In the vast landscape of the global energy transition, Sasol’s hydrogen ambitions are like planting a single tree in trying to reforest an entire desert: noble, but insufficient.
“Global Energy Perspective 2023”, a report issued earlier this year by consultancy house McKinsey, paints a rosy picture of hydrogen’s future, but let’s not kid ourselves — Sasol can’t achieve this dream in isolation. It needs the platinum industry to play along, creating a fertile ground for hydrogen production and use.
Hydrogen demand is like a mirage in the desert — promising but elusive. Nearly all hydrogen consumed is grey, produced from fossil fuels. The report suggests that by 2050 clean hydrogen could account for up to 100% of demand. The platinum industry, which has a significant stake in the future of hydrogen, is a natural ally for Sasol, which has been dabbling in hydrogen since 1950, using it as one of the inputs in the coal-to-liquids operations that are threatened by the global energy shift.
The collaboration, if it comes to pass, isn’t just a strategic move, it’s a necessity for both industries to thrive in a decarbonised world. Last week, Impala Platinum boss Nico Muller underscored the need for the industry to reassess its long-term strategies. “I don’t think the industry has ever had this long-term risk. For you to build a mine, you’re talking 10 to 20 years. This is exactly where there is long-term concern about electric vehicles.”
Sasol as a strategic company woven into our nation’s fabric as both an economic powerhouse and an environmental enigma is well documented.
One practical way for the two industries to work together and create an ecosystem for the hydrogen economy is by blending grey and green hydrogen, produced in tiny batches at Sasol’s plant in Sasolburg, and using it in mining trucks. This approach will do very little to reduce emissions but it would go a long way in demonstrating the viability of hydrogen as a fuel source in heavy-duty applications. It would provide a tangible example of how hydrogen can be integrated into existing industries, paving the way for broader adoption.
Accelerate adoption
The vision of Simon Baloyi, Sasol’s CEO who spoke candidly with this newspaper’s podcast Business Day Spotlight, of focusing on hydrogen as one of its future products aligns perfectly with the platinum industry goals. Together, they can accelerate the adoption of hydrogen as a fuel source in industrial segments such as steel, aluminium, chemicals, refining and cement because these sectors are difficult to decarbonise through other means.
Of course, this approach is not without critics. Some will argue that blending grey and green might delay the transition to fully green hydrogen. They believe that investments should be focused solely on green hydrogen to ensure a truly sustainable future.
Still, this perspective overlooks the pragmaticism in the blended approach. For one thing, just as adding a bit of kale to your cholesterol-inducing diet can improve your health, blending green hydrogen with grey hydrogen can improve, albeit by a small amount, our environmental footprint. It’s a way to build the necessary infrastructure and market demand while Sasol and the platinum industry work on scaling up the green hydrogen transition.
For another, the blending approach can mitigate the current cost of green hydrogen — which is about 10 times higher than green hydrogen. The cost of producing green hydrogen, which is made by running an electrical charge through water, is prohibitively high at as much as $12/kg, more than 10 times the cost of producing grey hydrogen. But McKinsey expects it to reach parity with grey hydrogen by 2030, driven by existing demand in chemicals and new applications in transport and steel.
The path to a sustainable hydrogen economy isn’t a solo journey. Sasol’s hydrogen ambitions, while commendable, need the collaborative efforts of the platinum industry to truly take root. Together, they can lead the charge towards a sustainable hydrogen economy, safeguarding jobs, protecting shareholder capital and ensuring a greener future for all. After all, a lush forest is stronger than a single tree.
• Motsoeneng is deputy editor of Business Day.
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