced SA-H2 Fund – an investment vehicle aimed at expediting the development of South Africa’s green hydrogen sector and circular economy.

The SA-H2 Fund initiative will aim to secure $1bn in ‘blended finance’ funding for projects to help meet the surging local and global demand for green hydrogen and derivative products that will aid in stimulating economies and addressing climate change.

Blended finance is viewed as a critical financing tool and architecture supporting the development of the green hydrogen sector in South Africa.

Andrew Johnstone, co-founder of Climate Fund Managers (CFM), said, “As the green hydrogen industry emerges in South Africa, an opportunity exists to support the country’s Just Transition, fostering resilience and sustainability in existing fossil fuel-driven sectors while cultivating new value chains for growth, development, and employment. CFM has launched similar large-scale blended finance vehicles with great success to date.”

The SA-H2 Fund is supported by CFM, Invest International BV (II) of the Netherlands, the Sanlam Group of South Africa (Sanlam), the Development Bank of Southern Africa (DBSA), and the Industrial Development Corporation of South Africa (IDC).

Rothman said, “The approval of the GHCS marks a significant milestone for South Africa, as it confirms the government’s strong backing of the green hydrogen sector. Having the DBSA, IDC, and Sanlam as local partners in the SA-H2 Fund underlines the belief that significant public/private sector stakeholders have in the future of green hydrogen in the country and the role that blended finance will fulfill.

“As observed at the recent COP28 event in Dubai, green hydrogen partnerships will play a pivotal role in the success of this sector, and as we conclude 2023, Sanlam Investments remains committed to monitoring all green hydrogen developments in 2024,” Rothman concluded.

South Africa is not the only country that is pursuing green hydrogen as a key enabler of the energy transition. Several other countries, such as Australia, Chile, Germany, Japan, and Saudi Arabia, have also announced plans and projects to develop and deploy green hydrogen technologies and infrastructure.

With the global push for clean energy and climate action, green hydrogen is poised to become a vital source of power and innovation for the world.

Source: Biz Community

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