Considerations for a green hydrogen economy in the Eastern Cape

Green hydrogen is a hot topic globally. More than 50 countries have developed hydrogen strategies to realise opportunities to decarbonise industry, create new markets, jobs and produce electricity from renewable sources like solar and wind. South Africa is seen as a potential leader in establishing an export-oriented green hydrogen economy on the continent. Hydrogen products such as ammonia can be sold and shipped to places like Europe and Japan where there is a high demand for clean energy. In the context of the Eastern Cape, what are important considerations for the establishment of a new green hydrogen economy?

In the first webinar of the Nelson Mandela University hydrogen knowledge platform Dr. Rebecca Maserumule from the National Department of Science and Innovation and Dr. Gary Koekemoer from the climate resilience framework project Nelson Mandela Bay presented an overview of the green hydrogen economy in South Africa and the Eastern Cape. Concerns and opportunities for the Eastern Cape province emerged around three broad sets of considerations. Firstly, the question was posed if green hydrogen is a viable and environmentally positive alternative to the use of fossil fuels. Secondly, it was considered that the green hydrogen value chain might supplement the transforming automotive industry. The third set of considerations concerned the required policy strategies and coordinating efforts to enable the green hydrogen sector.

An alternative to fossil fuels

Nelson Mandela Bay is a vital biodiversity hotspot by the sea. It has 2 ports where ships can refuel (bunkering). For the environment, the production and use of green hydrogen would be a better technological choice than exploring available oil and gas options. We have to do away with fossil fuels, but we can’t do away with energy. Gary Koekemoer, a local climate change expert and activist, said to be “cautiously optimistic” about the green hydrogen economy. Koekemoer emphasized that there are no technologies that have no impact at all on the environment. We might replace polluting combustion engines with hydrogen-driven engines, and reduce oil spills in the ocean, but those engines will still produce marine noise pollution that negatively affects Gqeberha’s penguin colony for example. The use of fuel cell technology to power ships will solve the noise issue, but the technology is more complex and costly.   

Moreover, for relatively new technologies like green hydrogen, we don’t exactly know the long-term impact on the environment. What happens to the environment in case of ammonia or hydrogen spills? Another key concern around technological choices is equity. In other words, who benefits? At the moment, the production of green hydrogen is expensive and requires big investments in electrolysers, wind turbines and solar panels. In the Eastern Cape, experiences with the fishing industry have learned that capital-intensive industries mostly benefit big capital and not local communities. How will the green hydrogen sector ensure that ordinary people benefit from the use of these new technologies?     

A supplement to the automotive industry

The automotive manufacturing industry is an important economic sector in the Eastern Cape that is transforming in the context of the Just Energy Transition (JET). The unreliable electricity situation and load shedding closed factories and caused job losses in the province with a consistent above average unemployment rate. Industrialists would like reliable provision of electricity. Would a green hydrogen value chain be able to create employment and industrial change? Is there a future for the production of electric vehicles? What are the prospects for permanent jobs in the production of green hydrogen? We know that most jobs will be temporary construction jobs to put infrastructure in place. After that, there will be a need for highly technical jobs as well as maintenance blue and white color jobs at the green hydrogen plants, the solar or wind farms and desalination plants.   

Another consideration is the potential for local manufacturing of the components for this green hydrogen value chain. At the moment, green hydrogen project developers face various challenges. Although South Africa is the biggest exporter in the world of Platinum Group Metals, used in electrolysers, these metals are exported to import them back as final products after value is added in other countries. Another challenge is South Africa’s tariff structure that created the situation that it is cheaper to import assembled wind turbines than to import components and assemble them in South Africa.

Enabling policy environment and coordination

Investors and other stakeholders in the green hydrogen economy need policy certainty to believe that it is worth investing in renewable energy, green hydrogen products or electric vehicles. At the moment, frustration exists around the policy arena needed to enable the green hydrogen economy. Several government institutions and departments are working on green hydrogen and their efforts need to be coordinated to be effective. Dr. Rebecca Maserumule from the national department of Science and Innovation (DSI) stated that South Africa is moving in the right direction with several provincial strategies being developed and a national Renewable Energy Master Plan on the way. Maserumule emphasized that the Nelson Mandela University (NMU) has to play an important role in bringing down costs to capital and project failure risk by training people locally to implement projects. Currently, less than 3% of green hydrogen projects have arrived at their final investment decision (FID). To keep existing experts in the country and train new ones, it is important that projects get going to ensure potential socio-economic benefits will be realised.

The themes and topics planned for future forums are listed below. Please click on the Contact us link if you have any questions or topics and speakers to suggest. Links to reports, videos and supporting documents from these sessions will be posted on this platform.