Daniel Mminele. Photo: Gallo / Images / Foto24.
South Africa will have to attract $ 14 billion (about Rs 224 billion) of investment if it is to develop a substantial green hydrogen industry, the head of the government’s climate finance team said.
An initial $ 1 billion would be needed to create an industry capable of exporting 20,000 tons of climate-friendly fuel per year and an additional $ 13 billion to reach a target of 270,000 tons, said Daniel Mminele, the chief. team, in a speech this week, a copy of which was seen by Bloomberg.
Mminele, a former central banker, was tasked this year with negotiating the details of a $ 8.5 billion offer in climate finance from some of the world’s wealthiest nations to help South Africa reduce the his addiction to coal. However, he told a panel of experts this week, some of that money should go towards developing green hydrogen and electric vehicle industries in South Africa.
“By decommissioning coal-fired power plants through a managed process and rapidly increasing alternative energy sources, South Africa can achieve greater security of supply,” he told the Mapungubwe Institute for Strategic Reflection. “Furthermore, investments in green hydrogen and electric vehicles are essential complementary investments.”
Mminele’s comments highlight South Africa’s desire to strike a balance between developed countries’ goals of seeing their funding reduce global warming emissions and the African nation’s need to shift its coal-dependent economy to clean energy without jeopardizing jobs and income.
The offering of funds in the form of soft loans and grants from the UK, US, France, Germany and the European Union was announced at the COP26 climate summit in Glasgow in November. Donors expect most of the funds will go towards shutting down coal plants and replacing them with renewable energy, a senior US official involved in the talks said in March.
“The plan should include components that can be addressed in parallel with energy investments,” said Mminele. The investment requirement for hydrogen was a government estimate, she said in response to a question from Bloomberg.
While South Africa currently depends on coal for more than 80% of its electricity, its abundant solar and wind energy potential makes it an ideal location for green hydrogen, which is produced using renewable energy to divide the water to generate clean gas combustion.
South Africa does not manufacture electric vehicles, although its auto industry is one of the nation’s largest export sources. European countries are imposing regulations that will see a rapid shift to the use of electric vehicles.