Green-hydrogen Secretariat Being Set Up At IDC As Single Point Of Contact For Public And Private Coordination

Wedoany.com Report-Nov 5, It will also be ringfenced from the development finance institution’s own commercial strategy in the area of green hydrogen, which will be pursued in parallel.

The secretariat will support the coordination of activities that have been identified as essential to the eventual development of a green hydrogen industry and ecosystem, including global advocacy in areas such a standard setting and the creation of frameworks to firm up the initial offtake needed to secure project finance.

These relate to project funding, the supply of and demand for green hydrogen, the shared infrastructure needed to lower the capital costs of investments, the provision of support for technology incubation and skills development, the crafting of supportive policy and regulation and ongoing community engagement.

The decision to establish the secretariat follows both the finalisation of the implementation roadmap for the JET Investment Plan – which includes scope to support green hydrogen alongside electricity and new energy vehicles – and the Green Hydrogen Commercialisation Strategy.

The strategy has identified two distinct markets, namely export demand, driven by the international trade of green-hydrogen derivatives, and domestic demand, driven by fuel switching and new use cases in the areas of mobility, industrial processes, agriculture and power.

Bate says that both markets are receiving attention, but that priority will be given by the secretariat to key project enablers, such as offtake, standards and shared infrastructure, the absence of which is impeding commercial development.

Bate says it is particularly important for South Africa that there is consistency in the definition of offtake rules across key importing countries in Europe and Asia so as to help de-risk South African projects.

“If you're exporting low-carbon hydrogen that qualifies as low carbon or green in Japan and Europe and those rules change, there's a risk that your offtake will be compromised.

“And that’s why we are prioritising the issues of ensuring consistent standards and rules around the carbon-intensity of the product.”

It is likely that the South African strategy will also be refined over time, given that certain market opportunities for South Africa – such as fuel-switching in the marine sector – are seen as potentially materialising ahead of other opportunities identified in the strategy.

“Our initial view was that shipping was probably a 2030 to 2035 opportunity.

“But given the focus on decarbonisation of shipping and given South Africa's location on a number of global trade routes, we believe that there could be an opportunity to accelerate.”

Bate acknowledges growing cynicism about the prospects for green hydrogen, and acknowledges that this scepticism has arisen partly because of the initial hype.

However, she argues that it remains a high-potential industrialisation opportunity for South Africa, owing to the country’s natural resource advantages in the areas of sun, wind and land and the proposal that production be based largely on desalinated water.

“This is a 25-year value chain opportunity, which requires systematic efforts to unlock and to de-risk.

“We understand that everybody wants it to happen now, but it is important that we proceed in a balanced way while remaining ambitious so that we do not allow this industrial opportunity to slip away.”