The head of the government’s climate finance task force stated that South Africa will require $14 billion in investment in order to build a large green hydrogen economy.
Bloomberg obtained a copy of Daniel Mminele’s speech in which he stated that an initial investment of $1 billion would be required to establish an industry capable of exporting 20,000 tons of the climate-friendly fuel annually, and an additional $13 billion would be required to reach a 270,000-ton goal.
Mminele, a former central banker, was hired this year to negotiate the terms of an offer of $8.5 billion in climate funding from some of the world’s wealthiest nations in order to assist South Africa in reducing its dependency on coal. Nonetheless, he told a think group this week that a portion of those funds would need to be allocated to building South Africa’s hydrogen and electric vehicle businesses.
“By decommissioning coal-fired power facilities through a regulated process and rapidly increasing other power sources, South Africa can achieve improved supply security,” he explained to the Mapungubwe Institute for Strategic Reflection. Moreover, investments in green hydrogen and electric vehicles are crucial complements.
Mminele’s remarks illustrate South Africa’s desire to find a balance between rich countries’ goals of seeing their funding reduce climate-warming emissions and the African nation’s need to transition its coal-reliant economy to clean energy without risking employment or revenue.
In November, at the COP26 climate meeting in Glasgow, the United Kingdom, the United States, France, Germany, and the European Union offered funding in the form of concessional loans and grants. A senior US official participating in the negotiations stated in March that the donors anticipate the majority of the monies to be used to close coal-fired power stations and replace them with renewable energy.
“The strategy should include elements that may be addressed concurrently with energy investments,” added Mminele. In answer to an inquiry from Bloomberg, he stated that the necessary investment in hydrogen was a government estimate.
South Africa is now reliant on coal for more than 80 percent of its electricity, but its vast solar and wind power potential makes it an excellent place for green hydrogen, which is produced by splitting water using energy from renewable sources to produce the clean-burning gas.
South Africa does not make electric vehicles, despite the fact that its automobile industry is one of its largest export industries. European nations are imposing legislation that will hasten the transition to electric automobiles.
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