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Minister Blade Nzimande: Launch of Hydrogen Society Roadmap

17 Feb 2022

Address by the Minister of Higher Education, Science and Innovation, Dr Blade Nzimande, on the occasion of the launch of the Hydrogen Society Roadmap

Programme Director, DSI Deputy Director General Technology Innovation, Dr Mmboneni Muofhe;
Director General of the Department of Science and Innovation, Dr Phil Mjwara;
Economic Advisor to the South African President, Ms Trudi Makhaya;
My Advisors;
Private Sector representatives;
Government officials;
Academia;
Civil society;
Distinguished guests;
Members of the media;
Ladies and gentleman

I am grateful to be joining you this afternoon on this occasion of the launch of the Hydrogen Society Roadmap (HSRM).

We are holding this important launch of the Hydrogen Society Roadmap at a time when our country and the world is faced with the fourfold challenges of:

  1. The Covid 19 pandemic;
  2. Persisting and stubborn economic crises, and its associated challenges of poverty, inequality and unemployment;
  3. The crises facing poor families, households and communities to make ends meet - the struggle to sustain life and livelihoods; and
  4. Climate Change.
     

This launch also takes place at a time when South Africa is also focusing on extraordinary measures of economic recovery and reconstruction to achieve inclusive growth following the devastation caused by COVID-19 and economic challenges.

Indeed the depth of the crisis caused by the COVID-19 pandemic has sharpened our resolve to rededicate ourselves to address our massive socio-economic challenges.

At the centre of our Reconstruction and Recovery Plan (ERRP), is the creation of sustainable jobs and livelihoods.

Our determination is to get our people back into the jobs they lost during the pandemic and  create new ones. This means that we want to broaden the participation of all South African’s in an inclusive economic.

As government we are determined to create an environment which encourages investment, the  creation of employment and skills needed for our economic growth and development.

I therefore view the launch of the Hydrogen Society Roadmap as amongst the critical and leading instruments towards our economic recovery and developing our economy.

Ladies and gentlemen

The South African hydrogen economy journey started in 2007 when Cabinet approved the national hydrogen and fuel cells research, development and innovation (RDI) Strategy (HySA Strategy).

The HySA Strategy is currently implemented by the Department of Science and Innovation (DSI) through the 15-year Hydrogen South Africa Programme.

The HySA Programme, now on its 13th year of implementation, has made significant contribution towards the creation of a Hydrogen Economy in South Africa.

This has been achieved through the creation of knowledge, technological expertise and human resources development.

During the 2019/20 financial year, the HySA Programme underwent its second five-year review, which recommended the development of an overarching Hydrogen Society Roadmap (HSRM).

In September 2020, the DSI initiated a process to develop the HSRM in collaboration with key relevant departments as well as the private sector and civil society through a consultative process, which culminated in a stakeholder collaboration workshop on 14 July 2021.

This led to the Cabinet approval of the Hydrogen Society Roadmap on the 14th  September 2021.

The implementation of this Roadmap is expected to support inclusive growth and assist government to reduce unemployment, poverty and inequality.

In South Africa, hydrogen is extensively used in the chemical and fuel-refining sectors, but it is currently produced mainly from non-renewable sources such as coal and natural gas.

Was is concerning is that hydrogen and fuel cell technologies (HFCT) are currently used in very few industrial activities in our country.

However, the use of hydrogen and fuel cell technologies is likely to expand significantly in future, driven by both mobile and stationary applications, as well as its use in industrial processes such as ammonia and steel production.

In addition to the renewable resources and available land to build the required renewable energy plants, South Africa has comparative advantage in that the country is home to 75% of the world reserves of the platinum group metals (PGMs).

The PGMs such as platinum, ruthenium and iridium are key components in fuel cell catalysts and electrolysers for green hydrogen production.

In addition, South Africa has a unique and patented Fischer-Tropsch process owned by Sasol, which gives South Africa a competitive edge in the production of liquid fuels based on the hydrogen production route.

Opportunities exist for direct replacement of the hydrogen from natural gas by green hydrogen.

For example, with the existing gas-to-liquids facility operated by PetroSA, as well as the existing port infrastructure located from the east coast all the way to the west cost of the country, this basic infrastructure can be modified and expanded to supply hydrogen into the domestic and international markets.

