South Africa, Denmark, and the Netherlands have launched SA-H2, a $1 billion fund to bolster green hydrogen projects in South Africa. The fund, backed by major financiers, signifies a shared commitment to sustainable energy and a belief in green hydrogen’s critical role in a future low-carbon economy.
In an unprecedented alliance, South Africa, the Netherlands, and Denmark have unveiled a joint fund – the SA-H2 – dedicated to bolstering green hydrogen initiatives in South Africa, tapping into its abundant wind and solar resources. The fund, totaling $1 billion, was launched in Pretoria, South Africa yesterday, with an initial seeding of $50 million from the Dutch investment body, Invest International.
The remainder of the fund is set to be raised over the subsequent two years, with numerous stakeholders including the Development Bank of Southern Africa, Industrial Development Corporation, and insurance firm Sanlam stepping up to support the cause. The fund will be expertly managed by the Dutch Climate Fund Managers.
In his address, delivered beside the Prime Ministers of the Netherlands and Denmark, Mark Rutte and Mette Frederiksen respectively, President Ramaphosa acknowledged the urgent need to tackle South Africa’s electricity crisis and stressed the critical role of renewable energy in achieving long-term energy security. While acknowledging that the current loadshedding crisis in the country necessitates reliance on its current coal fleet, the fund is nevertheless a move toward more sustainable source of energy.
“From solar to biogas, from wind to battery storage, these investments are leading one of the most important growth industries in our country” said Ramaphosa.
The fund is expected to stimulate significant advancements in the green hydrogen sector, offering early investment opportunities in a technology set to play a transformative role in achieving global emission reduction targets. These investments are likely to be lucrative, given that South Africa’s COP27 presentation revealed the country is targeting $250 billion in green hydrogen investment by the year 2050.
Emphasizing the spirit of collaboration underpinning the fund, Ramaphosa highlighted the diversity of the SA-H2’s support base, extending beyond state entities and private sector players to include organized labor and NGOs, with all parties hoping for productive social and economic gains, alongside the environmental benefits.
“… that is the true architecture of our cooperation in our country” continued Ramaphosa, “… and it reinforces our view that these developments need to be inclusive, and needs to benefit all within society.”
While the Netherlands and Denmark are not presently part of the Just Energy Transition Partnership (JETP), they have indicated a supportive stance toward its objectives, and discussions to join the alliance are underway.
The launch also witnessed the signing of a memorandum of understanding on green hydrogen between South Africa and the Netherlands. Additionally, an agreement was inked to expand an existing energy partnership between Denmark and South Africa. A finance package for water-related public infrastructure, announced by Invest International, rounded off the day’s commitments.
These collaborative efforts signify a collective commitment to combating climate change and a shared belief in green hydrogen’s potential to revolutionize the future energy landscape, with the launch of the SA-H2 fund represents a significant leap toward a sustainable energy future for South Africa.