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The Journal of African Business, Issue 10

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Welcome to The Journal of African Business, your up-to-date guide to business and investment trends on the continent. A unique guide to business and investment in Africa, September / October / November 2024.

SOUTH AFRICA’S CLEAN

SOUTH AFRICA’S CLEAN HYDROGEN AMBITION By Jackwell Feris, Sector Head for Industrials, Manufacturing & Trade, Cliffe Dekker Hofmeyr (CDH). IIn the throes of a global energy transformation, South Africa emerges as a prominent player, leveraging its abundant renewable resources, particularly solar and wind power, to unlock the potential of clean-hydrogen production. This pivotal step represents a momentous leap towards achieving a sustainable and environmentally responsible energy future, one characterised by reduced reliance on fossil fuels and a minimised carbon footprint. South Africa, through its clear policy position as espoused in its Hydrogen Society Roadmap, intends for green hydrogen to be a key driver for achieving sustainable economic development and growth. This comprehensive framework outlines strategic approaches and policy directions to mobilise resources and facilitate the transition towards a hydrogen-based economy. Specifically, the roadmap sets ambitious targets such as deploying 10GW of electrolysis capacity by 2030, achieving annual hydrogen production of 500 kilotons and scaling up electrolysis capacity to 15GW by 2040, tapping into both the export and domestic market in developing green hydrogen or derivative products. Recognising its broad potential, the roadmap identifies The pilot fleet of BMW iX5 hydrogen-fuel-cell electric vehicles is an historic initiative, supported by Anglo American Platinum, BMW Group South Africa and Sasol. priority sectors for hydrogen application, including transport and industry, while acknowledging its future role in power generation. President Cyril Ramaphosa’s keynote address at the Second South African Green Hydrogen Summit in 2023 underscored the transformative potential of green hydrogen for South Africa’s economic growth and just energy transition. He estimated that the hydrogen economy could contribute 3.6% to the country’s GDP by 2050, creating approximately 370 000 jobs. Additionally, the president emphasised the global significance of green hydrogen in limiting global warming to below 1.5°C, suggesting its potential to constitute 10-20% of the global energy mix. The country’s Green Hydrogen Commercialisation Strategy, approved by the Cabinet in 2023, designates green hydrogen as a critical strategic sector, with the objective of attracting foreign and domestic direct investment and establishing the country as a global leader within this burgeoning industry. This prioritisation was further emphasised by Minister Kgosientsho Ramakgopa, during his address at the 2023 African Energy Chamber’s Hydrogen Summit, where he highlighted its pivotal role within South Africa’s energy strategy. 12

GREEN HYDROGEN The Green Hydrogen Commercialisation Strategy identifies key low-hanging fruit that is the catalyst for local green-hydrogen production by the mining sector as the most promising early adopter of hydrogen for mobility at mines. There is further potential for sustainable aviation fuel using Sasol’s technology. Legal framework A key element of the Green Hydrogen Commercialisation Strategy is to ensure that the legal framework for the production is clear and easily ascertainable for developers in the entire hydrogen value chain (from energy generation to the production, transport and handling of green hydrogen or its derivatives). As such, the strategy emphasises the need for policy and financial incentives to support South African developers and other companies in the value chain to effectively contribute to the development of this developing sector, thereby enabling the supply of locally sourced products. This approach is crucial for fostering a sustainable and competitive PGM industry in South Africa, while also promoting the country’s position as a global leader in PGM production. References • Green Hydrogen Commercialisation Strategy: The Department of Trade Industry and Competition (thedtic.gov.za) • Cabinet approves Green Hydrogen Commercialisation Strategy (engineeringnews.co.za) • Green Hydrogen programme sparks sustainable energy revolution (msn.com) • President Cyril Ramaphosa: Second South African Green Hydrogen Summit | South African Government (www.gov.za) • SA aims to lead the world in green hydrogen innovation (miningreview.com) • MCSA welcomes launch of pilot hydrogen vehicle project (miningreview.com) The role of Platinum Group Metals South Africa’s rich endowment of minerals, particularly Platinum Group Metals (PGMs), represents a significant strategic advantage in the global transition towards achieving net-zero carbon emissions. PGMs serve as critical components within electrolysers used for hydrogen production and catalysts employed in fuel cells. Furthermore, ongoing advancements in PGM-based catalysts and other components for fuel cells and electrolysers position South Africa to become a key player within the global hydrogen economy. In a landmark development for the clean energy sector, a strategic alliance between Anglo American Platinum, BMW Group South Africa and Sasol has culminated in the launch of the first pilot fleet of BMW iX5 Hydrogen fuel cell electric vehicles (FCEVs) on South African public roads. This historic initiative, announced during the inaugural Hydrogen Council’s Regional Meeting held in Johannesburg in February 2024, represents a significant step forward in demonstrating the viability of hydrogen-fuel-cell technology. Each collaborator brings a distinct and critical element to the value chain. Anglo American Platinum leverages its expertise to supply the PGMs essential for both hydrogen production and its conversion back into electricity. BMW showcases the cutting-edge capabilities of the BMW iX5 FCEV in realworld driving conditions. Sasol contributes by providing the mobile-refuelling system, a vital component for infrastructure development in the nascent hydrogen economy. This collaborative project signifies a pivotal moment for the South African automotive, mining and energy sectors, paving the way for a more sustainable future powered by clean hydrogen technology. There are several other green hydrogen projects (at different scales) that are at different stages of development planning and will play a key role in South Africa becoming a cost-competitive producer of green hydrogen or derivative products (ammonia, e-methanol etc). However, the biggest hurdle has been access to funding for the early development phases of these projects. Although several developmental funding institutions have grant funding available for these early development phases not all projects will qualify. Green hydrogen remains an important part of the decarbonisation efforts of the global economy, and Africa must not be left behind. Jackwell Feris, Sector Head Cliffe, Dekker Hofmeyr. 13

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