South Africa currently produces 2% of the global demand for hydrogen, mostly made from natural gas by Sasol.

Given the projected global demand for green hydrogen, South Africa has the opportunity to convert its current global supply to green hydrogen and the potential to increase the country’s share of the green hydrogen market.

As a country, South Africa has good trading relations with the countries that are looking to import green hydrogen.

These include the European Union broadly and Germany in particular, Japan, South Korea and China.

According to the recently launched South African Hydrogen Valley Feasibility Study Report, the average cost of green hydrogen will be around USD 4 (EUR 3.5) per kg by 2030 along the Platinum Valley corridor, representing a green premium of USD2-2.5 per kg above grey hydrogen, produced from natural gas.

The Platinum Valley Corridor starts from Anglo American Platinum’s Mogalakwena Mine in Limpopo, through Pretoria and Johannesburg down to Durban, passing through the N1 and N3.

It is expected that by implementing the catalytic projects identified in the South African Hydrogen Valley Feasibility Study Report, the green premium could be lowered to enable green hydrogen to be at parity with grey hydrogen.

Ladies and gentlemen

As part of developing the Roadmap, the DSI, in collaboration with other stakeholders, identified projects or studies that will be implemented in parallel to kick-start the development of the Hydrogen industry in South Africa.

For instance, the Department of Trade, Industry and Competition, is developing a National Green Hydrogen Commercialisation Strategy that will give confidence to investors that South Africa is a destination for investment in the Hydrogen Economy.

The following catalytic projects have been identified as key to kick starting the implementation of the Roadmap:

  • Platinum Valley:

The Department’s hydrogen valley partnership with Anglo American, Bambili Energy and ENGIE is an example of leveraging investments made in the Hydrogen South Africa Programme to create mechanisms for the uptake of publicly financed intellectual property and supporting small, medium and micro enterprises (SMMEs).

Estimates place the potential gross domestic product (GDP) impact, direct and indirect, of H2 projects in the country at $3,9 billion to $8,8 billion, if the full vision of the hydrogen valley is realised.

This project could bring an additional $900 million to $2,000 million in tax revenue into South Africa’s coffers by 2050.

  • Limpopo Science and Technology Park:

The DSI commissioned a joint study with the Limpopo Economic Development Agency on the role of hydrogen and hydrogen fuel cells to power data centres that will be installed at the Limpopo Science and Technology Park.

While the use of diesel generators to power data centres is the standard practice, recently the move towards stationary fuel cells for uninterrupted power supply has gained momentum.

  • The CoalCO2-X RDI Programme:

The CoalCO2-X Programme aims to use renewable or green hydrogen and pollutants (CO2, SOx, NOx etc.) contained in the flue gas from coal fired boilers to make value added products that can support the transition to a decarbonized energy system and assist the country to meet its emission reduction goals while also ensuring a Just Energy Transition.

To date, the DSI has provided R50 million to kick-start the CoalCO2-X RDI Programme and is looking to demonstrate the flue gas conversion technology at a cement plant in collaboration with PPC Cement.

To ensure that the implementation of the HSRM is successful, a Monitoring, Evaluation, and Learning Framework (MEL) has been drafted to provide the means to monitor progress and evaluate the performance.

A detailed Monitoring, Evaluation, and Learning Framework (MEL) framework document, together with some baseline data is expected to be completed by April 2022.

South Africa’s geography with wide open spaces coupled with port infrastructure creates the environment for ensuring that hydrogen and ammonia produced with renewables can be readily shipped to other countries in the world.

The HSRM identifies the following high-level outcomes for the South African Hydrogen Economy:

  1. The creation of an export market for green hydrogen and ammonia:

In this regard, a key outcome of the HSRM is the creation of an export market for the South African green hydrogen.

The demand from international buyers for the South African green hydrogen will be determined by cost competitiveness, confidence in the South African hydrogen market, and an enabling export infrastructure;

  1. The green and enhanced power and buildings sector:

In this regard, hydrogen is capable of contributing to the achievement of a decarbonised and enhanced power sector by providing renewable energy storage and green power to the main electricity grid, thus improving overall grid stability;

  1. The decarbonisation of Heavy-Duty Transport:

In this regard, the HSRM will support the objective of decarbonisation of transport by 2050.

