The EU has committed grant funding totalling €32m (about R630m) to support the implementation of Transnet’s turnaround strategy and the development of a green hydrogen value chain in SA.
Kadri Simson, the European commissioner for energy, said at a press conference on Monday that one of the grants, valued at about R140m, would be to support Transnet’s recovery.
It would assist Transnet in leveraging additional funding for the “green transformation of its core operational areas, including ports, rail, pipeline, engineering and related facilities”.
The second grant, valued at about R490m, would contribute to the “primary construction of SA’s green hydrogen value chain”. The grant is expected to leverage R10bn in private and public sector finance across the hydrogen value chain, covering production, transport, storage and downstream industries.
“Our co-operation in support of SA’s green hydrogen agenda aims to accelerate the green transition, drive sustainable development, create new economic opportunities and build a more sustainable future for the region,” said Simson.
The grants came from the EU budget and would be implemented through development finance institutions.
The grants were in addition to the contributions the EU pledged as part of the international partners group to the Just Energy Transition Partnership, Simson said.
In 2021, France, Germany, the US, UK and the EU pledged financial support for SA’s just energy transition at the UN climate conference COP26 in Glasgow. The group has since grown to include countries such as Denmark and the Netherlands, and the financial pledges have increased from $8.5bn to about $12bn.
It is estimated in SA’s R1.5-trillion Just Energy Transition Investment Plan, which identifies green hydrogen as one of three priority areas, that R320bn would have to be spent up to 2027 on research & development of the infrastructure needed to support the production, use and export of green hydrogen.
Government estimates show that a green hydrogen economy could add 3.6% to SA’s GDP by 2050 and create at least 370,000 jobs.
Auction
Simon said the EU was now consuming about 10-million tonnes of hydrogen per year. Most of this was grey hydrogen (produced using natural gas as an energy source). However, to meet its targets for cutting natural gas consumption, the EU needed to replace much of the grey hydrogen with green hydrogen (which is produced using renewable energy as an energy source).
To this end, the EU held its first hydrogen auction this year, which awarded about €720m to seven renewable hydrogen projects in Europe. As the next phase, the EU was planning to launch a matchmaking platform in mid-2025 where EU-buyers could be matched with global green hydrogen producers.
“For that to happen we need global project promoters who are willing to bring green hydrogen projects online by 2030. By announcing our support to SA’s green hydrogen value chain we hope it will allow for the scaling up of green hydrogen projects in SA,” she said.
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