The initial focus will be road transport, which accounts for the majority of transport emissions and where the technology is most developed to use Hydrogen to power heavy duty vehicles.

Rail, shipping and aviation will be addressed in the medium term (2025-2030);

  1. The decarbonisation of Energy Intensive Industry:

In this regard, the HSRM will support the objective of decarbonisation of industry by 2050.

The initial focus will be on the steel, mining, chemicals, refineries and cement sectors, which together account for the majority of energy used in industry; and

  1. Local manufacturing of hydrogen products and fuel cell components:

In this regard, the establishment of a manufacturing sector for Hydrogen products and components is a key outcome for the HSRM.

The manufacturing sector will support the transition from internal combustion engine (ICE) to electric vehicle (EV) manufacturing, produce products for export and will contribute to the beneficiation of South African minerals through the supply of value added components in the Hydrogen value chain.

In addition, the HSRM identifies the production, storage and distribution of hydrogen; RDI as well as gender, equality and social inclusion (GESI) as important cross-cutters within the Hydrogen Economy.

More importantly, these are areas where potential interfaces could be explored to create a truly inclusive Hydrogen Economy for the country.

Next Steps

Today we are here to celebrate, but with an understanding that hard work is ahead of us.

The DG’s in his presentation will highlight the 70 key actions that have been identified by stakeholders.

The HSRM articulates the roles that all these stakeholders (comprising of government, industry, academia and civil society) are expected to play in implementing the action plan.

Stakeholders will be expected to mobilise resources through partnerships and create an ecosystem where investment decisions can be made to unlock the socio-economic benefits that can accrue through the integration of hydrogen and fuel cell technologies in various sectors of the economy.

Given the complex and extensive requirements for the implementation the HSRM, it will be enabled by a team of experts, from across industry, SOEs, academia and government, that have been assembled to ensure that the identified 70 key actions are completed as soon as possible to create an enabling environment for investment.

We have also established a partnership with the United Nation Industrial Development Organisation (UNIDO) that will assist with creating an agile, effective and relevant National Hydrogen Energy Centre that will institutionalise the implementation of the Hydrogen Society Roadmap.  

UNIDO has been working with governments, business associations and companies to solve industrial problems for more than 50 years, earning a reputation as the world’s most experienced industrial problem solver, as well as a neutral and honest broker in promoting cooperation and coordination among countries around the world.

UNIDO is fully committed to contributing to the achievement of the Sustainable Development Goals (SDGs), in particular Goal 9 focusing on Infrastructure, Industry and Innovation.

As South Africa we joined UNIDO as a Member State on 24 October 2000.    

Ladies and gentlemen

In conclusion, if South Africa fully implements the HSRM, within a few years, at least 20 000 new jobs will be created in South Africa as part of the adoption of the Hydrogen economy.

My Department of Science and Innovation and Department of Higher Education and Training are working together to scale up training and reskilling programmes across South Africa to ensure that the requisite infrastructure, curriculum and lecturers are in place to educate the next generation of employees and participants for the hydrogen economy.

The Department of Science and Innovation is working with the private sector partners to develop an updated Research Development and Innovation Strategy that will support the aspirations to have a vibrant domestic manufacturing sector for fuel cell components.

A number of MoUs have been signed with leading energy companies both in the private and State-owned to co-fund and co-create future technologies for the hydrogen economy.

In closing, let me first thank the Director General, Dr Phil Mjwara for ensuring that the officials of the Department as well as the other members of the National System of Innovation have worked to ensure the successful implementation of the HySA Strategy

They have ensured that through the Hydrogen Society Roadmap we have levelled up our efforts to the full participation of private sector, other government departments and civil society and academia in securing a clean, affordable and sustainable energy future for South Africa.

I want to express my gratitude to all of you.

I want to assure you today that government will continue to create an enabling environment for the implementation of the roadmap.

We will also focus on more attention on shovel ready projects such as those identified with the Platinum Valley Initiative.  

We have a huge task ahead, but the level of commitment that you have thus far demonstrated indicates that there is no challenge which is unsurmountable.

As the Minister of Higher Education, Science and Innovation, I therefore launch the Hydrogen Society Raodmap.

Thank you